[Federal Register Volume 78, Number 180 (Tuesday, September 17, 2013)]
[Notices]
[Pages 57203-57205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-22511]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70371; File No. SR-Phlx-2013-90]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Exchange's Pricing Schedule
September 11, 2013.
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 29, 2013, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') a 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Exchange's Pricing Schedule with
respect to certain pricing in Section II entitled ``Multiply Listed
Options Fees''.\3\ While changes to the Pricing Schedule pursuant to
this proposal are effective upon filing, the Exchange has designated
that they become operative on September 3, 2013.
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\3\ The pricing in Section II includes options overlying
equities, ETFs, ETNs and indexes which are Multiply Listed.
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The text of the proposed rule change is also available on the
Exchange's Web site at http://nasdaqomxphlx.cchwallstreet.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend the Exchange's
Pricing Schedule with respect to certain pricing in Section II entitled
``Multiply Listed Options Fees'' by eliminating a certain fee and
rebate for certain floor transactions.
Specifically, the Exchange proposes to eliminate certain pricing,
established on May 1, 2013,\4\ for Specialists \5\ and Market Makers
\6\ that are contra to a Customer order in Penny Pilot Options on
Exchange Traded-Fund (``ETFs'') \7\ on the Exchange's floor by
eliminating the $0.25 per contract fee that is in addition to the Floor
Options Transaction Charges in Section II of the Pricing
[[Page 57204]]
Schedule.\8\ Additionally, the contra Customer order to the Specialist
and Market Maker transaction, established on May 1, 2013,\9\ no longer
will be entitled to a rebate of $0.25 per contract. The Exchange
believes that the existing pricing structure did not provide any
material benefit to Specialists, Market Makers, Customers or to the
Exchange and that this new pricing will not impact trading in Penny
Pilot Options on ETFs on the Exchange's trading floor.
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\4\ See Securities Exchange Act Release No. 69548 (May 9, 2013)
78 FR 28681 (May 15, 2013) (SR-PHLX-2013-49).
\5\ A Specialist is an Exchange member who is registered as an
options specialist pursuant to Rule 1020(a).
\6\ A Market Maker includes Registered Options Traders (Rule
1014(b)(i) and (ii)), which includes Streaming Quote Traders (see
Rule 1014(b)(ii)(A)) and Remote Streaming Quote Traders (see Rule
1014(b)(ii)(B)). Directed Participants are also market makers.
\7\ An ETF is an open-ended registered investment company under
the Investment Company Act of 1940 that has received certain
exemptive relief from the Commission to allow secondary market
trading in the ETF shares. ETFs are generally index-based products,
in that each ETF holds a portfolio of securities that is intended to
provide investment results that, before fees and expenses, generally
correspond to the price and yield performance of the underlying
benchmark index.
\8\ Specialists and Market Makers are assessed a Floor Options
Transaction Charge of $0.25 per contract. See Section II of the
Pricing Schedule.
\9\ See supra note 4.
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2. Statutory Basis
The Exchange believes that its proposal to amend its Pricing
Schedule is consistent with Section 6(b) of the Act \10\ in general,
and furthers the objectives of Section 6(b)(4) of the Act \11\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members and other persons using its
facilities.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4).
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The Exchange believes it is reasonable to eliminate certain pricing
for Specialists and Market Makers that are contra to a Customer Penny
Pilot Options on ETFs transacted on the Exchange's floor by eliminating
the $0.25 per contract fee that is in addition to the Options
Transaction Charges \12\ in Section II of the Pricing Schedule is
reasonable because the Exchange has determined that the fee did not
encourage more orders in Penny Pilot Options on ETFs to be delivered
and executed on the Exchange's trading floor and did not provide any
material additional opportunity for floor participants to interact with
that order. The Exchange also proposes to eliminate this since the
Exchange also seeks to eliminate the rebate to the Customer on the
contra-side of a Specialist and Market Maker floor transaction in a
Penny Pilot Option on an ETF. The Exchange determined that paying a
rebate of $0.25 per contract to Customers on the contra-side of a
Specialist and Market Maker Penny Pilot Options on an ETF order did not
encourage market participants to send Customer Penny Pilot Options on
ETFs to the Exchange's floor for execution to qualify for the rebate
when they are contra to a Specialist or Market Maker order.
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\12\ Specialists and Market Makers are assessed an Options
Transaction Charge of $0.25 per contract for transacting floor
trading ETFs in Penny Pilot Options. See Section II of the Pricing
Schedule. The Exchange does not assess Payment for Order Flow fees
for floor transactions. See Section II of the Pricing Schedule.
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The Exchange's proposal to eliminate certain pricing for
Specialists and Market Makers that are contra to a Customer Penny Pilot
Options on ETFs transacted on the Exchange's trading floor by
eliminating the $0.25 per contract in addition to the Options
Transaction Charges\13\ in Section II of the Pricing Schedule is
equitable and not unfairly discriminatory because it applies to all
Specialists and Market Makers equally and uniformly.
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\13\ Specialists and Market Makers are assessed an Options
Transaction Charge of $0.25 per contract for transacting Floor ETFs
in Penny Pilot Options. See Section II of the Pricing Schedule. The
Exchange does not assess Payment for Order Flow fees for floor
transactions. See Section II of the Pricing Schedule.
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The Exchange's proposal to eliminate the $0.25 per contract rebate
to a Customer that is contra to a Specialist or Market Maker order in a
Penny Pilot Options on an ETF transacted on the Exchange's trading
floor is reasonable because although Customer order flow is unique and
such order flow may attract liquidity to the market to the benefit of
all market participants, the rebate at hand did not attract additional
liquidity and thus no additional benefit to market participants. The
Exchange will uniformly eliminate for all Customers the $0.25 per
contract rebate for orders that are contra to a Specialist or Market
Maker order in Penny Pilot Options on ETFs transacted on the Exchange's
trading floor so it is equitable and not unfairly discriminatory
because it applies to all Customers.
B. Self-Regulatory Organization's Statement on Burden on Competition
The does not believe that the proposed rule change will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act. The Exchange believes these pricing amendments
do not impose a burden on competition but rather that the proposed rule
change will continue to promote competition on the Exchange and
position the Exchange as an attractive alternative when compared to
other options exchanges.
The Exchange operates in a highly competitive market, comprised of
eleven [sic] exchanges, in which market participants can easily and
readily direct order flow to competing venues if they deem fee levels
at a particular venue to be excessive or rebates to be inadequate.
Accordingly, the fees that are assessed and the rebates paid by the
Exchange described in the above proposal are influenced by these robust
market forces and therefore must remain competitive with fees charged
and rebates paid by other venues and therefore must continue to be
reasonable and equitably allocated to those members that opt to direct
orders to the Exchange rather than competing venues.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor 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.\14\ At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
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\14\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml ); or
Send an email to [email protected]. Please include
File Number SR-Phlx-2013-90 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2013-90. 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
[[Page 57205]]
Internet Web site (http://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-2013-90 and should be
submitted on or before October 8, 2013.
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\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-22511 Filed 9-16-13; 8:45 am]
BILLING CODE 8011-01-P