Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Options Regulatory Fee, 6560-6562 [2016-02332]
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6560
Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Notices
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 proposal is
consistent with the Act. Comments may
be submitted by any of the following
methods:
asabaliauskas on DSK5VPTVN1PROD 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 No. SR–
BATS–2016–12 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 No.
SR–BATS–2016–12. 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
available publicly. All submissions
VerDate Sep<11>2014
17:51 Feb 05, 2016
Jkt 238001
should refer to File No. SR–BATS–
2016–12 and should be submitted on or
before February 29, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–02333 Filed 2–5–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77032; File No. SR–Phlx–
2016–04]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Options Regulatory Fee
February 2, 2016.
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 January
20, 2016, 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 make
adjustments to its Options Regulatory
Fee (‘‘ORF’’) by amending Section IV,
Part D of the Pricing Schedule.
While changes to the Pricing
Schedule pursuant to this proposal are
effective upon filing, the Exchange has
designated these changes to be operative
on February 1, 2016.
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
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00060
Fmt 4703
Sfmt 4703
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to decrease
the ORF from $0.0035 to $0.0034 as of
February 1, 2016 to account for
additional fine revenue, cost reductions
and to balance the Exchange’s
regulatory revenue against the
anticipated costs and potential fines.3
Background
The ORF is assessed to each member
for all options transactions executed or
cleared by the member that are cleared
at The Options Clearing Corporation
(‘‘OCC’’) in the Customer range (i.e., that
clear in the Customer account of the
member’s clearing firm at OCC). The
Exchange monitors the amount of
revenue collected from the ORF to
ensure that it, in combination with other
regulatory fees and fines, does not
exceed regulatory costs. The ORF is
imposed upon all transactions executed
by a member, even if such transactions
do not take place on the Exchange.4 The
ORF also includes options transactions
that are not executed by an Exchange
member but are ultimately cleared by an
Exchange member.5 The ORF is not
3 The Exchange notes that it previously filed a
rule change to amend the ORF as of February 1,
2016 to $0.0040. This rule change supersedes that
filing. See Securities Exchange Act Release No.
75749 (August 21, 2015), 80 FR 52073 (August 27,
2015) (SR–Phlx–2015–71).
4 The ORF applies to all ‘‘C’’ account origin code
orders executed by a member on the Exchange.
Exchange Rules require each member to record the
appropriate account origin code on all orders at the
time of entry in order to allow the Exchange to
properly prioritize and route orders and assess
transaction fees pursuant to the Rules of the
Exchange and report resulting transactions to OCC.
See Exchange Rule 1063, Responsibilities of Floor
Brokers, and Options Floor Procedure Advice F–4,
Orders Executed as Spreads, Straddles,
Combinations or Synthetics and Other Order Ticket
Marking Requirements. The Exchange represents
that it has surveillances in place to verify that
members mark orders with the correct account
origin code.
5 In the case where one member both executes a
transaction and clears the transaction, the ORF is
assessed to the member only once on the execution.
In the case where one member executes a
transaction and a different member clears the
transaction, the ORF is assessed only to the member
who executes the transaction and is not assessed to
E:\FR\FM\08FEN1.SGM
08FEN1
Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Notices
charged for member proprietary options
transactions because members incur the
costs of owning memberships and
through their memberships are charged
transaction fees, dues and other fees that
are not applicable to non-members. The
dues and fees paid by members go into
the general funds of the Exchange, a
portion of which is used to help pay the
costs of regulation. The ORF is collected
indirectly from members through their
clearing firms by OCC on behalf of the
Exchange.
The ORF is designed to recover a
portion of the costs to the Exchange of
the supervision and regulation of its
members, including performing routine
surveillances, investigations,
examinations, financial monitoring, and
policy, rulemaking, interpretive, and
enforcement activities. The Exchange
believes that revenue generated from the
ORF, when combined with all of the
Exchange’s other regulatory fees, will
cover a material portion, but not all, of
the Exchange’s regulatory costs. The
Exchange will continue to monitor the
amount of revenue collected from the
ORF to ensure that it, in combination
with its other regulatory fees and fines,
does not exceed regulatory costs. If the
Exchange determines regulatory
revenues exceed regulatory costs, the
Exchange will adjust the ORF by
submitting a fee change filing to the
Commission.
