Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Common Ownership, 53494-53496 [2014-21362]
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53494
Federal Register / Vol. 79, No. 174 / Tuesday, September 9, 2014 / Notices
Commission designates the proposed
rule change as operative upon filing.
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.
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:
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 rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2014–99 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–NYSEArca–2014–99. 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 will also 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
VerDate Mar<15>2010
17:39 Sep 08, 2014
Jkt 232001
available publicly. All submissions
should refer to File Number SR–
NYSEArca–2014–99 and should be
submitted on or before September 30,
2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Kevin M. O’Neill,
Deputy Secretary.
RECEIPT OF A BILLING INVOICE,
EXCEPT FOR DISPUTES CONCERNING
NASDAQ OMX PSX FEES,
PROPRIETARY DATA FEED FEES AND
CO-LOCATION SERVICES FEES. AS OF
JANUARY 3, 2011, THE EXCHANGE
WILL CALCULATE FEES ON A TRADE
DATE BASIS.
llllllllllllllllll
l
1PHLX®
[FR Doc. 2014–21357 Filed 9–8–14; 8:45 am]
is a registered trademark of The
NASDAQ OMX Group, Inc.
BILLING CODE 8011–01–P
*
*
*
*
*
VIII. NASDAQ OMX PSX FEES
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72968; File No. SR–Phlx–
2014–57]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; 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
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 proposal to
harmonize the treatment of the
aggregation of activity of affiliated
member organizations 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.
NASDAQ OMX PHLX LLC 1 PRICING
SCHEDULE
ALL BILLING DISPUTES MUST BE
SUBMITTED TO THE EXCHANGE IN
WRITING AND MUST BE
ACCOMPANIED BY SUPPORTING
DOCUMENTATION. ALL DISPUTES
MUST BE SUBMITTED NO LATER
THAN SIXTY (60) DAYS AFTER
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Aggregation of Activity of Affiliated
Member Organizations
(a) No Change
(b) No Change
(c) For purposes of this provision, the
term[s set forth below shall have the
following meanings:]
[(1) An] ‘‘affiliate’’ of a member
organization shall mean any [wholly
owned subsidiary, parent, or sister of
the ]member organization under 75%
common ownership or control of that [is
also a ]member organization.
[(2) A ‘‘wholly owned subsidiary’’
shall mean a subsidiary of a member
organization, 100% of whose voting
stock or comparable ownership interest
is owned by the member organization,
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
organization.]
[(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 organization.]
*
*
*
*
*
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
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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
Chapter VIII of the Pricing Schedule to
harmonize the treatment of the
aggregation of activity of affiliated
member organizations for the purposes
of assessing charges or credits by
making it consistent with the definition
of ‘‘Common Ownership’’ in the Preface
of the Pricing Schedule which relates to
options pricing. For purposes of
applying any PSX charge or credit
where the charge assessed, or credit
provided, by Phlx depends upon the
volume of a member organization’s
activity. A member organization may
request that the Exchange aggregate its
activity with the activity of its
affiliates.3 Therefore, for purposes of
applying any PSX charge or credit
where the charge assessed, or credit
provided, by Phlx depends upon the
volume of a member organization’s
activity, references to an entity
(including references to a ‘‘member
organization’’, or a ‘‘participant’’) shall
be deemed to include the entity and its
affiliates that have been approved for
aggregation.4
Currently, PSX Rules state that for
purposes of applying any PSX charge or
credit where the charge assessed, or
credit provided, by Phlx depends upon
the volume of a member organization’s
activity, a member organization may
request that the Exchange aggregate its
activity with the activity of its
affiliates.5 The Exchange proposes to
amend Chapter VIII of the Pricing
Schedule to conform that rule to that of
Phlx Options Pricing Rules so that
equities and options members/member
organizations are treated consistently
with respect to affiliations of member
organizations for purposes of pricing.
Phlx’s Options Rule provides,
3 See
Chapter VIII of the Pricing Schedule.
tkelley on DSK3SPTVN1PROD with NOTICES
4 Id.
5 An ‘‘affiliate’’ of a member organization shall
mean any wholly owned subsidiary, parent, or
sister of the member organization that is also a
member organization. A ‘‘wholly owned
subsidiary’’ shall mean a subsidiary of a member
organization, 100 percent of whose voting stock or
comparable ownership interest is owned by the
member organization, either directly or indirectly
through other wholly owned subsidiaries. A
‘‘parent’’ shall mean an entity that directly or
indirectly owns 100 percent of the voting stock or
comparable ownership interest of a member
organization. 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 organization. See
Chapter VIII of the Pricing Schedule.
