Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Pricing Schedule, 55496-55500 [2016-19798]
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55496
Federal Register / Vol. 81, No. 161 / Friday, August 19, 2016 / Notices
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U.S.C. 3642, 39 CFR part 3010, and 39
CFR part 3020, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3015, and
39 CFR part 3020, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2016–176 and
CP2016–255; Filing Title: Request of the
United States Postal Service to Add
First-Class Package Service Contact 60
to Competitive Product List and Notice
of Filing (Under Seal) of Unredacted
Governors’ Decision, Contract, and
Supporting Data; Filing Acceptance
Date: August 12, 2016; Filing Authority:
39 U.S.C. 3642 and 39 CFR 3020.30 et
seq.; Public Representative: Helen
Fonda; Comments Due: August 22,
2016.
2. Docket No(s).: MC2016–177 and
CP2016–256; Filing Title: Request of the
United States Postal Service to Add
Priority Mail & First-Class Package
Service Contact 26 to Competitive
Product List and Notice of Filing (Under
Seal) of Unredacted Governors’
Decision, Contract, and Supporting
Data; Filing Acceptance Date: August
12, 2016; Filing Authority: 39 U.S.C.
3642 and 39 CFR 3020.30 et seq.; Public
Representative: Natalie R. Ward;
Comments Due: August 22, 2016.
3. Docket No(s).: MC2016–178 and
CP2016–257; Filing Title: Request of the
United States Postal Service to Add
Priority Mail Contract 232 to
Competitive Product List and Notice of
Filing (Under Seal) of Unredacted
Governors’ Decision, Contract, and
Supporting Data; Filing Acceptance
Date: August 12, 2016; Filing Authority:
39 U.S.C. 3642 and 39 CFR 3020.30 et
seq.; Public Representative: Katalin K.
Clendenin; Comments Due: August 22,
2016.
4. Docket No(s).: MC2016–179 and
CP2016–258; Filing Title: Request of the
United States Postal Service to Add
Priority Mail Contract 233 to
Competitive Product List and Notice of
Filing (Under Seal) of Unredacted
Governors’ Decision, Contract, and
Supporting Data; Filing Acceptance
Date: August 12, 2016; Filing Authority:
39 U.S.C. 3642 and 39 CFR 3020.30 et
seq.; Public Representative: Katalin K.
Clendenin; Comments Due: August 22,
2016.
5. Docket No(s).: MC2016–180 and
CP2016–259; Filing Title: Request of the
United States Postal Service to Add
Priority Mail Express Contract 41 to
Competitive Product List and Notice of
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Filing (Under Seal) of Unredacted
Governors’ Decision, Contract, and
Supporting Data; Filing Acceptance
Date: August 12, 2016; Filing Authority:
39 U.S.C. 3642 and 39 CFR 3020.30 et
seq.; Public Representative: Helen
Fonda; Comments Due: August 22,
2016.
6. Docket No(s).: MC2016–181 and
CP2016–260; Filing Title: Request of the
United States Postal Service to Add
Priority Mail Contract 234 to
Competitive Product List and Notice of
Filing (Under Seal) of Unredacted
Governors’ Decision, Contract, and
Supporting Data; Filing Acceptance
Date: August 12, 2016; Filing Authority:
39 U.S.C. 3642 and 39 CFR 3020.30 et
seq.; Public Representative: Katalin K.
Clendenin; Comments Due: August 22,
2016.
This notice will be published in the
Federal Register.
Stacy L. Ruble,
Secretary.
[FR Doc. 2016–19764 Filed 8–18–16; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[File No. 500–1]
In the Matter of Imperial Plantation
Corporation; Order of Suspension of
Trading
August 17, 2016.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Imperial
Plantation Corporation because of
questions regarding the accuracy of
publicly available information about the
company’s business transactions and
securities, including inconsistent
disclosures about whether Imperial
Plantation Corporation received $1
million in a private placement of one
billion shares of its stock, and
inaccurate disclosure that it cancelled
the one billion shares when the shares
remained outstanding as of June 22,
2016. Imperial Plantation Corporation
(CIK No. 0001542934), is a Nevada
corporation with its principal place of
business listed as Tempe, Arizona with
stock quoted on OTC Link (previously,
‘‘Pink Sheets’’) operated by OTC
Markets Group, Inc. under the ticker
symbol IMPC.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
company.
PO 00000
Frm 00069
Fmt 4703
Sfmt 4703
THEREFORE, IT IS ORDERED,
pursuant to Section 12(k) of the
Securities Exchange Act of 1934, that
trading in the securities of the abovelisted company is suspended for the
period from 9:30 a.m. EDT, August 17,
2016, through 11:59 p.m. EDT, on
August 30, 2016.
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2016–19945 Filed 8–17–16; 4:15 pm]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78576; File No. SR-Phlx2016–83]
Self-Regulatory Organizations;
NASDAQ PHLX LLC; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Amend the
Exchange’s Pricing Schedule
August 15, 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 August 5,
2016, NASDAQ 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 at Section
I titled ‘‘Rebates and Fees for Adding
and Removing Liquidity in SPY’’ at Part
A, relating to Simple Orders for SPY 3
options to: (i) Increase the Customer 4
Fee for Removing Liquidity; and (ii)
amend Tier 4 of the Specialist 5 and
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Options overlying Standard and Poor’s
Depositary Receipts/SPDRs (‘‘SPY’’) are based on
the SPDR exchange-traded fund, which is designed
to track the performance of the S&P 500 Index.