ORF Adjustments
The Exchange is proposing to
decrease the ORF from $0.0035 to
$0.0034 as of February 1, 2016 in order
to account for regulatory revenue from
disciplinary actions taken by the
Exchange. The Exchange regularly
reviews its ORF to ensure that the ORF,
in combination with its other regulatory
fees and fines, does not exceed
regulatory costs. The Exchange believes
this adjustment will permit the
Exchange to cover a material portion of
its regulatory costs, while not exceeding
regulatory costs.
The Exchange notified members of
this ORF adjustment thirty (30) calendar
days prior to the proposed operative
date.6
asabaliauskas on DSK5VPTVN1PROD with NOTICES
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 Sections 6(b)(4) and 6(b)(5)
the member who clears the transaction. In the case
where a non-member executes a transaction and a
member clears the transaction, the ORF is assessed
to the member who clears the transaction.
6 See Options Trader Alert #2015–37.
7 15 U.S.C. 78f(b).
VerDate Sep<11>2014
17:51 Feb 05, 2016
Jkt 238001
of the Act 8 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 the Exchange operates or
controls, and is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange believes that lowering
the ORF from $0.0035 to $0.0034 as of
February 1, 2016 is reasonable because
the Exchange’s collection of ORF needs
to be balanced against the amount of
regulatory revenue collected by the
Exchange. The Exchange believes that
the proposed adjustments noted herein
will serve to balance the Exchange’s
regulatory revenue against the
anticipated regulatory costs. It is further
reasonable because this adjustment
results in a price reduction.
The Exchange believes that lowering
the ORF from $0.0035 to $0.0034 as of
February 1, 2016 is equitable and not
unfairly discriminatory because this
adjustment would be applicable to all
members on all of their transactions that
clear as Customer at OCC. In addition,
the ORF seeks to recover the costs of
supervising and regulating members,
including performing routine
surveillances, investigations,
examinations, financial monitoring, and
policy, rulemaking, interpretive, and
enforcement activities.
The ORF is not charged for member
proprietary options transactions because
members incur the costs of owning
memberships and through their
memberships are charged transaction
fees, dues and other fees that are not
applicable to non-members. Moreover,
the Exchange believes the ORF ensures
fairness by assessing higher fees to those
members that require more Exchange
regulatory services based on the amount
of Customer options business they
conduct.
Regulating Customer trading activity
is more labor intensive and requires
greater expenditure of human and
technical resources than regulating nonCustomer trading activity. Surveillance,
regulation and examination of nonCustomer trading activity generally
tends to be more automated and less
labor intensive. As a result, the costs
associated with administering the
Customer component of the Exchange’s
overall regulatory program are
anticipated to be higher than the costs
associated with administering the nonCustomer component of its regulatory
program. The Exchange proposes
assessing higher fees to those members
that will require more Exchange
8 15
PO 00000
U.S.C. 78f(b)(4) and (5).
Frm 00061
Fmt 4703
Sfmt 4703
6561
regulatory services based on the amount
of Customer options business they
conduct.9 Additionally, the dues and
fees paid by members go into the
general funds of the Exchange, a portion
of which is used to help pay the costs
of regulation. The Exchange believes
that the proposed ORF is a small cost for
Customer executions.10 The Exchange
has in place a regulatory structure to
surveil for, exam [sic] and monitor the
marketplace for violations of Exchange
Rules. The ORF assists the Exchange to
fund the cost of this regulation of the
marketplace.
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. In terms of
inter-market competition, the Exchange
notes that it operates in a highly
competitive market in which market
participants can readily favor competing
venues if they deem fee levels at a
particular venue to be excessive, or
rebate opportunities available at other
venues to be more favorable. In such an
environment, the Exchange must
continually adjust its fees to remain
competitive with other exchanges and
with alternative trading systems that
have been exempted from compliance
with the statutory standards applicable
to exchanges. Because competitors are
free to modify their own fees in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited.