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17:39 Sep 08, 2014
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‘‘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 member
organizations and align that standard to
the 75 percent standard for options
members and member organizations.
Pursuant to Chapter VIII of the Pricing
Schedule, a member organization
requesting aggregation of affiliate
activity shall be required to certify to
the Exchange the affiliate status of
entities whose activity it seeks to
aggregate prior to receiving approval for
aggregation, and shall be required to
inform the Exchange immediately of any
event that causes an entity to cease to
be an affiliate. In addition, the Exchange
reserves the right to request information
to verify the affiliate status of an entity.7
The Exchange intends to amend the
Phlx 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 member
organizations 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 an Options Trader Alert to its
members.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 8 in general, and furthers the
objectives of Section 6(b)(5) of the Act 9
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 member organizations for
the purposes of assessing charges or
credits with the treatment of the
aggregation of activity of affiliated
member organizations in relation to
options pricing so that more member
organizations will be able to benefit
from lower charges and/or increased
credits. The proposal will further serve
to reduce disparity of treatment between
member organizations with regards to
the pricing of different services and
6 See
the Preface of the Pricing Schedule.
Chapter VIII of the Pricing Schedule.
8 15 U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(5).
7 See
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53495
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 member organizations
to aggregate pricing because the
standard will be reduced from 100
percent to 75 percent for these member
organizations. There are no current
equity member organizations 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 LLC, NASDAQ
OMX BX, Inc. and Phlx 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 Phlx for
equity member organizations 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
E:\FR\FM\09SEN1.SGM
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53496
Federal Register / Vol. 79, No. 174 / Tuesday, September 9, 2014 / Notices
that control, are controlled by, or are
under common control with such
member.10 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
The Exchange 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
member organizations 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.
tkelley on DSK3SPTVN1PROD with NOTICES
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: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) 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)(ii) of the Act 11 and
subparagraph (f)(6) of Rule 19b–4
thereunder.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: (i) Necessary or appropriate in
10 See Securities Exchange Act Release No. 64211
(April 6, 2011), 76 FR 20414 (April 12, 2014) [sic]
(SR–BATS–2011–012).
11 15 U.S.C. 78s(b)(3)(a)(ii).
12 17 CFR 240.19b–4(f)(6).
VerDate Mar<15>2010
17:39 Sep 08, 2014
Jkt 232001
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
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–2014–57 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 SRPhlx–2014–57. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml).
Copies of the submission, all
subsequent amendments, all written
statements with respect to the proposed
rule change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–Phlx–
2014–57 and should be submitted on or
before September 30, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–21362 Filed 9–8–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72973; File No. SR–NYSE–
2014–45]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Amending Its
Price List To Establish a Billing
Practice With Respect to Billing
Disputes
September 3, 2014.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on August
21, 2014, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Price List to establish a billing practice
with respect to billing disputes. The text
of the proposed rule change is available
on the Exchange’s Web site at
www.nyse.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
self-regulatory organization 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 those 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,
1 15
U.S.C.78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
13 17
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 79, Number 174 (Tuesday, September 9, 2014)]
[Notices]
[Pages 53494-53496]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-21362]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72968; File No. SR-Phlx-2014-57]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; 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 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes proposal to harmonize the treatment of the
aggregation of activity of affiliated member organizations 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.
NASDAQ OMX PHLX LLC \1\ PRICING SCHEDULE
ALL BILLING DISPUTES MUST BE SUBMITTED TO THE EXCHANGE IN WRITING
AND MUST BE ACCOMPANIED BY SUPPORTING DOCUMENTATION. ALL DISPUTES MUST
BE SUBMITTED NO LATER THAN SIXTY (60) DAYS AFTER RECEIPT OF A BILLING
INVOICE, EXCEPT FOR DISPUTES CONCERNING NASDAQ OMX PSX FEES,
PROPRIETARY DATA FEED FEES AND CO-LOCATION SERVICES FEES. AS OF JANUARY
3, 2011, THE EXCHANGE WILL CALCULATE FEES ON A TRADE DATE BASIS.
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\1\PHLX[supreg] is a registered trademark of The NASDAQ OMX Group,
Inc.
* * * * *
VIII. NASDAQ OMX PSX FEES
* * * * *
Aggregation of Activity of Affiliated Member Organizations
(a) No Change
(b) No Change
(c) For purposes of this provision, the term[s set forth below
shall have the following meanings:]
[(1) An] ``affiliate'' of a member organization shall mean any
[wholly owned subsidiary, parent, or sister of the ]member organization
under 75% common ownership or control of that [is also a ]member
organization.