4 The term ‘‘Customer’’ applies to any transaction
that is identified by a member or member
organization for clearing in the Customer range at
The Options Clearing Corporation which is not for
the account of a broker or dealer or for the account
of a ‘‘Professional’’ (as that term is defined in Rule
1000(b)(14)).
5 The term ‘‘Specialist’’ applies to transactions for
the account of a Specialist (as defined in Exchange
Rule 1020(a)). A Specialist is an Exchange member
who is registered as an options specialist pursuant
2 17
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Federal Register / Vol. 81, No. 161 / Friday, August 19, 2016 / Notices
Market Maker 6 Rebate for Adding
Liquidity tiers and add two additional
tiers.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaqphlx.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 the
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The purpose of the proposed rule
change is to amend the Exchange’s
Pricing Schedule at Section I titled
‘‘Rebates and Fees for Adding and
Removing Liquidity in SPY’’ to increase
the Simple Order Customer Fee for
Removing Liquidity in SPY to fund
additional Simple Order Specialist and
Market Maker Rebates for Adding
Liquidity for options overlying SPY.
to Rule 1020(a). An options Specialist includes a
Remote Specialist which is defined as an options
specialist in one or more classes that does not have
a physical presence on an Exchange floor and is
approved by the Exchange pursuant to Rule 501.
6 The term ‘‘Market Maker’’ includes Registered
Options Traders (‘‘ROT’’). See Exchange Rule
1014(b)(i) and (ii). A ROT includes a Streaming
Quote Trader or ‘‘SQT,’’ a Remote Streaming Quote
Trader or ‘‘RSQT’’ and a Non-SQT, which by
definition is neither a SQT nor a RSQT. A ROT is
defined in Exchange Rule 1014(b) as a regular
member of the Exchange located on the trading
floor who has received permission from the
Exchange to trade in options for his own account.
An SQT is defined in Exchange Rule 1014(b)(ii)(A)
as an ROT who has received permission from the
Exchange to generate and submit option quotations
electronically in options to which such SQT is
assigned. An RSQT is defined in Exchange Rule in
1014(b)(ii)(B) as an ROT that is a member affiliated
with an RSQTO with no physical trading floor
presence who has received permission from the
Exchange to generate and submit option quotations
electronically in options to which such RSQT has
been assigned. A Remote Streaming Quote Trader
Organization or ‘‘RSQTO,’’ which may also be
referred to as a Remote Market Making Organization
(‘‘RMO’’), is a member organization in good
standing that satisfies the RSQTO readiness
requirements in Rule 507(a). RSQTs may also be
referred to as Remote Market Markers (‘‘RMMs’’).
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First Fee Change
The purpose of the first fee change is
to raise revenue for the Exchange by
increasing the Simple Order Customer
Fee for Removing Liquidity in SPY from
$0.43 to $0.45 per contract. Despite the
increase to this fee for Customers
removing liquidity, the Exchange
believes that the fee remains
competitive as compared to fees
assessed to other market participants.7
Second Fee Change
The purpose of the second fee change
is to amend the Specialist and Market
Maker Simple Order Rebates for Adding
Liquidity to incentivize Specialists and
Market Makers to add more volume to
Phlx in order to receive rebates. Today
Specialists and Market Makers have the
opportunity to earn rebates that range
from $0.15 to $0.30 per contract,8
depending on the amount of Specialist
and Market Maker Simple Order
contracts that are electronically
executed per day in a month in SPY on
Phlx. The Exchange is proposing to
amend current Tier 4 of the Specialist
and Market Maker Simple Order Rebates
for Adding Liquidity from volume that
is greater than 20,000 to volume
between 20,000 and 34,999
electronically executed Simple Order
contracts per day in a month in SPY.
The Tier 4 Specialist and Market Maker
Simple Order Rebates for Adding
Liquidity will remain at $0.30 per
contract. The Exchange also proposes to
add two more Specialist and Market
Maker Simple Order Rebates for Adding
Liquidity tiers. New Tier 5 Specialist
and Market Maker Simple Order Rebates
for Adding Liquidity would pay a $0.32
per contract rebate to Specialists and
Market Makers that add between 35,000
to 49,999 electronically executed
Simple Order contracts per day in a
month in SPY. New tier 6 Specialist and
Market Maker Simple Order Rebates for
Adding Liquidity would pay a $0.35 per
contract rebate to Specialists and Market
Makers that add greater than 49,999
electronically executed Simple Order
contracts per day in a month in SPY.
The Exchange believes that adding these
two new rebate tiers will encourage
Specialists and Market Makers to add
more electronically executed Simple
7 Non-Customer market participants (Specialists,
Market Makers, Firms, Broker-Dealers and
Professionals) are assessed a Simple Order Fee for
Removing Liquidity in SPY of $0.47 per contract.
