Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Exchange's Pricing Schedule Under Section VIII With Respect to Execution and Routing of Orders in Securities Priced at $1 or More Per Share, 78797-78799 [2015-31687]

Download as PDF Federal Register / Vol. 80, No. 242 / Thursday, December 17, 2015 / Notices from the introduction of FTSE 100 Index options. As a national securities exchange, the Exchange is required, under Section 6(b)(1) of the Act,19 to enforce compliance by its members, and persons associated with its members, with the provisions of the Act, Commission rules and regulations thereunder, and its own rules. As noted above, the Exchange states that, except as modified by the proposal, Exchange Rules in Chapters I through XIX, XXIV, XXIVA, and XXIVB would equally apply to FTSE 100 Index options. The Exchange also states that FTSE 100 Index options would be subject to the same rules that currently govern other CBOE index options, including sales practice rules, margin requirements, and trading rules. The Commission further believes that the Exchange’s proposed position and exercise limits, trading hours, margin, strike price intervals, minimum tick size, series openings, and other aspects of the proposed rule change, as modified by Amendment No. 1, are appropriate and consistent with the Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,20 that the proposed rule change (SR–CBOE–2015– 100), as modified by Amendment No. 1, be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–31685 Filed 12–16–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76631; File No. SR–Phlx– 2015–98] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Exchange’s Pricing Schedule Under Section VIII With Respect to Execution and Routing of Orders in Securities Priced at $1 or More Per Share asabaliauskas on DSK5VPTVN1PROD with NOTICES December 11, 2015. 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 November 19 15 U.S.C. 78f(b)(1). U.S.C. 78s(b)(2). 21 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 20 15 VerDate Sep<11>2014 16:53 Dec 16, 2015 Jkt 238001 30, 2015, NASDAQ OMX PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Exchange’s Pricing Schedule under Section VIII, entitled ‘‘NASDAQ OMX PSX FEES,’’ with respect to execution and routing of orders in securities priced at $1 or more per share. While the changes proposed herein are effective upon filing, the Exchange has designated the amendments become operative on December 1, 2015. 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 purpose of the proposed rule change is to amend certain charges and fees for order execution and routing applicable to the use of the order execution and routing services of the NASDAQ OMX PSX System (‘‘PSX’’) by member organizations for all securities traded at $1 or more per share. Specifically, under subparagraph (a)(1) of the rule the Exchange is proposing to increase the charges assessed member organizations that enter orders that execute in PSX. First, the Exchange is proposing to increase the charge for executions in Nasdaq- PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 78797 listed securities from $0.0028 to $0.0029 per share executed. Second, the Exchange is proposing to increase the charge for executions in NYSE-listed securities from $0.0027 to $0.0028 per share executed. Lastly, the Exchange is proposing to increase the charge for executions in securities listed on exchanges other than Nasdaq and NYSE from $0.0026 to $0.0028 per share executed. The Exchange is also proposing to increase credits provided to member organizations that provide displayed liquidity through PSX under subparagraph (a)(1) of the rule. First, the Exchange is proposing to increase the credit provided for Quotes/Orders entered by a member organization that provides and accesses 0.35% or more of Consolidated Volume during the month from $0.0028 to $0.0031 per share executed. Second, the Exchange is proposing to increase the credit provided for Quotes/Orders entered by a member organization that provides and accesses 0.25% or more of Consolidated Volume during the month from $0.0027 to $0.0029 per share executed. Lastly, the Exchange is eliminating the $0.0023 per share executed credit provided for Quotes/ Orders entered by a member organization that provides and accesses daily volume of 100,000 or more shares during the month, and is increasing the ‘‘default’’ credit (i.e., the credit received for providing displayed liquidity that does not otherwise qualify for a higher credit) provided for all other Quotes/ Orders from $0.0020 to $0.0023 per share executed. Finally, the Exchange is proposing to eliminate text from subparagraph (a) of the rule that defines the term ‘‘regular market hours,’’ which was erroneously left in the rule text when the tier it provided reference to was deleted. Currently, no fee or credit references the definition. Thus, the Exchange is proposing to delete the reference. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,3 in general, and with Sections 6(b)(4) and 6(b)(5) of the Act,4 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which Nasdaq operates or controls and is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable 3 15 4 15 E:\FR\FM\17DEN1.SGM U.S.C. 78f. U.S.C. 78f(b)(4) and (5). 