[Federal Register Volume 79, Number 174 (Tuesday, September 9, 2014)]
[Notices]
[Pages 53485-53488]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-21363]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72969; File No. SR-Phlx-2014-56]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Collection of Information Related to Aggregation of Activity of
Affiliates
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 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 Substance
of the Proposed Rule Change
The Exchange proposes to harmonize the process by which it collects
and aggregates information from its equity and option members and
member organizations for the purposes of assessing charges or credits
for options and equities trading.
The Exchange requests that this filing become operative on December
1, 2014.
[[Page 53486]]
The text of the proposed rule change is set forth below. Proposed
new language is in italics; deleted text is in brackets.
* * * * *
NASDAQ OMX PHLX LLC \1\ PRICING SCHEDULE
ALL BILLING DISPUTES MUST BE SUBMITTED TO THE EXCHANGE IN WRITING
AND MUST BE ACCOMPANIED BY SUPPORTING DOCUMENTATION. ALL DISPUTES MUST
BE SUBMITTED NO LATER THAN SIXTY (60) DAYS AFTER RECEIPT OF A BILLING
INVOICE, EXCEPT FOR DISPUTES CONCERNING NASDAQ OMX PSX FEES,
PROPRIETARY DATA FEED FEES AND CO-LOCATION SERVICES FEES. AS OF JANUARY
3, 2011, THE EXCHANGE WILL CALCULATE FEES ON A TRADE DATE BASIS.
\1\ PHLX[supreg] is a registered trademark of The NASDAQ OMX
Group, Inc.
* * * * *
PREFACE
For purposes of assessing options fees and paying rebates, the
following references should serve as guidance.
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 (``OCC'') which is not for the
account of broker or dealer or for the account of a ``Professional''
(as that term is defined in Rule 1000(b)(14)).\2\
The term ``Specialist'' applies to transactions for the account of
a Specialist \3\ (as defined in Exchange Rule 1020(a)).
The term ``ROT, SQT and RSQT'' applies to transactions for the
accounts of Registered Option Traders \4\ (``ROTs''), Streaming Quote
Traders (``SQTs''),\5\ and Remote Streaming Quote Traders
(``RSQTs'').\6\ For purposes of the Pricing Schedule, the term ``Market
Maker'' will be utilized to describe fees and rebates applicable to
ROTs, SQTs and RSQTs.
The term ``Firm'' applies to any transaction that is identified by
a member or member organization for clearing in the Firm range at OCC.
The term ``Professional'' applies to transactions for the accounts
of Professionals (as defined in Exchange Rule 1000(b)(14)).
The term ``Broker-Dealer'' applies to any transaction which is not
subject to any of the other transaction fees applicable within a
particular category.
The term ``Joint Back Office'' or ``JBO'' \7\ applies to any
transaction that is identified by a member or member organization for
clearing in the Firm range at OCC and is identified with an origin code
as a JBO. A JBO will be priced the same as a Broker-Dealer as of
September 1, 2014.
The term ``Common Ownership'' shall mean members or member
organizations under 75% common ownership or control.
For Purposes of Common Ownership Aggregation of Activity of Affiliated
Members and Member Organizations
(a) For purposes of applying any options transaction fee or rebate
where the fee assessed, or rebate provided by the Exchange depends upon
the volume of a member or member organization's activity, a member or
member organization may request that the Exchange aggregate its
activity with the activity of its affiliates.
(1) A member or member organization requesting aggregation of
affiliate activity shall be required to certify to the Exchange the
affiliate status of entities whose activity it seeks to aggregate prior
to receiving approval for aggregation, and shall be required to inform
the Exchange immediately of any event that causes an entity to cease to
be an affiliate. The Exchange shall review available information
regarding the entities, and reserves the right to request additional
information to verify the affiliate status of an entity. The Exchange
shall approve a request unless it determines that the certification is
not accurate.
(2) If two or more members or member organizations 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 the Exchange shall be
deemed to be effective as of the first day of that month. If two or
more members or member organizations 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 the
Exchange shall be deemed to be effective as of the first day of the
next calendar month.
(b) For purposes of applying any option transaction fee or rebate
where the fee assessed, or rebate provided by the Exchange depends upon
the volume of a member or member organization's activity, references to
an entity (including references to a ``member'' or ``member
organization'') shall be deemed to include the entity and its
affiliates that have been approved for aggregation.
(c) For purposes of this provision, the term ``affiliate'' of a
member or member organization shall mean any member or member
organization under 75% common ownership or control of that member or
member organization.