8 Today, the Specialist and Market Maker Simple
Order Rebates for Adding Liquidity are paid on a
four tier rebate schedule in SPY. All other market
participants do not receive a Simple Order Rebate
for Adding Liquidity in SPY.
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55497
Order liquidity in SPY on Phlx to obtain
the higher rebates.
The Exchange proposes to amend
Section I to reorganize the Pricing
Schedule and delete unnecessary rule
text. The Exchange proposes to amend
the current sentence above the
Specialist and Market Maker Simple
Order Rebates for Adding Liquidity tiers
which currently states, ‘‘*The Simple
Order Rebate for Adding Liquidity for
Specialists and Market Makers will be
paid as noted below:’’. The Exchange
intends to incorporate more language
into the new sentence concerning the
Specialist and Market Maker Simple
Order Rebates for Adding Liquidity tiers
to make clear which market participants
are being paid the rebate and what
volume counts toward the monthly
volume. The Exchange proposes to
amend the sentence as follows: ‘‘*The
Simple Order Rebate for Adding
Liquidity will be paid as noted below to
Specialists and Market Makers adding
the requisite amount of electronically
executed Specialist and Market Maker
Simple Order contracts per day in a
month in SPY:’’. This language is not
intended to amend the manner in which
the Exchange pays the Specialist and
Market Maker Simple Order Rebates for
Adding Liquidity. The Exchange is
proposing to include more clear and
specific language above the tiers and
then simply list the volume and rebate
amount in the table, rather than
repeating the language in the table
several times. The Exchange believes
that these non-substantive amendments
will add clarity to the Specialist and
Market Maker Simple Order Rebates for
Adding Liquidity by avoiding
unnecessary repetition in the Pricing
Schedule and simplifying the rebate
table.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,9 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,10 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, and is 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, while
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
10 15
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Federal Register / Vol. 81, No. 161 / Friday, August 19, 2016 / Notices
adopting a series of steps to improve the
current market model, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 11
Likewise, in NetCoalition v. Securities
and Exchange Commission 12
(‘‘NetCoalition’’) 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.13 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.’’ 14
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’. . . .’’ 15 Although the court
and the SEC were discussing the cash
equities markets, the Exchange believes
that these views apply with equal force
to the options markets.
First Fee Change
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The Exchange’s proposal to increase
the Customer Simple Order Fee for
Removing Liquidity in SPY is
reasonable because despite the increase
to the fee, Customers will continue to be
assessed the lowest Simple Order Fee
for Removing Liquidity in SPY as
compared to other market participants
(Specialists, Market Makers, Firms,16
11 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
12 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
2010).
13 See NetCoalition, at 534–535.
14 Id. at 537.
15 Id. at 539 (quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74782–83 (December 9, 2008) (SR–
NYSEArca–2006–21)).
16 The term ‘‘Firm’’ applies to any transaction that
is identified by a member or member organization
for clearing in the Firm range at The Options
Clearing Corporation.
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Broker-Dealers 17 and Professionals 18)
that continue to pay a $0.47 per contract
Simple Order Fee for Removing
Liquidity in SPY. SPY options are
currently the most actively traded
options class. Despite this fee increase,
the Exchange believes the Simple Order
Customer Fee for Removing Liquidity
will continue to encourage a greater
number of market participants to
remove Customer liquidity in SPY on
Phlx because they continue to be
assessed lower fees as compared to
other market participants.
The Exchange’s proposal to increase
the Customer Simple Order Fee for
Removing Liquidity in SPY is equitable
and not unfairly discriminatory because
the Simple Order Customer Fee for
Removing Liquidity will continue to be
lower as compared to other market
participants ($0.45 vs. $0.47 per
contract) and this lower fee will
continue to encourage market
participants to remove Customer
liquidity in SPY on Phlx. Customer
liquidity benefits all market participants
by providing more trading
opportunities, which attracts market
makers. An increase in the activity of
these market participants in turn
facilitates tighter spreads, which may
cause an additional corresponding
increase in order flow from other market
participants. Pricing by symbol is a
common practice on many U.S. options
exchanges as a means to incentivize
order flow to be sent to an exchange for
execution in the most actively traded
options classes. Other options
exchanges price by symbol.19
Second Fee Change
The Exchange believes that its
proposal to amend the Tier 4 Specialist
and Market Maker Simple Order Rebates
for Adding Liquidity in SPY and add
two new Specialist and Market Maker
Simple Order Rebates for Adding
Liquidity tiers is reasonable because it
will attract more Specialist and Market
Maker electronically executed Simple
Order volume in SPY to Phlx. The
Exchange is offering Specialists and
Market Makers an opportunity to earn
up to a $0.35 per contract Simple Order
17 The term ‘‘Broker-Dealer’’ applies to any
transaction which is not subject to any of the other
transaction fees applicable within a particular
category.
18 The term ‘‘Professional’’ applies to transactions
for the accounts of Professionals, as defined in
Exchange Rule 1000(b)(14) means any person or
entity that (i) is not a broker or dealer in securities,
and (ii) places more than 390 orders in listed
options per day on average during a calendar month
for its own beneficial account(s).