17DEN1 asabaliauskas on DSK5VPTVN1PROD with NOTICES 78798 Federal Register / Vol. 80, No. 242 / Thursday, December 17, 2015 / Notices principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, 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; and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, for example, the Commission indicated that market forces should generally determine the price of non-core market data because national market system regulation ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 5 Likewise, in NetCoalition v. NYSE Arca, Inc., 615 F.3d 525 (D.C. Cir. 2010), the D.C. Circuit upheld the Commission’s use of a market-based approach in evaluating the fairness of market data fees against a challenge claiming that Congress mandated a costbased approach.6 As the court emphasized, the Commission ‘‘intended in Regulation NMS that ‘market forces, rather than regulatory requirements’ play a role in determining the market data . . . to be made available to investors and at what cost.’’ 7 Further, ‘‘[n]o one disputes that competition for order flow is ‘fierce.’ . . . As the SEC explained, ‘[i]n the U.S. national market system, buyers and sellers of securities, and the brokerdealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution’; [and] ‘no exchange can afford to take its market share percentages for granted’ because ‘no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers’ . . . .’’ 8 The proposed increases to the credits and charges in the fee schedule under the Exchange’s Pricing Schedule under Section VIII are reflective of the Exchange’s ongoing efforts to use pricing incentives to attract order flow to the Exchange and improve market 5 See Exchange Act Release No. 34–51808 (June 9, 2005) (‘‘Regulation NMS Adopting Release’’). 6 See NetCoalition, 615 F.3d at 534. 7 Id. at 537. 8 NetCoalition, 615 F.3d at 539 (quoting ArcaBook Order, 73 FR at 74782–74783). VerDate Sep<11>2014 16:53 Dec 16, 2015 Jkt 238001 quality. The goal of these pricing incentives is to provide meaningful incentives for members to increase their participation on the Exchange. The Exchange is proposing to increase the charges to a member organization entering an order that executes in PSX and is also proposing to increase credits provided to member organizations. As a general principle, the Exchange must, from time to time, adjust the level of fees and credits provided to most efficiently allocate reduced fees and credits in terms of market improving behavior. In this regard, the Exchange is limited in how far it may reduce fees and in the amount of credits that it can provide to market participants. The Exchange believes that the increases to the charges assessed a member organization entering an order that executes in PSX are reasonable because they reflect the Exchange’s need to adjust its credits and fees in response to the costs and benefits provided by the Exchange. In addition to covering Exchange costs, the increased fees will allow the Exchange to offer credits to market participants that provide beneficial liquidity to PSX, to the benefit of all of its participants. The Exchange notes that it is increasing the charge assessed for executions in securities listed on exchanges other than Nasdaq and NYSE by a greater amount than for securities listed on Nasdaq and NYSE because it still wishes to offer lower fees for removal of liquidity for securities not listed on Nasdaq while balancing the exchanges’ fees with its credits. The Exchange believes that the proposed increases to the charges assessed a member organization entering an order that executes in PSX are consistent with an equitable allocation of fees and are not unfairly discriminatory because they apply to all member organizations that enter orders in the securities based on the listing venue of the security. The Exchange believes that the proposed increases to the credits provided to a member organization that provides displayed liquidity through PSX are reasonable because the Exchange seeks to improve market quality by providing increased incentives to market participants to provide beneficial displayed liquidity. To achieve this, the Exchange must, from time to time, adjust the levels of credits and the related qualification requirements in reaction to market behavior. In the present case, the Exchange is proposing to increase two of the credit tiers, eliminate the lowest credit tier, and increase the ‘‘default’’ credit to the level of the eliminated credit tier. The Exchange believes PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 providing the greatest incentive to market participants that also provide and access the highest level of Consolidated Volume during the month may significantly increase the number of member organizations that provide such high levels of market improving participation, to the benefit of all participants. Elimination of the credit tier and increasing the level of the default credit to the level of the eliminated tier is reasonable as it is reflective of the Exchange’s desire to make PSX an attractive venue to any member organization that is willing to provide displayed liquidity. The Exchange believes that the proposed increases to the credits provided for displayed liquidity through PSX and elimination of a credit tier are consistent with an equitable allocation of fees and are not unfairly discriminatory because they apply to all member organizations that provide displayed liquidity through PSX and meet the criteria of the credit tier. In addition, member organizations that previously would have qualified under the eliminated tier would continue to receive the same credit under the ‘‘default’’ credit tier. The Exchange believes that the elimination of rule text that defines a term no longer used in the fee schedule is consistent with the protection of investors and the public interest because it will avoid investor confusion that may occur by including it. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule changes will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended.9 Phlx notes that it operates in a highly competitive market in which market participants can readily favor dozens of different competing exchanges and alternative trading systems if they deem charges at a particular venue to be excessive, or credit opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its charges and credits to remain competitive with other exchanges. Because competitors are free to modify their own charges and credits in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which changes to charges and credits in this market may impose any burden on competition is extremely limited. 9 15 E:\FR\FM\17DEN1.SGM U.S.C. 78f(b)(8). 17DEN1 Federal Register / Vol. 80, No. 242 / Thursday, December 17, 2015 / Notices In this instance, the changes to charges and credits do not impose a burden on competition because the Exchange membership is optional and is the subject of competition from other exchanges. The increased credits and charges are reflective of the intent to increase the order flow on the Exchange. For these reasons, the Exchange does not believe that any of the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. Moreover, because there are numerous competitive alternatives to the use of the Exchange, it is likely that the Exchange will lose market share as a result of the changes if they are unattractive to market participants. Accordingly, the Exchange does not believe that the proposed rule changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. 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. asabaliauskas on DSK5VPTVN1PROD with NOTICES 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.10 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: • Send an email to rule-comments@ sec.gov. Please include File Number SR– Phlx–2015–98 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–2015–98. 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– 2015–98 and should be submitted on or before January 7, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Robert W. Errett, Deputy Secretary. BILLING CODE 8011–01–P Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or 10 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Sep<11>2014 16:53 Dec 16, 2015 11 17 Jkt 238001 PO 00000 CFR 200.30–3(a)(12). Frm 00092 Fmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76632; File No. SR–CBOE– 2015–104] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Accelerated Approval of a Proposed Rule Change To Trade Expiring MSCI EAFE Index Options Until 3:00 p.m. December 11, 2015. I. Introduction On November 13, 2015, the Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to change the trading hours for expiring MSCI EAFE Index (‘‘EAFE’’) options. This proposal was published for comment in the Federal Register on November 25, 2015.3 The Commission received no comments regarding the proposal. This order approves the proposed rule change on an accelerated basis. II. Description of the Proposed Rule Change The Exchange proposes to change the trading hours for expiring EAFE options from 10:00 a.m. (Chicago time) on their expiration date to 3:00 p.m. (Chicago time) on their expiration date. When the Exchange first listed EAFE options, the MSCI EAFE Index was not calculated and disseminated during the entire time period during which EAFE options were traded on the Exchange. Accordingly, the Exchange set the initial trading hours for expiring EAFE options to align with expiring EAFE futures contracts traded on the Intercontinental Exchange, Inc. (‘‘ICE’’), which stopped trading at 10:00 a.m. (Chicago time) on the third Friday of the futures contracts month.4 The MSCI EAFE Index, however, will now be calculated and disseminated through the close of trading on U.S. 1 15 [FR Doc. 2015–31687 Filed 12–16–15; 8:45 am] Sfmt 4703 78799 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 76482 (November 19, 2015), 80 FR 73839 (‘‘Notice’’). 4 See Notice, supra note 3, at 73840. The Exchange established listing criteria that permits the trading of EAFE options ‘‘after trading in all component securities has closed for the day and the index level is no longer widely disseminated at least once every fifteen (15) seconds by one or more major market data vendors, provided that EAFE futures contracts are trading and prices for those contract may be used as a proxy for the current index value.’’ See CBOE Rule 24.2.01(a)(8). 2 17 E:\FR\FM\17DEN1.SGM 17DEN1

