3292 Federal Register / Vol. 80, No. 14 / Thursday, January 22, 2015 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3A Specialist is an Exchange member who is 

registered as an options specialist pursuant to Rule 

1020(a). An options Specialist includes a Remote 

Specialist which is defined as an options specialist 

in one or more classes that does not have a physical 

presence on an Exchange floor and is approved by 

the Exchange pursuant to Rule 501. 

4A ‘‘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. 

5Specialists and Market Makers are subject to a 

‘‘Monthly Market Maker Cap’’ of $550,000 for: (i) 

Electronic and floor Option Transaction Charges; 

(ii) QCC Transaction Fees (as defined in Exchange 

Rule 1080(o) and Floor QCC Orders, as defined in 

1064(e)); and (iii) fees related to an order or quote 

that is contra to a PIXL Order or specifically 

responding to a PIXL auction. The trading activity 

of separate Specialist and Market Maker member 

organizations is aggregated in calculating the 

Monthly Market Maker Cap if there is Common 

Ownership between the member organizations. All 

dividend, merger, short stock interest, reversal and 

conversion, jelly roll and box spread strategy 

executions (as defined in Section II) are excluded 

from the Monthly Market Maker Cap. 6Category A rebates are paid to members 

executing electronically-delivered Customer Simple 

Orders in Penny Pilot Options and Customer 

Simple Orders in Non-Penny Pilot Options in 

Section II symbols. Rebates are paid on Customer 

PIXL Orders in Section II symbols that execute 

against non-Initiating Order interest. In the instance 

where member organizations qualify for Tier 4 or 

higher in the Customer Rebate Program, Customer 

PIXL Orders that execute against a PIXL Initiating 

Order will be paid a rebate of $0.14 per contract. 

7Category B rebates are paid to members 

executing electronically-delivered Customer 

Complex Orders in Penny Pilot Options and NonPenny Pilot Options in Section II symbols. Rebates 

are paid on Customer PIXL Complex Orders in 

Section II symbols that execute against nonInitiating Order interest. In the instance where 

member organizations qualify for Tier 4 or higher 

in the Customer Rebate Program, Customer 

Complex PIXL Orders that execute against a 

Complex PIXL Initiating Order will be paid a rebate 

of $0.17 per contract. The Category B Rebate is not 

paid when an electronically-delivered Customer 

Complex Order, including Customer Complex PIXL 

Order, executes against another electronicallydelivered Customer Complex Order. 

8See Section B of the Pricing Schedule. 9A QCC Order is comprised of an order to buy 

or sell at least 1000 contracts that is identified as 

being part of a qualified contingent trade, as that 

term is defined in Rule 1080(o)(3), coupled with a 

contra-side order to buy or sell an equal number of 

contracts. The QCC Order must be executed at a 

price at or between the National Best Bid and Offer 

and be rejected if a Customer order is resting on the 

Exchange book at the same price. A QCC Order 

shall only be submitted electronically from off the 

floor to the PHLX XL II System. See Rule 1080(o). 

See also Securities Exchange Act Release No. 64249 

(April 7, 2011), 76 FR 20773 (April 13, 2011) (SR– 

Phlx–2011–47) (a rule change to establish a QCC 

Order to facilitate the execution of stock/option 

Qualified Contingent Trades (‘‘QCTs’’) that satisfy 

the requirements of the trade through exemption in 

connection with Rule 611(d) of the Regulation 

NMS). 

10Members and member organizations under 

common ownership may aggregate their Customer 

volume for purposes of calculating the Customer 

Rebate Tiers and receiving rebates. Common 

ownership means members or member 

organizations under 75% common ownership or 

control. 

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 advance notice that 

are filed with the Commission, and all 

written communications relating to the 

advance notice 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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of OCC 

and on OCC’s Web site http://

www.theocc.com/components/docs/

legal/rules_and_bylaws/sr_occ_14_

812.pdf. 

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–OCC–2014–812 and should 

be submitted on or before February 6, 

2015. 

By the Commission. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–00970 Filed 1–21–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74059; File No. SR–Phlx– 

2015–01] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Customer Rebate Program 

January 15, 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 January 

2, 2015, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Customer Rebate Program in Section B 

of the Pricing Schedule. 

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 proposes to amend the 

‘‘Customer Rebate Program,’’ in Section 

B of the Pricing Schedule to: (i) Increase 

certain Category B rebates; and (ii) 

increase the additional Category B Tier 

2 and 3 rebates paid to Specialists 3 and 

Market Makers 4 that reach the Monthly 

Market Maker Cap.5 The Exchange 

believes that the proposed increased 

rebates will encourage market 

participants to direct a greater number 

of Customer orders to the Exchange. 

