[Federal Register Volume 79, Number 174 (Tuesday, September 9, 2014)]
[Notices]
[Pages 53490-53492]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-21359]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72965; File No. SR-BX-2014-039]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Common Ownership
September 3, 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 August 20, 2014, NASDAQ OMX BX, Inc. (``BX'' 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 Substance
of the Proposed Rule Change
The Exchange is filing a proposed rule change to harmonize the
process by which it collects information from its equity members and
Options Participants for aggregating the activity of affiliated
entities for the purposes of assessing charges or credits.
The Exchange requests that this filing become operative on December
1, 2014.
The text of the proposed rule change is set forth below. Proposed
new language is in italics; deleted text is in brackets.
* * * * *
Chapter XV Options Pricing
BX Options Market Participants may be subject to the Charges for
Membership, Services and Equipment in the Rule 7000 Series as well as
the fees in this Chapter XV. For purposes of assessing fees and paying
rebates, the following references should serve as guidance.
The term ``Customer'' or (``C'') applies to any transaction that is
identified by a Participant for clearing in the Customer range at The
Options Clearing Corporation (``OCC'') which is not for the account of
broker or dealer or for the account of a ``Professional'' (as that term
is defined in Chapter I, Section 1(a)(48)).
The term ``BX Options Market Maker'' or (``M'') is a Participant
that has registered as a Market Maker on BX Options pursuant to Chapter
VII, Section 2, and must also remain in good standing pursuant to
Chapter VII, Section 4. In order to receive Market Maker pricing in all
securities, the Participant must be registered as a BX Options Market
Maker in at least one security.
The term ``Non-BX Options Market Maker'' or (``O'') is a registered
market maker on another options exchange that is not a BX Options
Market Maker. A Non-BX Options Market Maker must append the proper Non-
BX Options Market Maker designation to orders routed to BX Options.
The term ``Firm'' or (``F'') applies to any transaction that is
identified by a Participant for clearing in the Firm range at OCC.
The term ``Professional'' or (``P'') 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) pursuant to Chapter I, Section
1(a)(48). All Professional orders shall be appropriately marked by
Participants.
The term ``Broker-Dealer'' or (``B'') applies to any transaction
which is not subject to any of the other transaction fees applicable
within a particular category.
The term ``Common Ownership'' shall mean Participants under 75%
common ownership or control.
(a) For purposes of applying any options transaction fee or rebate
where the fee assessed, or rebate provided by BX depends upon the
volume of an Options Participant's activity, an Options Participant may
request that BX aggregate its activity with the activity of its
affiliates.
(1) An Options Participant requesting aggregation of affiliate
activity shall be required to certify to BX the affiliate status of
entities whose activity it seeks to aggregate prior to receiving
approval for aggregation, and shall be required to inform BX
immediately of any event that causes an entity to cease to be an
affiliate. BX shall review available information regarding the
entities, and reserves the right to request additional information to
verify the affiliate status of an entity. BX shall approve a request
unless it determines that the certification is not accurate.
(2) If two or more Options Participants become affiliated on or
prior to the sixteenth day of a month, and submit the required request
for aggregation on or prior to the twenty-second day of the month, an
approval of the request by BX shall be deemed to be effective as of the
first day of that month. If two or more Options Participants become
affiliated after the sixteenth day of a month, or submit a request for
aggregation after the twenty-second day of the month, an approval of
the request by BX shall be deemed to be effective as of the first day
of the next calendar month.
(b) For purposes of applying any options transaction fee or rebate
where the fee assessed, or rebate provided, by BX depends upon the
volume of an Options Participant's activity, references to an entity
(including references to a ``Options Participant'') shall be deemed to
include the entity and its affiliates that have been approved for
aggregation.
(c) For purposes of options pricing, the term ``affiliate'' of an
Options Participant shall mean any Options Participant under 75% common
ownership or control of that Options Participant.
With respect to Chapter XV, Sections 2(1) and (2) the order that is
received by the trading system first in time shall be considered an
order adding liquidity and an order that trades against that order
shall be considered an order removing liquidity.
