[Federal Register Volume 80, Number 250 (Wednesday, December 30, 2015)]
[Notices]
[Pages 81589-81590]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32813]
[[Page 81589]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76754; File No. SR-BX-2015-083]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Adopt a
Participant Fee
December 23, 2015.
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 December 17, 2015, 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 proposes to amend the Exchange's transaction fees to
adopt a new Participant Fee at Chapter XV, entitled, ``Options
Pricing,'' Section 10 entitled ``Participant Fee--Options.''
The Exchange purposes [sic] to adopt a Participant Fee, applicable
to BX Options Participants, to recoup costs incurred by the Exchange.
The Exchange's Participant Fee is competitive with those of other
options exchanges.\3\ While the amendment proposed herein is effective
upon filing, the Exchange has designated the amendment [sic] become
operative on January 4, 2016.
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\3\ See note 14 below.
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The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxbx.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 proposes to adopt a Participant Fee, applicable to BX
Options Participants, so the Exchange can allocate its costs to various
options market participants. Today, the Exchange does not assess BX
Options Participants a fee to access the options market. The Exchange
proposes to assess all BX Options Participants a $500 per month
Participant Fee. The NASDAQ Options Market LLC (``NOM'') initially
assessed a Participant Fee in 2012 to its Options Participants.\4\ BX
is a smaller market, as compared to NOM, and, to date, the Exchange
determined not to assess BX members an Options Participant Fee. Now,
the Exchange is proposing such a fee, which would be assessed as of
January 4, 2016, to all BX Options Participants. The proposed
Participant Fee is in addition to the trading rights fee of $1,000 per
month to be an Exchange member.\5\
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\4\ See Securities and Exchange Act Release No. 68502 (December
20, 2012), 77 FR 76572 (December 28, 2012) (SR-NASDAQ-2012-139).
\5\ See Exchange Rule 7001.
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The Exchange believes this Participant Fee is competitive with fees
at other options exchanges.\6\
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\6\ See note 14 below.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \7\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act \8\ 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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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4) and (5).
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The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, for example, the Commission indicated that market forces should
generally determine the price of non-core market data because national
market system regulation ``has been remarkably successful in promoting
market competition in its broader forms that are most important to
investors and listed companies.'' \9\ Likewise, in NetCoalition v. NYSE
Arca, Inc.\10\ (``NetCoalition'') the D.C. Circuit upheld the
Commission's use of a market-based approach in evaluating the fairness
of market data fees against a challenge claiming that Congress mandated
a cost-based approach.\11\ As the court emphasized, the Commission
``intended in Regulation NMS that `market forces, rather than
regulatory requirements' play a role in determining the market data . .
. to be made available to investors and at what cost.'' \12\
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\9\ Securities Exchange Act Release No. 51808 at 37499 (June 9,
2005) (``Regulation NMS Adopting Release'').
\10\ NetCoalition v. NYSE Arca, Inc., 615 F.3d 525 (D.C. Cir.
2010).
\11\ See NetCoalition, at 534.
\12\ Id. at 537.
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Further, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers'. . . .'' \13\ Although the court and
the SEC were discussing the cash equities markets, the Exchange
believes that these views apply with equal force to the options
markets.
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\13\ Id. at 539 (quoting ArcaBook Order, 73 FR at 74782-74783).
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The Exchange's proposal to adopt a BX Options Participant Fee of
$500 per month is reasonable because the Exchange is seeking to recoup
costs related to membership administration. The proposed fee is lower
than similar fees at other options exchanges.\14\ The
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Exchange's proposal to adopt a BX Options Participant Fee of $500 is
equitable and not unfairly discriminatory because the Participant Fee
will be assessed uniformly to each BX Options Participant.
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\14\ See The Chicago Board Options Exchange, Incorporated's Fees
Schedule. Per month a Market Maker Trading Permit is $5,500, an SPX
Tier Appointment is $3,000, a VIX Tier Appointment is $2,000, and an
Electronic Access Permit is $1,600. See also the International
Securities Exchange LLC's Schedule of Fees. Per month an Electronic
Access Member is assessed $500.00 for membership and a market maker
is assessed from $2,000 to $4,000 per membership depending on the
type of market maker. See also C2 Options Exchange, Incorporated's
Fees Schedule. Per month, a market-maker is assessed a $5,000 permit
fee, an Electronic Access Permit is assessed a $1,000 permit fee.
See also NYSE Arca, Inc.'s Fee Schedule. Per month, a Clearing Firm
is assessed a $1,000 per month fee for the first Options Trading
Permit (``OTP'') and $250 thereafter, and a market maker is assessed
a permit based on the maximum number of OTPs held by an OTP Firm or
OTP Holder during a calendar month ranging from $1,000 to $6,000 a
month.
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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. In terms of inter-market
competition, 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, or rebate opportunities available at other venues to be more
favorable. In such an environment, the Exchange must continually adjust
its fees to remain competitive with other exchanges and with
alternative trading systems that have been exempted from compliance
with the statutory standards applicable to exchanges. Because
competitors are free to modify their own fees in response and because
market participants may readily adjust their order routing practices,
the Exchange believes that the degree to which fee changes in this
market may impose any burden on competition is extremely limited.
In terms of intra-market competition, the Exchange's proposal to
adopt a BX Options Participant Fee of $500 per month does not impose an
undue burden on competition because the Exchange would uniformly assess
the same Participant Fee to each BX Options Participant. If the changes
proposed herein are unattractive to market participants, it is likely
that the Exchange will lose Participants. Accordingly, the Exchange
does not believe that the proposed changes will impair the ability of
members or competing order execution venues to maintain their
competitive standing in the financial markets.
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\
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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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. 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-2015-083 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-BX-2015-083. 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-BX-2015-083, and should be
submitted on or before January 20, 2016.
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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Brent J. Fields,
Secretary.
[FR Doc. 2015-32813 Filed 12-29-15; 8:45 am]
BILLING CODE 8011-01-P