19 Miami International Securities Exchange LLC
(‘‘MIAX’’) prices by symbol. See MIAX’s Fee
Schedule.
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Rebate for Adding Liquidity in SPY.
Today, the highest Specialist and
Market Maker Simple Order Rebate for
Adding Liquidity in SPY is $0.30 per
contract. Specialists and Market Makers
will be encouraged to add more
electronically executed Simple Order
liquidity in SPY on Phlx to obtain the
proposed higher rebates.
The Exchange believes that its
proposal to amend the Tier 4 Specialist
and Market Maker Simple Order Rebates
for Adding Liquidity in SPY and add
two new Specialist and Market Maker
Simple Order Rebates for Adding
Liquidity tiers is equitable and not
unfairly discriminatory because
Specialists and Market Makers have
obligations to the market and regulatory
requirements, which normally do not
apply to other market participants.20
They have obligations to make
continuous markets, engage in a course
of dealings reasonably calculated to
contribute to the maintenance of a fair
and orderly market, and not make bids
or offers or enter into transactions that
are inconsistent with a course of
dealings. The differentiation as between
Specialists and Market Makers and all
other market participants recognizes the
differing contributions made to the
liquidity and trading environment on
the Exchange by these market
participants. An increase in the activity
of these market participants in turn
facilitates tighter spreads, which may
cause an additional corresponding
increase in order flow from other market
participants. For these reasons, the
Exchange believes that it is equitable
and not unfairly discriminatory to only
offer Specialists and Market Makers
Simple Order Rebates for Adding
Liquidity in SPY.
The Exchange’s proposal to reorganize
the Pricing Schedule and delete
unnecessary rule text is reasonable
because the Exchange believes the
deletion of the unnecessary text and
reorganization of the rule text will bring
greater clarity to the Pricing Schedule.
The Exchange’s proposal to reorganize
the Pricing Schedule and delete
unnecessary rule text is equitable and
not unfairly discriminatory because the
amendment is non-substantive and only
intended to provide clarity to the
Pricing Schedule. The rule text will
apply uniformly to all market
participants.
20 See Rule 1014 titled ‘‘Obligations and
Restrictions Applicable to Specialists and
Registered Options Traders.’’
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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 fees and rebates proposed herein
are intended to continue to incentivize
market participants to send a greater
amount of SPY order flow to Phlx and
for this reason imposes no inter-market
burden on competition. If the changes
proposed herein are unattractive to
market participants, it is likely that the
Exchange will lose market share as a
result. Accordingly, the Exchange does
not believe that the proposed changes
will impair the ability of members or
competing order execution venues to
maintain their competitive standing in
the financial markets.
mstockstill on DSK3G9T082PROD with NOTICES
First Fee Change
The Exchange’s proposal to increase
the Customer Simple Order Fee for
Removing Liquidity in SPY does not
impose an undue burden on intramarket competition because the Simple
Order Customer Fee for Removing
Liquidity will continue to be lower as
compared to other market participants
($0.45 vs. $0.47 per contract) and this
lower fee will continue to encourage
market participants to remove Customer
liquidity in SPY on Phlx. Also,
Customer liquidity benefits all market
participants by providing more trading
opportunities, which attracts market
makers. An increase in the activity of
these market participants in turn
facilitates tighter spreads, which may
cause an additional corresponding
increase in order flow from other market
participants. Pricing by symbol is a
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common practice on many U.S. options
exchanges as a means to incentivize
order flow to be sent to an exchange for
execution in the most actively traded
options classes. Other options
exchanges price by symbol.21
Second Fee Change
The Exchange believes that its
proposal to amend the Tier 4 Specialist
and Market Maker Simple Order Rebates
for Adding Liquidity and add two new
Specialist and Market Maker Simple
Order Rebates for Adding Liquidity tiers
does not impose an undue burden on
intra-market competition because
Specialists and Market Makers have
obligations to the market and regulatory
requirements, which normally do not
apply to other market participants.22
They have obligations to make
continuous markets, engage in a course
of dealings reasonably calculated to
contribute to the maintenance of a fair
and orderly market, and not make bids
or offers or enter into transactions that
are inconsistent with a course of
dealings. The differentiation as between
Specialists and Market Makers and all
other market participants recognizes the
differing contributions made to the
liquidity and trading environment on
the Exchange by these market
participants. An increase in the activity
of these market participants in turn
facilitates tighter spreads, which may
cause an additional corresponding
increase in order flow from other market
participants. For these reasons, the
Exchange believes that it is equitable
and not unfairly discriminatory to only
offer Specialists and Market Makers
Simple Order Rebates for Adding
Liquidity in SPY.
The Exchange’s proposal to reorganize
the Pricing Schedule and delete
unnecessary rule text does not impose
an undue burden on intra-market
competition because the Exchange
believes the deletion of the unnecessary
text and reorganization of the rule text
will bring greater clarity to the Pricing
Schedule and the revised language
applies uniformly to all market
participants.
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.
21 See
22 See
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note 19 above.
note 20 above.