The Exchange does not believe that
reducing its ORF creates an undue
burden on intra-market competition
because the adjustment will apply to all
members on all of their transactions that
clear as Customer at OCC. The Exchange
is obligated to ensure that the amount of
regulatory revenue collected from the
ORF, in combination with its other
regulatory fees and fines, does not
exceed regulatory costs. Additionally,
the dues and fees paid by members go
into the general funds of the Exchange,
9 The ORF is not charged for orders that clear in
categories other than the Customer range at OCC
(e.g., Market Maker orders) because members incur
the costs of memberships and through their
memberships are charged transaction fees, dues and
other fees that go into the general funds of the
Exchange, a portion of which is used to help pay
the costs of regulation.
10 The Exchange does not assess a Customer any
transaction fees in Multiply Listed Options, except
in SPY, and pays Customer rebates.
E:\FR\FM\08FEN1.SGM
08FEN1
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Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Notices
a portion of which is used to help pay
the costs of regulation. The Exchange’s
members are subject to ORF on other
options markets.11
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.12
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (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.
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:
asabaliauskas on DSK5VPTVN1PROD 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–Phlx–2016–04 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–2016–04. 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
11 The following options exchanges assess an
ORF, Chicago Board Options Exchange,
Incorporated (‘‘CBOE’’), C2 Options Exchange, Inc.
(‘‘C2’’), the International Securities Exchange, LLC
(‘‘ISE’’), NYSE Arca, Inc. (‘‘NYSEArca’’) and [sic]
NYSE AMEX LLC (‘‘NYSEAmex’’), BATS Exchange,
Inc. (‘‘BATS’’) and The NASDAQ Options Market
LLC (‘‘NOM’’).
12 15 U.S.C. 78s(b)(3)(A)(ii).
VerDate Sep<11>2014
17:51 Feb 05, 2016
Jkt 238001
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–
2016–04 and should be submitted on or
before February 29, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–02332 Filed 2–5–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold an Open Meeting
on Wednesday, February 10, 2016 at
10:00 a.m., in the Auditorium, Room
L–002.
The subject matter of the Open
Meeting will be:
• The Commission will consider
whether to adopt rules under the
Securities Exchange Act of 1934
providing for the application of the Title
VII security-based swap dealer de
minimis counting requirements to
security-based swap transactions
connected with a non-U.S. person’s
dealing activity that are arranged,
negotiated, or executed by personnel
located in a U.S. branch or office or by
personnel of an agent of such non-U.S.
person located in a U.S. branch or
office.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted, or postponed, please
contact:
The Office of the Secretary at (202)
551–5400.
Dated: February 3, 2016.
Brent J. Fields,
Secretary.
[FR Doc. 2016–02490 Filed 2–4–16; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77034; File No. SR–MIAX–
2016–03]
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend Exchange Rules
503 and 515
February 2, 2016.
Pursuant to the provisions of 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 January 20, 2016, Miami
International Securities Exchange LLC
(‘‘MIAX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
as described in Items I and II 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 is filing a proposal to
amend Exchange Rules 503, Openings
on the Exchange, and 515, Execution of
Orders and Quotes.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://www.miaxoptions.com/filter/
wotitle/rule_filing, at MIAX’s principal
office, and at the Commission’s Public
Reference Room.
1 15
13 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00062
Fmt 4703
Sfmt 4703
2 17
E:\FR\FM\08FEN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
08FEN1
Agencies
[Federal Register Volume 81, Number 25 (Monday, February 8, 2016)]
[Notices]
[Pages 6560-6562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-02332]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77032; File No. SR-Phlx-2016-04]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Options Regulatory Fee
February 2, 2016.
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 January 20, 2016, 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 make adjustments to its Options Regulatory
Fee (``ORF'') by amending Section IV, Part D of the Pricing Schedule.
While changes to the Pricing Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on February 1, 2016.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqomxphlx.cchwallstreet.com/, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to decrease the ORF from $0.0035 to $0.0034
as of February 1, 2016 to account for additional fine revenue, cost
reductions and to balance the Exchange's regulatory revenue against the
anticipated costs and potential fines.\3\
---------------------------------------------------------------------------
\3\ The Exchange notes that it previously filed a rule change to
amend the ORF as of February 1, 2016 to $0.0040. This rule change
supersedes that filing. See Securities Exchange Act Release No.