* * * * *
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 BX Options Rules at Chapter XV,
entitled ``Options Pricing,'' to
[[Page 53491]]
harmonize the process by which the Exchange will collect information
from Options Participants that desire their activity to be aggregated
for the purposes of assessing charges or credits with the process
currently required for equity members on BX. The Exchange proposes to
adopt the process that is used by equity members today without changing
that process. The Exchange believes that this filing is non-
controversial because the process, as proposed, will not change.
Today, equity members may aggregate affiliate activity based on
volume of activity for purposes of pricing.\3\ Today, the Exchange does
not offer the ability to aggregate pricing to its Options Participants.
The Exchange is proposing to define Common Ownership, in the same
manner it is defined today for options participants at The NASDAQ
Options Market LLC (``NOM'') and NASDAQ OMX PHLX LLC (``Phlx''). The
term ``Common Ownership'' means Participants under 75 percent common
ownership or control. The Exchange proposes to define Common Ownership
in the instance that BX Options offered the ability to aggregate
pricing. Further, the Exchange proposes to adopt the same process that
exists today for equity members with respect to the manner in which it
would collect information to aggregate pricing.
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\3\ See BX Rule 7027(a).
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Today, a BX equity member requesting aggregation of affiliate
activity is required to certify to BX the affiliate status of entities
whose activity it seeks to aggregate prior to receiving approval for
aggregation, and also is required to inform BX immediately of any event
that causes an entity to cease to be an affiliate. BX reviews available
information regarding the entities, and reserves the right to request
additional information to verify the affiliate status of an entity. BX
approves a request unless it determines that the certification is not
accurate. Further, if two or more members become affiliated on or prior
to the sixteenth day of a month, and submit the required request for
aggregation on or prior to the twenty-second day of the month, an
approval of the request by BX is deemed to be effective as of the first
day of that month. If two or more members become affiliated after the
sixteenth day of a month, or submit a request for aggregation after the
twenty-second day of the month, an approval of the request by BX is
deemed to be effective as of the first day of the next calendar month.
The Exchange proposes to amend BX Options Rules at Chapter XV to
adopt language consistent with the requirements applied today to BX
equity members and require BX Options Participants to provide the same
type of information in order to receive aggregated pricing.
The Exchange believes that harmonizing the Options Rules of BX to
conform to those of NOM and Phlx with respect to Common Ownership and
also requiring all BX members, equity and options, to provide
information with respect to affiliates promotes consistency and avoids
confusion.
The Exchange proposes to apply this pricing as of December 1, 2014
and issue an Options Trader Alert to its members.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \4\ in general, and furthers the objectives of Section
6(b)(5) of the Act \5\ in particular, that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest,
in that the proposal will harmonize its Common Ownership Rules with
those of NOM and Phlx and also will harmonize the process by which the
Exchange collects information from equity members and Options
Participants regarding the aggregation of activity of affiliated
entities for the purpose of assessing charges or credits.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that applying the same 75% standard for
Common Ownership as NOM and Phlx will provide consistency among these
exchanges with respect to aggregating volume. In addition, the Exchange
believes that harmonizing the process by which the Exchange collects
information related to aggregation for equity members and Options
Participants will provide consistency to market participants with
respect to meeting the requirements to aggregate on BX. Also, the
Exchange believes that adopting this method for collecting such
information on aggregated pricing, with respect to Options
Participants, will ensure proper validation for firms entitled to the
aggregation.
B. Self-Regulatory Organization's Statement on Burden on Competition
BX 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 is merely seeking to harmonize
the manner in which it aggregates pricing and collects information
related to the aggregation of activity of affiliated entities for the
purposes of assessing charges or credits for equity members and Options
Participants. The Exchange intends to apply a uniform process to
request such aggregation for all BX members and BX Options
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
Because the foregoing proposed rule change does not significantly
affect the protection of investors or the public interest; does not
impose any significant burden on competition; and by its terms does not
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate., it has become
effective pursuant to Section 19(b)(3)(A) \6\ of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\7\
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\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4(f)(6)(iii).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: 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 Number SR-BX-2014-039 on the subject line.
[[Page 53492]]
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-BX-2014-039. 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 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-BX-2014-039 and should be
submitted on or before September 30, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O' Neill,
Deputy Secretary.
[FR Doc. 2014-21359 Filed 9-8-14; 8:45 am]
BILLING CODE 8011-01-P