Frm 00072
Fmt 4703
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.23
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–2016–83 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–2016–83. 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.,
23 15
Sfmt 4703
55499
E:\FR\FM\19AUN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
19AUN1
55500
Federal Register / Vol. 81, No. 161 / Friday, August 19, 2016 / Notices
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–
2016–83, and should be submitted on or
before September 9, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–19798 Filed 8–18–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78573; File No. SR–FINRA–
2016–032]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a
Proposed Rule Change Relating to
FINRA Rule 2232 (Customer
Confirmations) To Require Members
To Disclose Additional Pricing
Information on Retail Customer
Confirmations Relating to
Transactions in Fixed Income
Securities
August 15, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (‘‘Act’’
or ‘‘SEA’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on August 12, 2016, Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
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 FINRA. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
mstockstill on DSK3G9T082PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to amend FINRA
2232 (Customer Confirmations) to
require members to disclose additional
pricing information on retail customer
24 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
18:08 Aug 18, 2016
Jkt 238001
confirmations relating to transactions in
fixed income securities.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
office of FINRA 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,
FINRA 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. FINRA 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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
FINRA is proposing to amend Rule
2232 to require members to provide
additional pricing information on
customer confirmations in connection
with non-municipal fixed income
transactions with retail customers.
Specifically, if a member trades as
principal with a non-institutional
customer in a corporate debt or agency
debt security, the member must disclose
the member’s mark-up or mark-down
from the prevailing market price for the
security on the customer confirmation,
if the member also executes one or more
offsetting principal transaction(s) on the
same trading day on the same side as
the customer trade, the aggregate size of
which meets or exceeds the size of the
customer trade.
While members are already required,
pursuant to SEA Rule 10b–10, to
provide customers with pricing
information, including transaction cost
information, in connection with
transactions in equity securities where
the member acted as principal, no
comparable requirement currently exists
for transactions in fixed income
securities.3 Based on statistics that are
3 See 17 CFR 240.10b–10. Under Rule 10b–10,
where a member is acting as principal for its own
account and is not a market maker in an equity
security, and receives a customer order in that
equity security that it executes by means of a
principal trade to offset the contemporaneous trade
with the customer, the rule requires the member to
disclose the difference between the price to the
customer and the dealer’s contemporaneous
purchase (for customer purchases) or sale price (for
customer sales). See Rule 10b–10(a)(2)(ii)(A). Where
PO 00000
Frm 00073
Fmt 4703
Sfmt 4703
discussed in greater detail below,
FINRA believes that some customers
pay materially higher mark-ups or markdowns in retail size trades than other
customers for the same fixed income
security. FINRA believes that the
proposed requirement will provide
meaningful and useful pricing
information to retail customers in fixed
income securities. FINRA believes that
the proposal will better enable
customers to evaluate the cost and
quality of the execution service that
members provide, will promote
transparency into firms’ pricing
practices, and will encourage
communications between firms and
their customers about the pricing of
their fixed income transactions.
As described in greater detail in Item
II.C. below, FINRA initially solicited
comment on a related proposal in
Regulatory Notice 14–52 (‘‘initial
proposal’’),4 and subsequently on a
revised proposal in Regulatory Notice
15–36 (‘‘revised proposal’’).5 FINRA
also has been working with the MSRB
to develop similar proposals, as
appropriate, to ensure consistent
disclosures to customers across debt
securities and to reduce the operational
burdens for firms that trade multiple
fixed income securities. As such, the
MSRB has been developing its own
pricing information disclosure proposal,
and FINRA and the MSRB published
their initial and revised proposals
concurrently.6 FINRA understands that
the MSRB intends to file a substantially
similar rule change.
Provided below is a more detailed
description of each aspect of the
proposed rule change.
Scope of the Disclosure Requirement
The proposed rule applies where the
member buys (or sells) a security on a
principal basis from (or to) a noninstitutional customer and engages in
one or more offsetting principal trades
on the same trading day in the same
security, where the size of the member’s
offsetting principal trade(s), in the
aggregate, equals or exceeds the size of
the customer trade. A non-institutional
customer is a customer account that is
not an institutional account, as defined
the firm acts as principal for any other transaction
in an NMS stock, or an equity security that is listed
on a national securities exchange and is subject to
last sale reporting, the rule requires the member to
report the reported trade price, the price to the
customer in the transaction, and the difference, if
any, between the reported trade price and the price
to the customer. See Rule 10b–10(a)(2)(ii)(B).
4 See Regulatory Notice 14–52 (November 2014).
5 See Regulatory Notice 15–36 (October 2015).
6 See MSRB Regulatory Notice 2015–16
(September 2015), MSRB Regulatory Notice 2014–
20 (November 2014).
E:\FR\FM\19AUN1.SGM
19AUN1
]]>Agencies
[Federal Register Volume 81, Number 161 (Friday, August 19, 2016)]
[Notices]
[Pages 55496-55500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19798]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78576; File No. SR-Phlx-2016-83]
Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Exchange's Pricing Schedule
August 15, 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 August 5, 2016, NASDAQ 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 at
Section I titled ``Rebates and Fees for Adding and Removing Liquidity
in SPY'' at Part A, relating to Simple Orders for SPY \3\ options to:
(i) Increase the Customer \4\ Fee for Removing Liquidity; and (ii)
amend Tier 4 of the Specialist \5\ and
[[Page 55497]]
Market Maker \6\ Rebate for Adding Liquidity tiers and add two
additional tiers.
