8380 Federal Register / Vol. 80, No. 31 / Tuesday, February 17, 2015 / Notices 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5The term ‘‘Member’’ is defined as ‘‘any 

registered broker or dealer, or any person associated 

with a registered broker or dealer, that has been 

admitted to membership in the Exchange. A 

Member will have the status of a ‘‘member’’ of the 

Exchange as that term is defined in Section 3(a)(3) 

of the Act.’’ See Exchange Rule 1.5(n). 

6See Securities Exchange Act Release No. 71449 

(January 30, 2014), 79 FR 6961 (February 5, 2014) 

(SR–EDGX–2013–43; SR–EDGA–2013–34). 

7As provided in the Fee Schedule, ‘‘ADV’’ is 

currently defined as ‘‘average daily volume 

calculated as the number of shares added to, 

removed from, or routed by, the Exchange, or any 

combination or subset thereof, per day. ADV is 

calculated on a monthly basis.’’ 

8As provided in the Fee Schedule, ‘‘TCV’’ is 

currently defined as ‘‘total consolidated volume 

calculated as the volume reported by all exchanges 

and trade reporting facilities to a consolidated 

transaction reporting plan for the month for which 

the fees apply.’’ 

9See Securities Exchange Act Release Nos. 74025 

(January 9, 2015), 80 FR 2154 (January 15, 2015) 

(SR–EDGA–2014–36); and 74021 [sic] (January 9, 

2015), 80 FR 2142 (January 15, 2015) (SR–EDGX– 

2014–37). 

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–EDGA– 

2015–05, and should be submitted on or 

before March 10, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–03077 Filed 2–13–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74238; File No. SR–EDGA– 

2015–07] 

Self-Regulatory Organizations; EDGA 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Related to Fees for Use 

of the Exchange 

February 10, 2015. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 

30, 2015, EDGA Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGA’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated the proposed rule change as 

one establishing or changing a member 

due, fee, or other charge imposed by the 

Exchange under Section 19(b)(3)(A)(ii) 

of the Act 3 and Rule 19b–4(f)(2) 

thereunder,4 which renders the 

proposed rule change effective upon 

filing with the Commission. 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 filed a proposal to 

amend its fees and rebates applicable to 

Members 5 of the Exchange pursuant to 

EDGA Rule 15.1(a) and (c) (‘‘Fee 

Schedule’’) to: (i) Amend the definitions 

of ADV and TCV to remove a provision 

to exclude shares on each day from 

January 12, 2015 up to and including 

January 16, 2015; (ii) update the 

description of fee code D to include 

routing using the RDOT routing strategy; 

(iii) delete fee codes M and U, as well 

as remove the ROLF routing strategy 

from Footnote 7, all of which route to 

LavaFlow; and (iv) make a number of 

non-substantive and organizational 

amendments. 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at www.batstrading.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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to: (i) Amend 

the definitions of ADV and TCV to 

remove a provision to exclude shares on 

each day from January 12, 2015 up to 

and including January 16, 2015; (ii) 

update the description of fee code D to 

include routing using the RDOT routing 

strategy; (iii) delete fee codes M and U, 

as well as remove the ROLF routing 

strategy from Footnote 7, all of which 

route to LavaFlow; and (iv) make a 

number of non-substantive and 

organizational amendments. 

ADV and TCV Definitions 

Earlier this year, the Exchange and its 

affiliate, EDGX Exchange, Inc. (‘‘EDGX’’) 

received approval to effect a merger (the 

‘‘Merger’’) of the Exchange’s parent 

company, Direct Edge Holdings LLC, 

with BATS Global Markets, Inc., the 

parent of BATS (together with BATS, 

EDGA and EDGX, the ‘‘BGM Affiliated 

Exchanges’’).6 In the context of the 

Merger, the BGM Affiliated Exchanges 

worked to migrate EDGX and EDGA 

onto the BATS technology platform, and 

align certain system functionality, 

retaining only intended differences 

between the BGM Affiliated Exchanges. 

The migration of EDGX and EDGA onto 

the BATS technology platform occurred 

during the week of January 12, 2015. 

Currently, the Exchange determines 

the tiered pricing that it will provide to 

Members according to the Exchange’s 

tiered pricing structure, which is based 

on the calculation of ADV 7 and/or 

average daily TCV.8 The Exchange 

currently excludes from its calculation 

of ADV and TCV those shares traded on 

each day from January 12, 2015 up to 

and including January 16, 2015 in order 

to avoid penalizing Members that, 

because of the technology migration that 

occurred during the week of January 12, 

2015, did not participate on the 

Exchange during that week to the extent 

that they might have otherwise 

participated.9 As described above, such 

exclusion only applied to tier 

calculations in January, meaning that 

the language has no effect moving 

forward. As such, the Exchange 

proposes to remove the provisions from 

the definitions of ADV and TCV that 

exclude trading activity that occurred 

on each day from January 12, 2015 up 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 31 / Tuesday, February 17, 2015 / Notices 8381 

10The term ‘‘System’’ is defined as ‘‘the 

electronic communications and trading facility 

designated by the Board through which securities 

orders of Users are consolidated for ranking, 

execution and, when applicable, routing away.’’ 