Agencies

[Federal Register Volume 80, Number 242 (Thursday, December 17, 2015)]
[Notices]
[Pages 78797-78799]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31687]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76631; File No. SR-Phlx-2015-98]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
the Exchange's Pricing Schedule Under Section VIII With Respect to 
Execution and Routing of Orders in Securities Priced at $1 or More Per 
Share

December 11, 2015.
    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 November 30, 2015, 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Pricing Schedule 
under Section VIII, entitled ``NASDAQ OMX PSX FEES,'' with respect to 
execution and routing of orders in securities priced at $1 or more per 
share.
    While the changes proposed herein are effective upon filing, the 
Exchange has designated the amendments become operative on December 1, 
2015.
    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 purpose of the proposed rule change is to amend certain charges 
and fees for order execution and routing applicable to the use of the 
order execution and routing services of the NASDAQ OMX PSX System 
(``PSX'') by member organizations for all securities traded at $1 or 
more per share.
    Specifically, under subparagraph (a)(1) of the rule the Exchange is 
proposing to increase the charges assessed member organizations that 
enter orders that execute in PSX. First, the Exchange is proposing to 
increase the charge for executions in Nasdaq-listed securities from 
$0.0028 to $0.0029 per share executed. Second, the Exchange is 
proposing to increase the charge for executions in NYSE-listed 
securities from $0.0027 to $0.0028 per share executed. Lastly, the 
Exchange is proposing to increase the charge for executions in 
securities listed on exchanges other than Nasdaq and NYSE from $0.0026 
to $0.0028 per share executed.
    The Exchange is also proposing to increase credits provided to 
member organizations that provide displayed liquidity through PSX under 
subparagraph (a)(1) of the rule. First, the Exchange is proposing to 
increase the credit provided for Quotes/Orders entered by a member 
organization that provides and accesses 0.35% or more of Consolidated 
Volume during the month from $0.0028 to $0.0031 per share executed. 
Second, the Exchange is proposing to increase the credit provided for 
Quotes/Orders entered by a member organization that provides and 
accesses 0.25% or more of Consolidated Volume during the month from 
$0.0027 to $0.0029 per share executed. Lastly, the Exchange is 
eliminating the $0.0023 per share executed credit provided for Quotes/
Orders entered by a member organization that provides and accesses 
daily volume of 100,000 or more shares during the month, and is 
increasing the ``default'' credit (i.e., the credit received for 
providing displayed liquidity that does not otherwise qualify for a 
higher credit) provided for all other Quotes/Orders from $0.0020 to 
$0.0023 per share executed.
    Finally, the Exchange is proposing to eliminate text from 
subparagraph (a) of the rule that defines the term ``regular market 
hours,'' which was erroneously left in the rule text when the tier it 
provided reference to was deleted. Currently, no fee or credit 
references the definition. Thus, the Exchange is proposing to delete 
the reference.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\3\ in general, and with 
Sections 6(b)(4) and 6(b)(5) of the Act,\4\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system which Nasdaq operates or controls and is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable

[[Page 78798]]

principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, 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; and are not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Commission and the courts have repeatedly expressed their 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, for example, the Commission indicated that market forces should 
generally determine the price of non-core market data because national 
market system regulation ``has been remarkably successful in promoting 
market competition in its broader forms that are most important to 
investors and listed companies.'' \5\ Likewise, in NetCoalition v. NYSE 
Arca, Inc., 615 F.3d 525 (D.C. Cir. 2010), the D.C. Circuit upheld the 
Commission's use of a market-based approach in evaluating the fairness 
of market data fees against a challenge claiming that Congress mandated 
a cost-based approach.\6\ As the court emphasized, the Commission 
``intended in Regulation NMS that `market forces, rather than 
regulatory requirements' play a role in determining the market data . . 
. to be made available to investors and at what cost.'' \7\
---------------------------------------------------------------------------

    \5\ See Exchange Act Release No. 34-51808 (June 9, 2005) 
(``Regulation NMS Adopting Release'').
    \6\ See NetCoalition, 615 F.3d at 534.
    \7\ Id. at 537.
---------------------------------------------------------------------------

    Further, ``[n]o one disputes that competition for order flow is 
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market 
system, buyers and sellers of securities, and the broker-dealers that 
act as their order-routing agents, have a wide range of choices of 
where to route orders for execution'; [and] `no exchange can afford to 
take its market share percentages for granted' because `no exchange 
possesses a monopoly, regulatory or otherwise, in the execution of 
order flow from broker dealers' . . . .'' \8\
---------------------------------------------------------------------------

    \8\ NetCoalition, 615 F.3d at 539 (quoting ArcaBook Order, 73 FR 
at 74782-74783).
---------------------------------------------------------------------------