---------------------------------------------------------------------------
\3\ Options overlying Standard and Poor's Depositary Receipts/
SPDRs (``SPY'') are based on the SPDR exchange-traded fund, which is
designed to track the performance of the S&P 500 Index.
\4\ The term ``Customer'' applies to any transaction that is
identified by a member or member organization for clearing in the
Customer range at The Options Clearing Corporation which is not for
the account of a broker or dealer or for the account of a
``Professional'' (as that term is defined in Rule 1000(b)(14)).
\5\ The term ``Specialist'' applies to transactions for the
account of a Specialist (as defined in Exchange Rule 1020(a)). A
Specialist is an Exchange member who is registered as an options
specialist pursuant to Rule 1020(a). An options Specialist includes
a Remote Specialist which is defined as an options specialist in one
or more classes that does not have a physical presence on an
Exchange floor and is approved by the Exchange pursuant to Rule 501.
\6\ The term ``Market Maker'' includes Registered Options
Traders (``ROT''). See Exchange Rule 1014(b)(i) and (ii). A ROT
includes a Streaming Quote Trader or ``SQT,'' a Remote Streaming
Quote Trader or ``RSQT'' and a Non-SQT, which by definition is
neither a SQT nor a RSQT. A ROT is defined in Exchange Rule 1014(b)
as a regular member of the Exchange located on the trading floor who
has received permission from the Exchange to trade in options for
his own account. An SQT is defined in Exchange Rule 1014(b)(ii)(A)
as an ROT who has received permission from the Exchange to generate
and submit option quotations electronically in options to which such
SQT is assigned. An RSQT is defined in Exchange Rule in
1014(b)(ii)(B) as an ROT that is a member affiliated with an RSQTO
with no physical trading floor presence who has received permission
from the Exchange to generate and submit option quotations
electronically in options to which such RSQT has been assigned. A
Remote Streaming Quote Trader Organization or ``RSQTO,'' which may
also be referred to as a Remote Market Making Organization
(``RMO''), is a member organization in good standing that satisfies
the RSQTO readiness requirements in Rule 507(a). RSQTs may also be
referred to as Remote Market Markers (``RMMs'').
---------------------------------------------------------------------------
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqphlx.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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend the Exchange's
Pricing Schedule at Section I titled ``Rebates and Fees for Adding and
Removing Liquidity in SPY'' to increase the Simple Order Customer Fee
for Removing Liquidity in SPY to fund additional Simple Order
Specialist and Market Maker Rebates for Adding Liquidity for options
overlying SPY.
First Fee Change
The purpose of the first fee change is to raise revenue for the
Exchange by increasing the Simple Order Customer Fee for Removing
Liquidity in SPY from $0.43 to $0.45 per contract. Despite the increase
to this fee for Customers removing liquidity, the Exchange believes
that the fee remains competitive as compared to fees assessed to other
market participants.\7\
---------------------------------------------------------------------------
\7\ Non-Customer market participants (Specialists, Market
Makers, Firms, Broker-Dealers and Professionals) are assessed a
Simple Order Fee for Removing Liquidity in SPY of $0.47 per
contract.
---------------------------------------------------------------------------
Second Fee Change
The purpose of the second fee change is to amend the Specialist and
Market Maker Simple Order Rebates for Adding Liquidity to incentivize
Specialists and Market Makers to add more volume to Phlx in order to
receive rebates. Today Specialists and Market Makers have the
opportunity to earn rebates that range from $0.15 to $0.30 per
contract,\8\ depending on the amount of Specialist and Market Maker
Simple Order contracts that are electronically executed per day in a
month in SPY on Phlx. The Exchange is proposing to amend current Tier 4
of the Specialist and Market Maker Simple Order Rebates for Adding
Liquidity from volume that is greater than 20,000 to volume between
20,000 and 34,999 electronically executed Simple Order contracts per
day in a month in SPY. The Tier 4 Specialist and Market Maker Simple
Order Rebates for Adding Liquidity will remain at $0.30 per contract.
The Exchange also proposes to add two more Specialist and Market Maker
Simple Order Rebates for Adding Liquidity tiers. New Tier 5 Specialist
and Market Maker Simple Order Rebates for Adding Liquidity would pay a
$0.32 per contract rebate to Specialists and Market Makers that add
between 35,000 to 49,999 electronically executed Simple Order contracts
per day in a month in SPY. New tier 6 Specialist and Market Maker
Simple Order Rebates for Adding Liquidity would pay a $0.35 per
contract rebate to Specialists and Market Makers that add greater than
49,999 electronically executed Simple Order contracts per day in a
month in SPY. The Exchange believes that adding these two new rebate
tiers will encourage Specialists and Market Makers to add more
electronically executed Simple Order liquidity in SPY on Phlx to obtain
the higher rebates.