75749 (August 21, 2015), 80 FR 52073 (August 27, 2015) (SR-Phlx-
2015-71).
---------------------------------------------------------------------------
Background
The ORF is assessed to each member for all options transactions
executed or cleared by the member that are cleared at The Options
Clearing Corporation (``OCC'') in the Customer range (i.e., that clear
in the Customer account of the member's clearing firm at OCC). The
Exchange monitors the amount of revenue collected from the ORF to
ensure that it, in combination with other regulatory fees and fines,
does not exceed regulatory costs. The ORF is imposed upon all
transactions executed by a member, even if such transactions do not
take place on the Exchange.\4\ The ORF also includes options
transactions that are not executed by an Exchange member but are
ultimately cleared by an Exchange member.\5\ The ORF is not
[[Page 6561]]
charged for member proprietary options transactions because members
incur the costs of owning memberships and through their memberships are
charged transaction fees, dues and other fees that are not applicable
to non-members. The dues and fees paid by members go into the general
funds of the Exchange, a portion of which is used to help pay the costs
of regulation. The ORF is collected indirectly from members through
their clearing firms by OCC on behalf of the Exchange.
---------------------------------------------------------------------------
\4\ The ORF applies to all ``C'' account origin code orders
executed by a member on the Exchange. Exchange Rules require each
member to record the appropriate account origin code on all orders
at the time of entry in order to allow the Exchange to properly
prioritize and route orders and assess transaction fees pursuant to
the Rules of the Exchange and report resulting transactions to OCC.
See Exchange Rule 1063, Responsibilities of Floor Brokers, and
Options Floor Procedure Advice F-4, Orders Executed as Spreads,
Straddles, Combinations or Synthetics and Other Order Ticket Marking
Requirements. The Exchange represents that it has surveillances in
place to verify that members mark orders with the correct account
origin code.
\5\ In the case where one member both executes a transaction and
clears the transaction, the ORF is assessed to the member only once
on the execution. In the case where one member executes a
transaction and a different member clears the transaction, the ORF
is assessed only to the member who executes the transaction and is
not assessed to the member who clears the transaction. In the case
where a non-member executes a transaction and a member clears the
transaction, the ORF is assessed to the member who clears the
transaction.
---------------------------------------------------------------------------
The ORF is designed to recover a portion of the costs to the
Exchange of the supervision and regulation of its members, including
performing routine surveillances, investigations, examinations,
financial monitoring, and policy, rulemaking, interpretive, and
enforcement activities. The Exchange believes that revenue generated
from the ORF, when combined with all of the Exchange's other regulatory
fees, will cover a material portion, but not all, of the Exchange's
regulatory costs. The Exchange will continue to monitor the amount of
revenue collected from the ORF to ensure that it, in combination with
its other regulatory fees and fines, does not exceed regulatory costs.
If the Exchange determines regulatory revenues exceed regulatory costs,
the Exchange will adjust the ORF by submitting a fee change filing to
the Commission.
ORF Adjustments
The Exchange is proposing to decrease the ORF from $0.0035 to
$0.0034 as of February 1, 2016 in order to account for regulatory
revenue from disciplinary actions taken by the Exchange. The Exchange
regularly reviews its ORF to ensure that the ORF, in combination with
its other regulatory fees and fines, does not exceed regulatory costs.
The Exchange believes this adjustment will permit the Exchange to cover
a material portion of its regulatory costs, while not exceeding
regulatory costs.
The Exchange notified members of this ORF adjustment thirty (30)
calendar days prior to the proposed operative date.\6\
---------------------------------------------------------------------------
\6\ See Options Trader Alert #2015-37.