11The term ‘‘System routing table’’ refers to ‘‘the 

proprietary process for determining the specific 

trading venues to which the System routes orders 

and the order in which it routes them.’’ See 

Exchange Rule 11.11(g). 

12See Exchange Rule 11.11(g)(5). 

13 15 U.S.C. 78f. 

14 15 U.S.C. 78f(b)(4). 

to and including January 16, 2015 as the 

exclusion period has passed and these 

provisions are no longer necessary. 

Fee Code D 

Currently, fee code D is appended to 

orders routed to the NYSE. Orders 

yielding fee code D are charged a fee of 

$0.0027 per share in securities priced at 

or above $1 and 0.30% of the dollar 

value of the trade in securities priced 

below $1. The Exchange proposes to 

amend the description of fee code D to 

include routing using the RDOT routing 

strategy, in addition to orders routed to 

the NYSE. RDOT is a routing option 

under which an order checks the 

System 10 for available shares and then 

is sent to destinations on the System 

routing table,11 which may include nonexchange destinations. If shares remain 

unexecuted after routing, they are sent 

to the New York Stock Exchange, Inc. 

(‘‘NYSE’’) and can be re-routed by the 

NYSE. Any remainder will be posted to 

the NYSE, unless otherwise instructed 

by the User.12 Historically, fee code D is 

appended by the System to orders 

routed using the RDOT routing strategy 

that are executed on a destination on the 

System routing table prior to reaching 

the NYSE as well as to those RDOT 

orders that remove liquidity from the 

NYSE. Therefore, the Exchange 

proposes to update the description of 

fee code D to make clear that it also 

includes orders routed using the RDOT 

routing strategy. The Exchange notes 

that fee code F is and will remain 

appended to orders routed using the 

RDOT routing strategy that add liquidity 

to NYSE. 

Fee Codes M and U, Footnote 7 

The Exchange proposes to amend its 

Fee Schedule to delete fee code M, 

which routes to LavaFlow and adds 

liquidity, as well as fee code U, which 

routes to LavaFlow. The Exchange also 

proposes to amend Footnote 7 to remove 

references to the ROLF routing strategy, 

under which an order will check the 

Exchange for available shares and then 

will be sent to LavaFlow. These changes 

are being proposed in response to 

LavaFlow’s announcement that it will 

cease market operations and its last day 

of trading will be Friday, January 30, 

2015. For orders yielding fee code M, 

the Exchange currently provides a 

rebate of $0.0024 per share in securities 

priced at or above $1.00 and no rebate 

in securities priced below $1.00. For 

orders yielding fee code U, the 

Exchange currently charges a fee of 

$0.0028 per share in securities priced at 

or above $1.00 and no fee in securities 

priced below $1.00. The rates for orders 

that yield fee codes M or U represent a 

pass through of the rate that BATS 

Trading, the Exchange’s affiliated 

routing broker-dealer, is subject to for 

routing orders to LavaFlow. As of 

February 2, 2015, the Exchange, via 

BATS Trading, will no longer be able to 

route orders to LavaFlow because it 

ceased operations, and, therefore, 

proposes to delete fee codes M and U, 

as well as references to the ROLF 

routing strategy in Footnote 7. 

Non-Substantive and Organizational 

Changes to Fee Code and Associated 

Fees 

The Exchange also proposes to make 

two non-substantive and organizational 

changes to its Fee Schedule to provide 

greater clarity to Members on how the 

Exchange assesses fees and calculates 

rebates. The Exchange proposes to 

reorder the fee codes under the section 

entitled, Fee Codes and Associated Fees, 

as well as indicate the amount of the 

fees and rebates as five decimal points, 

rather than four decimal points, by 

adding a zero to the end of each fee and 

rebate, to reflect the order pricing format 

on the Exchange’s Web site. The 

Exchange notes that none of these 

changes amend any fee or rebate, nor do 

they alter the manner in which it 

assesses fees or calculates rebates. 

Implementation Date 

The Exchange proposes to implement 

these amendments to its Fee Schedule 

on February 2, 2015. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the objectives of Section 6 of the Act,13

in general, and furthers the objectives of 

Section 6(b)(4),14 in particular, as it is 

designed to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its Members and 

other persons using its facilities. The 

Exchange also notes that it operates in 

a highly-competitive market in which 

market participants can readily direct 

order flow to competing venues if they 

deem fee levels at a particular venue to 

be excessive. The proposed rule change 

reflects a competitive pricing structure 

designed to incent market participants 

to direct their order flow to the 

Exchange. The Exchange believes that 

the proposed rates are equitable and 

non-discriminatory in that they apply 

uniformly to all Members. The 

Exchange believes the fees and credits 

remain competitive with those charged 

by other venues and therefore continue 

to be reasonable and equitably allocated 

to Members. 