---------------------------------------------------------------------------
\8\ Today, the Specialist and Market Maker Simple Order Rebates
for Adding Liquidity are paid on a four tier rebate schedule in SPY.
All other market participants do not receive a Simple Order Rebate
for Adding Liquidity in SPY.
---------------------------------------------------------------------------
The Exchange proposes to amend Section I to reorganize the Pricing
Schedule and delete unnecessary rule text. The Exchange proposes to
amend the current sentence above the Specialist and Market Maker Simple
Order Rebates for Adding Liquidity tiers which currently states, ``*The
Simple Order Rebate for Adding Liquidity for Specialists and Market
Makers will be paid as noted below:''. The Exchange intends to
incorporate more language into the new sentence concerning the
Specialist and Market Maker Simple Order Rebates for Adding Liquidity
tiers to make clear which market participants are being paid the rebate
and what volume counts toward the monthly volume. The Exchange proposes
to amend the sentence as follows: ``*The Simple Order Rebate for Adding
Liquidity will be paid as noted below to Specialists and Market Makers
adding the requisite amount of electronically executed Specialist and
Market Maker Simple Order contracts per day in a month in SPY:''. This
language is not intended to amend the manner in which the Exchange pays
the Specialist and Market Maker Simple Order Rebates for Adding
Liquidity. The Exchange is proposing to include more clear and specific
language above the tiers and then simply list the volume and rebate
amount in the table, rather than repeating the language in the table
several times. The Exchange believes that these non-substantive
amendments will add clarity to the Specialist and Market Maker Simple
Order Rebates for Adding Liquidity by avoiding unnecessary repetition
in the Pricing Schedule and simplifying the rebate table.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\9\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\10\ 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, and is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 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, while
[[Page 55498]]
adopting a series of steps to improve the current market model, the
Commission highlighted the importance of market forces in determining
prices and SRO revenues and, also, recognized that current regulation
of the market system ``has been remarkably successful in promoting
market competition in its broader forms that are most important to
investors and listed companies.'' \11\
---------------------------------------------------------------------------
\11\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
Likewise, in NetCoalition v. Securities and Exchange Commission
\12\ (``NetCoalition'') 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.\13\ 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.'' \14\
---------------------------------------------------------------------------
\12\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\13\ See NetCoalition, at 534-535.
\14\ 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'. . . .'' \15\ Although the court and
the SEC were discussing the cash equities markets, the Exchange
believes that these views apply with equal force to the options
markets.
---------------------------------------------------------------------------
\15\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008)
(SR-NYSEArca-2006-21)).
---------------------------------------------------------------------------
First Fee Change
The Exchange's proposal to increase the Customer Simple Order Fee
for Removing Liquidity in SPY is reasonable because despite the
increase to the fee, Customers will continue to be assessed the lowest
Simple Order Fee for Removing Liquidity in SPY as compared to other
market participants (Specialists, Market Makers, Firms,\16\ Broker-
Dealers \17\ and Professionals \18\) that continue to pay a $0.47 per
contract Simple Order Fee for Removing Liquidity in SPY. SPY options
are currently the most actively traded options class. Despite this fee
increase, the Exchange believes the Simple Order Customer Fee for
Removing Liquidity will continue to encourage a greater number of
market participants to remove Customer liquidity in SPY on Phlx because
they continue to be assessed lower fees as compared to other market
participants.
---------------------------------------------------------------------------
\16\ The term ``Firm'' applies to any transaction that is
identified by a member or member organization for clearing in the
Firm range at The Options Clearing Corporation.
\17\ The term ``Broker-Dealer'' applies to any transaction which
is not subject to any of the other transaction fees applicable
within a particular category.
\18\ The term ``Professional'' applies to transactions for the
accounts of Professionals, as defined in Exchange Rule 1000(b)(14)
means any person or entity that (i) is not a broker or dealer in
securities, and (ii) places more than 390 orders in listed options
per day on average during a calendar month for its own beneficial
account(s).
---------------------------------------------------------------------------
The Exchange's proposal to increase the Customer Simple Order Fee
for Removing Liquidity in SPY is equitable and not unfairly
discriminatory because the Simple Order Customer Fee for Removing
Liquidity will continue to be lower as compared to other market
participants ($0.45 vs. $0.47 per contract) and this lower fee will
continue to encourage market participants to remove Customer liquidity
in SPY on Phlx. Customer liquidity benefits all market participants by
providing more trading opportunities, which attracts market makers. An
increase in the activity of these market participants in turn
facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market participants.
Pricing by symbol is a common practice on many U.S. options exchanges
as a means to incentivize order flow to be sent to an exchange for
execution in the most actively traded options classes. Other options
exchanges price by symbol.\19\
---------------------------------------------------------------------------
\19\ Miami International Securities Exchange LLC (``MIAX'')
prices by symbol. See MIAX's Fee Schedule.
