[Federal Register Volume 79, Number 50 (Friday, March 14, 2014)]
[Notices]
[Pages 14551-14553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-05596]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71673; File No. SR-Phlx-2014-15]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
SPY Simple Orders Fees For Removing Liquidity
March 10, 2014.
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 February 27, 2014, 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.
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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
The Exchange proposes to modify the Exchange's Pricing Schedule to
amend Simple Order pricing in Section I, entitled Rebates and Fees for
Adding and Removing Liquidity in SPY.\3\
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\3\ Options overlying Standard and Poor's Depositary Receipts/
SPDRs (``SPY'') are based on the SPDR exchange-traded fund
(``ETF''), which is designed to track the performance of the S&P 500
Index.
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While the changes proposed herein are effective upon filing, the
Exchange has designated that the amendments be operative on March 3,
2014.
The text of the proposed rule change is 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 Exchange is proposing to amend the Simple Order Fees for
Removing Liquidity in Section I applicable to transactions overlying
SPY. The Exchange currently assesses Customers, Specialists,\4\ Market
Makers,\5\ Firms,\6\
[[Page 14552]]
Broker-Dealers \7\ and Professionals \8\ a $0.47 per contract Fee for
Removing Liquidity in SPY Simple Orders. The Exchange is proposing to
increase Fees for Removing Liquidity in SPY Simple Orders from $0.47 to
$0.49 per contract for all market participants, except Customers. The
Exchange is increasing these fees at this time because it believes that
the increase will allow the Exchange to enhance its services and remain
competitive with other options exchanges.
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\4\ A ``Specialist'' is an Exchange member who is registered as
an options specialist pursuant to Rule 1020(a).
\5\ 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.
\6\ 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.
\7\ The term ``Broker-Dealer'' applies to any transaction which
is not subject to any of the other transaction fees applicable
within a particular category.
\8\ The term ``Professional'' 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). See Rule
1000(b)(14).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\9\ in general, and with
Section 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 or system which the Exchange operates or controls, and is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposal to increase Fees for Removing Liquidity in
SPY Simple Orders from $0.47 to $0.49 per contract for all market
participants, except for Customers, is reasonable because the increase
is consistent with or less than [sic] rates assessed by other options
exchanges, such as Topaz Exchange, LLC (``Gemini''), NYSE ARCA, Inc.
(``NYSE Arca''), BATS Exchange, Inc. (``BATS'') and NASDAQ Options
Market LLC (``NOM'').\11\ The Exchange believes that the SPY Simple
Order Fees for Removing Liquidity remain competitive with other options
markets. The Exchange believes that this proposal will bring additional
revenue to the Exchange to allow the Exchange to enhance its services
and remain competitive with other options exchanges.
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\11\ See Gemini's Fee Schedule. Gemini assesses taker fees for
Priority Customer sof [sic] $0.45 per contract and $0.48 per
contract for all market participants. See NYSE Arca fees Schedule.
NYSE Arca assesses all non-customer market participants a take
liquidity fee of $0.48 per contract. Customers are assessed $0.45
per contract for removing liquidity. Gemini permits its members to
lower certain of these fees provided they meet certain criteria. See
BATS BZX Exchange Fee Schedule. BATS assesses a $0.48 charge per
contract for a Professional, Firm or Market Maker order that removes
liquidity and $0.47 per contract for a Customer order that removes
liquidity. BATS permits its members to lower certain of these fees
provided they meet certain criteria. See NOM Rules at Chapter XV,
Section 2. Currently, NOM assesses $0.45 per contract for a Customer
to remove liquidity and $0.49 per contract for all other market
participants, except NOM Market Makers who are assessed $0.48 per
contract. NOM Participants are provided the ability to reduce
certain fees provided they add requisite liquidity.
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The Exchange's proposal to increase Fees for Removing Liquidity in
SPY Simple Orders from $0.47 to $0.49 per contract for all market
participants, except Customers, is equitable and not unfairly
discriminatory because all non-Customer market participants will be
assessed a uniform fee to remove liquidity in SPY Simple Orders of
$0.49 per contract. The Exchange will continue to assess Customers a
SPY Simple Order Fee for Removing Liquidity of $0.47 per contract. The
Exchange assesses Customers lower or no fees today \12\ on Phlx because
Customer order flow is unique. Customer liquidity benefits all market
participants by providing more trading opportunities, which attract
Specialists and 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. Other options exchanges also assess Customers
lower fees.\13\ For these reasons, the Exchange believes this proposal
is equitable and not unfairly discriminatory.
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\12\ For example, on PHLX today the Customer fee is $0.00 for
all electronically-delivered multiply-listed options, except SPY,
whereas as [sic] other market participants are assessed fees ranging
from $0.22 to $0.60 per contract. See NASDAQ OMX PHLX, LLC's Pricing
Schedule.
\13\ See note 11.
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B. Self-Regulatory Organization's Statement on Burden on Competition
Phlx does not believe that the proposed rule change will impose an
undue burden on competition not necessary or appropriate in furtherance
of the purposes of the Act. The Exchange believes that increasing the
SPY Simple Order Fees for Removing Liquidity for all market
participants, except Customers, does not impose a burden on
competition, but rather that the proposed rule change will continue to
promote competition on the Exchange as the rates proposed above are
consistent with the current rates assessed by competing options
exchanges.\14\
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\14\ See note 11.
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The Exchange does not believe that assessing Customers a lower Fee
for Removing Liquidity when transacting SPY Simple Orders, as compared
to other market participants, imposes an undue burden on competition
because Customer liquidity benefits all market participants by
providing more trading opportunities, which attracts Specialists and
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.
All market participants are eligible to qualify for a Customer Rebate.
The Exchange operates in a highly competitive market, comprised of
twelve options 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
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.\15\ 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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\15\ 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.
[[Page 14553]]
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-2014-15 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-2014-15. 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 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-2014-15, and should be
submitted on or before April 4, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-05596 Filed 3-13-14; 8:45 am]
BILLING CODE 8011-01-P