    The proposed increases to the credits and charges in the fee 
schedule under the Exchange's Pricing Schedule under Section VIII are 
reflective of the Exchange's ongoing efforts to use pricing incentives 
to attract order flow to the Exchange and improve market quality. The 
goal of these pricing incentives is to provide meaningful incentives 
for members to increase their participation on the Exchange.
    The Exchange is proposing to increase the charges to a member 
organization entering an order that executes in PSX and is also 
proposing to increase credits provided to member organizations. As a 
general principle, the Exchange must, from time to time, adjust the 
level of fees and credits provided to most efficiently allocate reduced 
fees and credits in terms of market improving behavior. In this regard, 
the Exchange is limited in how far it may reduce fees and in the amount 
of credits that it can provide to market participants.
    The Exchange believes that the increases to the charges assessed a 
member organization entering an order that executes in PSX are 
reasonable because they reflect the Exchange's need to adjust its 
credits and fees in response to the costs and benefits provided by the 
Exchange. In addition to covering Exchange costs, the increased fees 
will allow the Exchange to offer credits to market participants that 
provide beneficial liquidity to PSX, to the benefit of all of its 
participants. The Exchange notes that it is increasing the charge 
assessed for executions in securities listed on exchanges other than 
Nasdaq and NYSE by a greater amount than for securities listed on 
Nasdaq and NYSE because it still wishes to offer lower fees for removal 
of liquidity for securities not listed on Nasdaq while balancing the 
exchanges' fees with its credits. The Exchange believes that the 
proposed increases to the charges assessed a member organization 
entering an order that executes in PSX are consistent with an equitable 
allocation of fees and are not unfairly discriminatory because they 
apply to all member organizations that enter orders in the securities 
based on the listing venue of the security.
    The Exchange believes that the proposed increases to the credits 
provided to a member organization that provides displayed liquidity 
through PSX are reasonable because the Exchange seeks to improve market 
quality by providing increased incentives to market participants to 
provide beneficial displayed liquidity. To achieve this, the Exchange 
must, from time to time, adjust the levels of credits and the related 
qualification requirements in reaction to market behavior. In the 
present case, the Exchange is proposing to increase two of the credit 
tiers, eliminate the lowest credit tier, and increase the ``default'' 
credit to the level of the eliminated credit tier. The Exchange 
believes providing the greatest incentive to market participants that 
also provide and access the highest level of Consolidated Volume during 
the month may significantly increase the number of member organizations 
that provide such high levels of market improving participation, to the 
benefit of all participants. Elimination of the credit tier and 
increasing the level of the default credit to the level of the 
eliminated tier is reasonable as it is reflective of the Exchange's 
desire to make PSX an attractive venue to any member organization that 
is willing to provide displayed liquidity. The Exchange believes that 
the proposed increases to the credits provided for displayed liquidity 
through PSX and elimination of a credit tier are consistent with an 
equitable allocation of fees and are not unfairly discriminatory 
because they apply to all member organizations that provide displayed 
liquidity through PSX and meet the criteria of the credit tier. In 
addition, member organizations that previously would have qualified 
under the eliminated tier would continue to receive the same credit 
under the ``default'' credit tier.
    The Exchange believes that the elimination of rule text that 
defines a term no longer used in the fee schedule is consistent with 
the protection of investors and the public interest because it will 
avoid investor confusion that may occur by including it.

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

    The Exchange does not believe that the proposed rule changes will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended.\9\ 
Phlx notes that it operates in a highly competitive market in which 
market participants can readily favor dozens of different competing 
exchanges and alternative trading systems if they deem charges at a 
particular venue to be excessive, or credit opportunities available at 
other venues to be more favorable. In such an environment, the Exchange 
must continually adjust its charges and credits to remain competitive 
with other exchanges. Because competitors are free to modify their own 
charges and credits in response, and because market participants may 
readily adjust their order routing practices, the Exchange believes 
that the degree to which changes to charges and credits in this market 
may impose any burden on competition is extremely limited.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b)(8).

---------------------------------------------------------------------------

[[Page 78799]]

    In this instance, the changes to charges and credits do not impose 
a burden on competition because the Exchange membership is optional and 
is the subject of competition from other exchanges. The increased 
credits and charges are reflective of the intent to increase the order 
flow on the Exchange. For these reasons, the Exchange does not believe 
that any of the proposed changes will impair the ability of members or 
competing order execution venues to maintain their competitive standing 
in the financial markets. Moreover, because there are numerous 
competitive alternatives to the use of the Exchange, it is likely that 
the Exchange will lose market share as a result of the changes if they 
are unattractive to market participants.
    Accordingly, the Exchange does not believe that the proposed rule 
changes will impair the ability of members or competing order execution 
venues to maintain their competitive standing in the financial markets.

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.\10\ 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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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-2015-98 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-2015-98. 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-2015-98 and should be 
submitted on or before January 7, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-31687 Filed 12-16-15; 8:45 am]
BILLING CODE 8011-01-P
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