---------------------------------------------------------------------------
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 Sections
6(b)(4) and 6(b)(5) of the Act \8\ 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 the Exchange operates or controls, and is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange believes that lowering the ORF from $0.0035 to $0.0034
as of February 1, 2016 is reasonable because the Exchange's collection
of ORF needs to be balanced against the amount of regulatory revenue
collected by the Exchange. The Exchange believes that the proposed
adjustments noted herein will serve to balance the Exchange's
regulatory revenue against the anticipated regulatory costs. It is
further reasonable because this adjustment results in a price
reduction.
The Exchange believes that lowering the ORF from $0.0035 to $0.0034
as of February 1, 2016 is equitable and not unfairly discriminatory
because this adjustment would be applicable to all members on all of
their transactions that clear as Customer at OCC. In addition, the ORF
seeks to recover the costs of supervising and regulating members,
including performing routine surveillances, investigations,
examinations, financial monitoring, and policy, rulemaking,
interpretive, and enforcement activities.
The ORF is not charged for member proprietary options transactions
because members incur the costs of owning memberships and through their
memberships are charged transaction fees, dues and other fees that are
not applicable to non-members. Moreover, the Exchange believes the ORF
ensures fairness by assessing higher fees to those members that require
more Exchange regulatory services based on the amount of Customer
options business they conduct.
Regulating Customer trading activity is more labor intensive and
requires greater expenditure of human and technical resources than
regulating non-Customer trading activity. Surveillance, regulation and
examination of non-Customer trading activity generally tends to be more
automated and less labor intensive. As a result, the costs associated
with administering the Customer component of the Exchange's overall
regulatory program are anticipated to be higher than the costs
associated with administering the non-Customer component of its
regulatory program. The Exchange proposes assessing higher fees to
those members that will require more Exchange regulatory services based
on the amount of Customer options business they conduct.\9\
Additionally, the dues and fees paid by members go into the general
funds of the Exchange, a portion of which is used to help pay the costs
of regulation. The Exchange believes that the proposed ORF is a small
cost for Customer executions.\10\ The Exchange has in place a
regulatory structure to surveil for, exam [sic] and monitor the
marketplace for violations of Exchange Rules. The ORF assists the
Exchange to fund the cost of this regulation of the marketplace.
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\9\ The ORF is not charged for orders that clear in categories
other than the Customer range at OCC (e.g., Market Maker orders)
because members incur the costs of memberships and through their
memberships are charged transaction fees, dues and other fees that
go into the general funds of the Exchange, a portion of which is
used to help pay the costs of regulation.
\10\ The Exchange does not assess a Customer any transaction
fees in Multiply Listed Options, except in SPY, and pays Customer
rebates.
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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. In terms of inter-market
competition, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive, or rebate opportunities available at other venues to be more
favorable. In such an environment, the Exchange must continually adjust
its fees to remain competitive with other exchanges and with
alternative trading systems that have been exempted from compliance
with the statutory standards applicable to exchanges. Because
competitors are free to modify their own fees in response, and because
market participants may readily adjust their order routing practices,
the Exchange believes that the degree to which fee changes in this
market may impose any burden on competition is extremely limited.
The Exchange does not believe that reducing its ORF creates an
undue burden on intra-market competition because the adjustment will
apply to all members on all of their transactions that clear as
Customer at OCC. The Exchange is obligated to ensure that the amount of
regulatory revenue collected from the ORF, in combination with its
other regulatory fees and fines, does not exceed regulatory costs.
Additionally, the dues and fees paid by members go into the general
funds of the Exchange,
[[Page 6562]]
a portion of which is used to help pay the costs of regulation. The
Exchange's members are subject to ORF on other options markets.\11\
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\11\ The following options exchanges assess an ORF, Chicago
Board Options Exchange, Incorporated (``CBOE''), C2 Options
Exchange, Inc. (``C2''), the International Securities Exchange, LLC
(``ISE''), NYSE Arca, Inc. (``NYSEArca'') and [sic] NYSE AMEX LLC
(``NYSEAmex''), BATS Exchange, Inc. (``BATS'') and The NASDAQ
Options Market LLC (``NOM'').
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\12\
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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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. 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-Phlx-2016-04 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-2016-04. 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-2016-04 and should be
submitted on or before February 29, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-02332 Filed 2-5-16; 8:45 am]
BILLING CODE 8011-01-P