* * * * *
VIII. NASDAQ OMX PSX FEES
* * * * *
Aggregation of Activity of Affiliated Member Organizations
(a) For purposes of applying any PSX charge or credit where the
charge assessed, or credit provided, by the Exchange depends upon the
volume of a member organization's activity, a member organization may
request that the Exchange aggregate its activity with the activity of
its affiliates.
(1) A member organization requesting aggregation of affiliate
activity shall be required to certify to the Exchange the affiliate
status of entities whose activity it seeks to aggregate prior to
receiving approval for aggregation, and shall be required to inform the
Exchange immediately of any event that causes an entity to cease to be
an affiliate. [In addition, the Exchange reserves the right to request
information to verify the affiliate status of an entity.] The Exchange
shall review available information regarding the entities, and reserves
the right to request additional information to verify the affiliate
status of an entity. The Exchange shall approve a request unless it
determines that the certification is not accurate.
(2) If two or more member organizations 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 the Exchange shall be 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 the Exchange shall be deemed to be effective as of the
first day of the next calendar month.
(b) No Change.
(c) No Change.
* * * * *
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
[[Page 53487]]
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 both the Preface of the Pricing
Schedule, which applies to options, and Chapter VIII of the Pricing
Schedule, which applies to equities, to harmonize the process by which
the Exchange will collect information from members and member
organizations that desire their activity to be aggregated for the
purposes of assessing charges or credits. Today, equity and options
members may aggregate affiliate activity based on volume of activity
for purposes of pricing, but at different percentages (100 percent vs.
75 percent).\3\ The Exchange believes that having the same process for
equity and options members will provide consistency to its processes
when aggregating pricing.
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\3\ See Preface of the Pricing Schedule, which applies to
options, and Chapter VIII of the Pricing Schedule, which applies to
equities.
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Today, a PSX member organization requesting aggregation of
affiliate activity is required to certify to the Exchange the affiliate
status of entities whose activity it seeks to aggregate prior to
receiving approval for aggregation, and is required to inform the
Exchange immediately of any event that causes an entity to cease to be
an affiliate. In addition, the Exchange reserves the right to request
information to verify the affiliate status of an entity.
The Exchange proposes to make this language consistent with the
requirements of The NASDAQ Stock Market LLC (``NASDAQ'') and NASDAQ OMX
BX, Inc. (``BX'') \4\ by further stating that it will approve a request
unless it determines that the certification is not accurate. Also, the
Exchange proposes to adopt the following NASDAQ and BX equity process
for determining the effective date for aggregation: ``If two or more
member organizations 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
the Exchange shall be 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 the
Exchange shall be deemed to be effective as of the first day of the
next calendar month.''
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\4\ See NASDAQ and BX Rules 7027(a).
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The Exchange also proposes to add the same process that would exist
for PSX members to the process that would be required for option
members by also adding the same language, as specified above, to the
Preface of the Pricing Schedule, which applies to options pricing. The
Exchange believes that harmonizing the process for collecting this
information will avoid confusion and simplify information requested of
equity and options members by requesting consistent information.
Finally, the Exchange proposes to add language to clarify that the
defined terms in the Preface of the Pricing Schedule apply to options
pricing, fees and rebates.
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\5\ in general, and furthers the objectives of Section
6(b)(5) of the Act\6\ in particular, in 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 the process by which the Exchange
collects information from equity and options members and member
organizations regarding the aggregation of activity of affiliated
member organizations for the purposes of assessing charges or credits.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that harmonizing this process by which the
Exchange collects information related to aggregation for equity and
options members to the process in place at NASDAQ and BX \7\ will
provide consistency to market participants with respect to meeting the
requirements to aggregate on NASDAQ, BX or Phlx. Also, the Exchange
believes that adopting this method for collecting such information on
aggregated pricing will ensure proper validation for firms entitled to
the aggregation.
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\7\ See note 4.
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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. The Exchange is merely seeking
to harmonize the manner in which it collects information related to the
aggregation of activity of affiliated member organizations for the
purposes of assessing charges or credits for equity and options
members. The Exchange intends to apply a uniform process to request
such aggregation for all Phlx members and member organizations.
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: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
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)(ii) of the Act \8\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(a)(ii).
\9\ 17 CFR 240.19b-4(f)(6).
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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: (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.
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
[[Page 53488]]
Number SR-Phlx-2014-56 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-2014-56. 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-Phlx-2014-56 and should be
submitted on or before September 30, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O' Neill,
Deputy Secretary.
[FR Doc. 2014-21363 Filed 9-8-14; 8:45 am]
BILLING CODE 8011-01-P