[(2) A ``wholly owned subsidiary'' shall mean a subsidiary of a
member organization, 100% of whose voting stock or comparable ownership
interest is owned by the member organization, 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 organization.]
[(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
organization.]
* * * * *
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 53495]]
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 Chapter VIII of the Pricing
Schedule to harmonize the treatment of the aggregation of activity of
affiliated member organizations for the purposes of assessing charges
or credits by making it consistent with the definition of ``Common
Ownership'' in the Preface of the Pricing Schedule which relates to
options pricing. For purposes of applying any PSX charge or credit
where the charge assessed, or credit provided, by Phlx depends upon the
volume of a member organization's activity. A member organization may
request that the Exchange aggregate its activity with the activity of
its affiliates.\3\ Therefore, for purposes of applying any PSX charge
or credit where the charge assessed, or credit provided, by Phlx
depends upon the volume of a member organization's activity, references
to an entity (including references to a ``member organization'', or a
``participant'') shall be deemed to include the entity and its
affiliates that have been approved for aggregation.\4\
---------------------------------------------------------------------------
\3\ See Chapter VIII of the Pricing Schedule.
\4\ Id.
---------------------------------------------------------------------------
Currently, PSX Rules state that for purposes of applying any PSX
charge or credit where the charge assessed, or credit provided, by Phlx
depends upon the volume of a member organization's activity, a member
organization may request that the Exchange aggregate its activity with
the activity of its affiliates.\5\ The Exchange proposes to amend
Chapter VIII of the Pricing Schedule to conform that rule to that of
Phlx Options Pricing Rules so that equities and options members/member
organizations are treated consistently with respect to affiliations of
member organizations for purposes of pricing. Phlx'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 member organizations and
align that standard to the 75 percent standard for options members and
member organizations.
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\5\ An ``affiliate'' of a member organization shall mean any
wholly owned subsidiary, parent, or sister of the member
organization that is also a member organization. A ``wholly owned
subsidiary'' shall mean a subsidiary of a member organization, 100
percent of whose voting stock or comparable ownership interest is
owned by the member organization, either directly or indirectly
through other wholly owned subsidiaries. A ``parent'' shall mean an
entity that directly or indirectly owns 100 percent of the voting
stock or comparable ownership interest of a member organization. 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 organization. See Chapter VIII of the Pricing Schedule.
\6\ See the Preface of the Pricing Schedule.
---------------------------------------------------------------------------
Pursuant to Chapter VIII of the Pricing Schedule, a member
organization requesting aggregation of affiliate activity shall be
required to certify to the Exchange the affiliate status of entities
whose activity it seeks to aggregate prior to receiving approval for
aggregation, and shall be required to inform the Exchange immediately
of any event that causes an entity to cease to be an affiliate. In
addition, the Exchange reserves the right to request information to
verify the affiliate status of an entity.\7\
---------------------------------------------------------------------------
\7\ See Chapter VIII of the Pricing Schedule.
---------------------------------------------------------------------------
The Exchange intends to amend the Phlx 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 member organizations 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 an Options Trader Alert to its members.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \8\ in general, and furthers the objectives of Section
6(b)(5) of the Act \9\ 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 member organizations for the purposes of
assessing charges or credits with the treatment of the aggregation of
activity of affiliated member organizations in relation to options
pricing so that more member organizations will be able to benefit from
lower charges and/or increased credits. The proposal will further serve
to reduce disparity of treatment between member organizations 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.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that this proposed rule change may enable
additional equity member organizations to aggregate pricing because the
standard will be reduced from 100 percent to 75 percent for these
member organizations. There are no current equity member organizations
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 LLC, NASDAQ OMX BX, Inc. and Phlx 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 Phlx for equity member organizations 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
[[Page 53496]]
that control, are controlled by, or are under common control with such
member.\10\ 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.
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\10\ See Securities Exchange Act Release No. 64211 (April 6,
2011), 76 FR 20414 (April 12, 2014) [sic] (SR-BATS-2011-012).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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
member organizations 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: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
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)(ii) of the Act \11\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(a)(ii).
\12\ 17 CFR 240.19b-4(f)(6).
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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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act.
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-2014-57 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 SRPhlx-2014-57. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street, NE., Washington,
DC 20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-Phlx-2014-57 and should be
submitted on or before September 30, 2014.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-21362 Filed 9-8-14; 8:45 am]
BILLING CODE 8011-01-P