Currently, the Exchange has a 

Customer Rebate Program consisting of 

five tiers that pays Customer rebates on 

two Categories, A 6 and B,7 of 

transactions.8 A Phlx member qualifies 

for a certain rebate tier based on the 

percentage of total national customer 

volume in multiply-listed options that it 

transacts monthly on Phlx. The 

Exchange calculates Customer volume 

in Multiply Listed Options by totaling 

electronically-delivered and executed 

volume, excluding volume associated 

with electronic Qualified Contingent 

Cross (‘‘QCC’’) Orders,9 as defined in 

Exchange Rule 1080(o).10


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 14 / Thursday, January 22, 2015 / Notices 3293 

11Options overlying SPY are included in the 

calculation of Customer volume in Multiply Listed 

Options that are electronically-delivered and 

executed for purposes of the Customer Rebate 

Program, however, rebates are not paid for 

electronic executions in options overlying SPY. 12The term ‘‘Common Ownership’’ means 

members or member organizations under 75% 

common ownership or control. 

13See note 5. 

14 15 U.S.C. 78f. 

15 15 U.S.C. 78f(b)(4) and (5). 

16See Rule 1014 titled ‘‘Obligations and 

Restrictions Applicable to Specialists and 

Registered Options Traders.’’ 

17Specialists and Market Makers pay for certain 

data feeds including the SQF Port Fee. SQF Port 

Fees are listed in the Exchange’s Pricing Schedule 

at Section VII. SQF is an interface that allows 

Specialists and Market Makers to connect and send 

quotes into Phlx XL and assists them in responding 

to auctions and providing liquidity to the market. 

The Exchange pays the following 

rebates: 11

Customer rebate tiers Percentage thresholds of national customer volume in multiply-listed equity and ETF 

options classes, excluding SPY options (monthly) 

Category 

A 

Category 

B 

Tier 1 ........................ 0.00%–0.60% .................................................................................................................... $0.00 $0.00 

Tier 2 ........................ Above 0.60%–1.10% ........................................................................................................ * 0.10 * 0.17 

Tier 3 ........................ Above 1.10%–1.60% ........................................................................................................ * 0.12 * 0.17 

Tier 4 ........................ Above 1.60%–2.50% ........................................................................................................ 0.16 0.19 

Tier 5 ........................ Above 2.50% .................................................................................................................... 0.17 0.19 

The Exchange proposes to increase 

the Tier 4 and 5 Category B rebates from 

$0.19 to $0.20 per contract. 

Currently, the Exchange offers 

Specialists and Market Makers, or its 

affiliate under Common Ownership,12

that have reached the Monthly Market 

Maker Cap 13 an increased $0.02 per 

contract Category A and B rebate in 

addition to the Tier 2 and 3 rebates. The 

Exchange proposes to increase the 

additional Category B rebate, which is 

currently paid in addition to the 

applicable Tier 2 or 3 rebate, to a 

Specialist or Market Maker, or its 

affiliate under Common Ownership, 

provided the Specialist or Market Maker 

has reached the Monthly Market Maker 

Cap, from $0.02 to $0.03 per contract. 

The Exchange will continue to pay 

Specialists and Market Makers, or its 

affiliate under Common Ownership, that 

have reached the Monthly Market Maker 

Cap an increased $0.02 per contract 

Category A rebate in addition to the Tier 

2 and 3 rebates. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,14

in general, and with Section 6(b)(4) and 

6(b)(5) of the Act,15 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 that the Exchange operates or 

controls, and is not designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange’s proposal to increase 

the Tier 4 and 5 Category B rebates will 

encourage market participants to send a 

greater amount of Customer liquidity to 

Phlx. 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. 

The Exchange believes that its 

proposal to increase the Tier 4 and 5 

Category B rebates is equitable and not 

unfairly discriminatory because it will 

be applied to all market participants in 

a uniform matter. All members are 

eligible to receive the rebate provided 

they submit a qualifying number of 

electronic Customer volume. 

The Exchange believes that its 

proposal to pay an increased $0.03 per 

contract Category B rebate, in addition 

to the applicable Tier 2 or 3 rebate, to 

a Specialist or Market Maker, or its 

affiliate under Common Ownership, 

provided the Specialist or Market Maker 

has reached the Monthly Market Maker 

Cap is reasonable because the Exchange 

intends to continue to encourage 

Specialists and Market Makers to 

transact Customer Complex Orders on 

the Exchange to receive the enhanced 

rebate. The Exchange will continue to 

encourage Specialists and Market 

Makers to transact Customer Simple 

Orders on the Exchange by offering the 

additional $0.02 per contract Category A 

rebate in addition to the applicable Tier 

2 or 3 rebate. 

The Exchange believes that its 

proposal to pay an increased $0.03 per 

contract Category B rebate, in addition 

to the applicable Tier 2 or 3 rebate, to 

a Specialist or Market Maker, or its 

affiliate under Common Ownership, 

provided the Specialist or Market Maker 

has reached the Monthly Market Maker 

Cap is equitable and not unfairly 

discriminatory because unlike other 

market participants, Specialists and 

Market Makers have burdensome 

quoting obligations 16 to the market that 

do not apply to Customers, 

Professionals, Firms and Broker-Dealers. 

