[Federal Register Volume 78, Number 204 (Tuesday, October 22, 2013)]
[Notices]
[Pages 62764-62765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-24644]
[[Page 62764]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70643; File No. SR-Topaz-2013-07]
Self-Regulatory Organizations; Topaz Exchange, LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Schedule of Fees
October 9, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on September 30, 2013, the Topaz Exchange, LLC (d/b/a ISE Gemini)
(the ``Exchange'' or ``Topaz'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II and III below, which Items have been prepared by the self-
regulatory organization. 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 the
Substance of the Proposed Rule Change
Topaz is proposing to amend its Schedule of Fees to establish a
surcharge fee for non-Priority Customer orders in options on 1/10 the
value of the Nasdaq-100 Stock Index. The text of the proposed rule
change is available on the Exchange's Internet Web site at http://www.ise.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 the
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 self-regulatory organization 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
On August 26, 2013 the Exchange filed a proposed rule change to
adopt a surcharge fee for options on the full value of the Nasdaq-100
Stock Index (``NDX''),\3\ in connection with the listing of NDX options
on the Exchange. As the Exchange now intends to list options on the
Mini-NDX (``MNX''), which represents 1/10 the value of the NDX index,
the Exchange is proposing to adopt the same $0.22 per contract
surcharge fee for MNX options.
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\3\ See Securities Exchange Act Release No. 34-70296 (Aug. 30,
2013), 78 FR 54942 (Sept. 6, 2013) (SR-Topaz-2013-03).
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The Exchange has entered into a license agreement with The NASDAQ
OMX Group, Inc. in connection with the listing and trading of MNX
options, and is proposing to adopt a surcharge fee applicable to non-
Priority Customer orders in these options to defray the licensing
costs. Absent this license agreement, market participants would be
unable to trade MNX options on the Exchange. This surcharge fee
reflects the pass-through charges associated with the licensing of this
product, and the Exchange believes that charging the participants that
trade these instruments is the most equitable means of recovering the
costs of the license. The Exchange notes that the proposed surcharge
fee does not apply to Priority Customer orders in this product.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\4\ in general, and Section
6(b)(4) of the Act,\5\ in particular, in that it is designed to provide
for the equitable allocation of reasonable dues, fees, and other
charges among its members and other persons using its facilities.
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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(4).
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The proposed surcharge fee is reasonable because it is a direct
result of the licensing fees charged to the Exchange by the index
provider that owns the intellectual property associated with the index,
and reflect the pass-through charges associated with obtaining the
license to trade MNX options, which the Exchange believes is the most
equitable means of recovering the costs of the license. The proposed
fee is equitable and not unfairly discriminatory in that it applies
uniformly to all similarly situated Exchange participants, and is
assessed only on those non-Priority Customer participants who choose to
transact in MNX options. The Exchange believes it is equitable and not
unfairly discriminatory to assess this surcharge fee on all
participants except Priority Customers because the Exchange seeks to
encourage Priority Customer order flow and the liquidity such order
flow brings to the marketplace, which in turn benefits all market
participants.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\6\ the Exchange does
not believe that the proposed rule change will impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. By providing all participants on the Exchange with
the ability to hedge via MNX options, the Exchange is not placing any
burden on competition among its various participants. The Exchange
further notes that the licensing agreement it has secured is not an
exclusive agreement as many other option exchanges currently trade MNX
options and charge fees related to such license.\7\ As such, there is
no burden on competition among exchanges for the trading of these
products.
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\6\ 15 U.S.C. 78f(b)(8).
\7\ For example, NYSE Amex Options (``Amex''), NYSE Arca Options
(``Arca''), and the International Securities Exchange, LLC (``ISE'')
each charge a surcharge fee of $0.22 for trades in MNX options. See
Amex Fee Schedule, Royalty Fees; Arca Fees and Charges, Royalty
Fees; and ISE Schedule of Fees, Section VI, Other Options Fees and
Rebates, Non-Priority Customer License Surcharge for Index Options.
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Finally, 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. In such an environment, the Exchange must continually
review, and consider adjusting, its fees and credits to remain
competitive with other exchanges. For the reasons described above, the
Exchange believes that the proposed rule change reflects this
competitive environment.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.
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,\8\ and subparagraph (f)(2) of Rule 19b-4
[[Page 62765]]
thereunder,\9\ because it establishes a due, fee, or other charge
imposed by Topaz.
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\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
\9\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
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 No. SR-Topaz-2013-07 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 No. SR-Topaz-2013-07. 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 (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 such filing also will be available for inspection
and copying at the principal offices 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 No. SR-Topaz-2013-07, and should be
submitted on or before November 12, 2013.
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\10\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24644 Filed 10-21-13; 8:45 am]
BILLING CODE 8011-01-P