---------------------------------------------------------------------------
Second Fee Change
The Exchange believes that its proposal to amend the Tier 4
Specialist and Market Maker Simple Order Rebates for Adding Liquidity
in SPY and add two new Specialist and Market Maker Simple Order Rebates
for Adding Liquidity tiers is reasonable because it will attract more
Specialist and Market Maker electronically executed Simple Order volume
in SPY to Phlx. The Exchange is offering Specialists and Market Makers
an opportunity to earn up to a $0.35 per contract Simple Order Rebate
for Adding Liquidity in SPY. Today, the highest Specialist and Market
Maker Simple Order Rebate for Adding Liquidity in SPY is $0.30 per
contract. Specialists and Market Makers will be encouraged to add more
electronically executed Simple Order liquidity in SPY on Phlx to obtain
the proposed higher rebates.
The Exchange believes that its proposal to amend the Tier 4
Specialist and Market Maker Simple Order Rebates for Adding Liquidity
in SPY and add two new Specialist and Market Maker Simple Order Rebates
for Adding Liquidity tiers is equitable and not unfairly discriminatory
because Specialists and Market Makers have obligations to the market
and regulatory requirements, which normally do not apply to other
market participants.\20\ They have obligations to make continuous
markets, engage in a course of dealings reasonably calculated to
contribute to the maintenance of a fair and orderly market, and not
make bids or offers or enter into transactions that are inconsistent
with a course of dealings. The differentiation as between Specialists
and Market Makers and all other market participants recognizes the
differing contributions made to the liquidity and trading environment
on the Exchange by these market participants. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants. For these reasons, the Exchange
believes that it is equitable and not unfairly discriminatory to only
offer Specialists and Market Makers Simple Order Rebates for Adding
Liquidity in SPY.
---------------------------------------------------------------------------
\20\ See Rule 1014 titled ``Obligations and Restrictions
Applicable to Specialists and Registered Options Traders.''
---------------------------------------------------------------------------
The Exchange's proposal to reorganize the Pricing Schedule and
delete unnecessary rule text is reasonable because the Exchange
believes the deletion of the unnecessary text and reorganization of the
rule text will bring greater clarity to the Pricing Schedule. The
Exchange's proposal to reorganize the Pricing Schedule and delete
unnecessary rule text is equitable and not unfairly discriminatory
because the amendment is non-substantive and only intended to provide
clarity to the Pricing Schedule. The rule text will apply uniformly to
all market participants.
[[Page 55499]]
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 fees and rebates proposed herein are intended to continue to
incentivize market participants to send a greater amount of SPY order
flow to Phlx and for this reason imposes no inter-market burden on
competition. If the changes proposed herein are unattractive to market
participants, it is likely that the Exchange will lose market share as
a result. Accordingly, the Exchange does not believe that the proposed
changes will impair the ability of members or competing order execution
venues to maintain their competitive standing in the financial markets.
First Fee Change
The Exchange's proposal to increase the Customer Simple Order Fee
for Removing Liquidity in SPY does not impose an undue burden on intra-
market competition because the Simple Order Customer Fee for Removing
Liquidity will continue to be lower as compared to other market
participants ($0.45 vs. $0.47 per contract) and this lower fee will
continue to encourage market participants to remove Customer liquidity
in SPY on Phlx. Also, Customer liquidity benefits all market
participants by providing more trading opportunities, which attracts
market makers. An increase in the activity of these market participants
in turn facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market participants.
Pricing by symbol is a common practice on many U.S. options exchanges
as a means to incentivize order flow to be sent to an exchange for
execution in the most actively traded options classes. Other options
exchanges price by symbol.\21\
---------------------------------------------------------------------------
\21\ See note 19 above.
---------------------------------------------------------------------------
Second Fee Change
The Exchange believes that its proposal to amend the Tier 4
Specialist and Market Maker Simple Order Rebates for Adding Liquidity
and add two new Specialist and Market Maker Simple Order Rebates for
Adding Liquidity tiers does not impose an undue burden on intra-market
competition because Specialists and Market Makers have obligations to
the market and regulatory requirements, which normally do not apply to
other market participants.\22\ They have obligations to make continuous
markets, engage in a course of dealings reasonably calculated to
contribute to the maintenance of a fair and orderly market, and not
make bids or offers or enter into transactions that are inconsistent
with a course of dealings. The differentiation as between Specialists
and Market Makers and all other market participants recognizes the
differing contributions made to the liquidity and trading environment
on the Exchange by these market participants. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants. For these reasons, the Exchange
believes that it is equitable and not unfairly discriminatory to only
offer Specialists and Market Makers Simple Order Rebates for Adding
Liquidity in SPY.
---------------------------------------------------------------------------
\22\ See note 20 above.
---------------------------------------------------------------------------
The Exchange's proposal to reorganize the Pricing Schedule and
delete unnecessary rule text does not impose an undue burden on intra-
market competition because the Exchange believes the deletion of the
unnecessary text and reorganization of the rule text will bring greater
clarity to the Pricing Schedule and the revised language applies
uniformly to all market participants.
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.\23\
---------------------------------------------------------------------------
\23\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
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-2016-83 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-2016-83. 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.,
[[Page 55500]]
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-2016-83, and should be
submitted on or before September 9, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-19798 Filed 8-18-16; 8:45 am]
BILLING CODE 8011-01-P