Specialists and Market Makers serve an 

important role on the Exchange with 

regard to order interaction and they 

provide liquidity in the marketplace. 

Additionally, Specialists and Market 

Makers incur costs unlike other market 

participants including, but not limited 

to, PFOF and other costs associated with 

market making activities,17 which 

results in a higher average cost per 

execution as compared to Firms, BrokerDealers and Professionals. The proposed 

differentiation as between Specialists 

and Market Makers as compared to 

other market participants recognizes the 

differing contributions made to the 

trading environment on the Exchange by 

these market participants. 

Additionally, the Exchange believes 

that it is reasonable, equitable and not 

unfairly discriminatory to pay 

Specialists and Market Makers different 

rebates for transacting Simple versus 

Complex Orders. Today, the Exchange 

pays different Category A (Simple 

Order) and Category B (Complex Order) 

rebates. The Exchange also differentiates 

pricing for Simple and Complex Orders 

transaction fees in Section I as do other 

options exchanges. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange 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 the Customer 

Rebate Program will continue to 

encourage Customer order flow to be 

directed to the Exchange. Certain market 

participants will receive higher Tier 4 

and 5 Category B rebates for transacting 

the same Customer order flow as today. 

The Exchange believes that the 


tkelley on DSK3SPTVN1PROD with NOTICES
3294 Federal Register / Vol. 80, No. 14 / Thursday, January 22, 2015 / Notices 

18See note 16. 

19See the Chicago Board Options Exchange, Inc.’s 

Fees Schedule and the International Securities 

Exchange, LLC’s Schedule of Fees. 20 15 U.S.C. 78s(b)(3)(A)(ii). 

21 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 73342 

(Oct. 10, 2014), 79 FR 62492. 4Letter to SEC from Anonymous Commenter, 

dated November 7, 2014. Comments regarding the 

Customer Rebate Program will continue 

to encourage Customer order flow to be 

directed to the Exchange. By 

incentivizing members to route 

Customer orders, the Exchange desires 

to attract liquidity to the Exchange, 

which in turn benefits all market 

participants. All market participants are 

eligible to qualify for a Customer Rebate. 

The Exchange believes this pricing 

amendment does not impose a burden 

on competition but rather that the 

proposed rule change will continue to 

promote competition on the Exchange. 

The Exchange does not believe that 

offering Specialists and Market Makers 

an enhanced Category B rebate of $0.03 

per contract in addition to the 

applicable Tier 2 or 3 rebate creates an 

undue burden on competition because 

Specialists and Market Makers have 

burdensome quoting obligations 18 to 

the market that do not apply to 

Customers, Professionals, Firms and 

Broker-Dealers. Specialists and Market 

Makers serve an important role on the 

Exchange with regard to order 

interaction and they provide liquidity in 

the marketplace. In addition, paying 

different rebates for Simple and 

Complex Orders is not novel. Other 

options exchanges today similarly 

differentiate rebates.19

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.20 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 rule-comments@

sec.gov. Please include File Number SR– 

Phlx–2015–01 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–2015–01. 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 

a.m. and 3 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– 

2015–01 and should be submitted on or 

before February 12, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–00965 Filed 1–21–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74058; File No. SR– 

NYSEArca–2014–114] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of 

Amendments No. 1 and No. 2 and 

Order Granting Accelerated Approval 

of a Proposed Rule Change, as 

Modified by Amendment Nos. 1 and 2, 

to List and Trade Shares of the iShares 

Interest Rate Hedged 0–5 Year High 

Yield Bond ETF, iShares Interest Rate 

Hedged 10+ Year Credit Bond ETF, and 

the iShares Interest Rate Hedged 

Emerging Markets Bond ETF Under 

NYSE Arca Equities Rule 8.600 

January 15, 2015. 

I. Introduction 

On September 29, 2014, NYSE Arca, 

Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to list and trade shares 

(‘‘Shares’’) of the iShares Interest Rate 

Hedged 0–5 Year High Yield Bond ETF 

(‘‘High Yield Bond Fund’’), iShares 

Interest Rate Hedged 10+ Year Credit 

Bond ETF (‘‘Credit Bond Fund’’), and 

the iShares Interest Rate Hedged 

Emerging Markets Bond ETF (‘‘Emerging 

Markets Bond Fund’’) (collectively ‘‘the 

Funds’’) under NYSE Arca Equities Rule 

8.600. The proposed rule change was 

published for comment in the Federal 

Register on October 17, 2014.3 The 

Commission received one supporting 

comment on the proposal,4 and on 


tkelley on DSK3SPTVN1PROD with NOTICES