ADV and TCV Definitions 

The Exchange believes that its 

proposed amendments to the definitions 

of ADV and TCV to remove a provision 

to exclude shares during the week the 

Exchange is migrated onto BATS 

technology is reasonable because, as 

explained above, it is no longer 

necessary as the exclusion period has 

passed. The Exchange is not proposing 

to amend the thresholds a Member must 

achieve to become eligible for, or the 

dollar value associated with, the tiered 

rebates or fees. The initial proposal to 

exclude these trading days from the 

calculation of ADV and TCV was 

designed to provide Members additional 

time to monitor the migration of the 

Exchange onto BATS technology. In 

addition, the Exchange believes that the 

proposed changes to its Fee Schedule 

are equitably allocated among Exchange 

constituents and not unfairly 

discriminatory as the methodology for 

calculating ADV and TCV will apply 

equally to all Members. 

Fee Code D 

The Exchange believes that its 

proposal to update fee code D to also 

include order routed using the RDOT 

routing strategy represents an equitable 

allocation of reasonable dues, fees, and 

other charges among Members and other 

persons using its facilities. Historically, 

fee code D has been appended by the 

System to orders routed using the RDOT 

routing strategy that are executed on a 

destination on the System routing table 

prior to reaching the NYSE as well as to 

orders that that remove liquidity from 

NYSE. Therefore, the Exchange believes 

that updating fee code to specifically 

state that fee code D is appended to 

orders using the RDOT routing strategy 

would benefit Members by providing 

clear guidance in its Fee Schedule 

regarding which orders fee code D 

would be appended to. In addition, the 

Exchange believes that the proposed 

change to its Fee Schedule is equitably 

allocated among Exchange constituents 

and not unfairly discriminatory as the 

application of fee code D will apply 

equally to all Members who use the 

RDOT routing strategy. 


tkelley on DSK3SPTVN1PROD with NOTICES
8382 Federal Register / Vol. 80, No. 31 / Tuesday, February 17, 2015 / Notices 

15 15 U.S.C. 78s(b)(3)(A). 

16 17 CFR 240.19b–4(f). 

Fee Codes M and U, Footnote 7 

The Exchange believes that its 

proposal to delete fee codes M and U in 

its Fee Schedule as well as remove 

references to the ROLF routing strategy 

from Footnote 7 represents an equitable 

allocation of reasonable dues, fees, and 

other charges among Members and other 

persons using its facilities. The 

proposed change is in response to 

LavaFlow’s announcement that it will 

cease market operations and its last day 

of trading will Friday, January 30, 2015. 

As of February 2, 2015, the Exchange, 

via BATS Trading, will no longer be 

able to route orders to LavaFlow and, 

therefore, proposes to remove fee codes 

M and U as well as a reference to the 

ROLF routing strategy in Footnote 7. 

The Exchange believes that the 

proposed amendments are intended to 

make the Fee Schedule clearer and less 

confusing for investors and eliminate 

potential investor confusion, thereby 

removing impediments to and 

perfecting the mechanism of a free and 

open market and a national market 

system, and, in general, protecting 

investors and the public interest. 

Non-Substantive and Organizational 

Changes to Fee Code and Associated 

Fees 

The Exchange believes that the nonsubstantive clarifying changes to its Fee 

Schedule are reasonable because they 

are designed to provide greater 

transparency to Members with regard to 

how the Exchange assesses fees and 

calculates rebates. The Exchange notes 

that none of the proposed nonsubstantive clarifying changes are 

designed to amend any fee, nor alter the 

manner in which it assesses fees or 

calculates rebates. These nonsubstantive and organizational changes 

to the Fee Schedule as intended to make 

the Fee Schedule clearer and less 

confusing for investors and eliminate 

potential investor confusion, thereby 

removing impediments to and 

perfecting the mechanism of a free and 

open market and a national market 

system, and, in general, protecting 

investors and the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange believes its proposed 

amendments to its Fee Schedule would 

not impose any burden on competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

The Exchange does not believe that the 

proposed change represents a significant 

departure from previous pricing offered 

by the Exchange or pricing offered by 

the Exchange’s competitors. 

Additionally, Members may opt to 

disfavor the Exchange’s pricing if they 

believe that alternatives offer them 

better value. Accordingly, the Exchange 

does not believe that the proposed 

change will impair the ability of 

Members or competing venues to 

maintain their competitive standing in 

the financial markets. 

ADV and TCV Definitions 

The proposal to remove a provision to 

exclude shares from January 12, 2015 up 

to and including January 16, 2015 from 

the ADV and TCV calculations would 

not affect intermarket nor intramarket 

competition because it is no longer 

necessary as the exclusion period has 

passed. 

Fee Code D 

The Exchange believes that its 

proposal to update fee code D to also 

include order routed using the RDOT 

routing strategy would not affect 

intermarket nor intramarket competition 

because this change is not designed to 

amend any fee or rebate or alter the 

manner in which the Exchange assesses 

fees for orders yielding fee code D 

amend the orders to which fee code D 

applies. It is simply proposed to update 

the description of fee code D to make 

clear that it also includes orders routed 

using the RDOT routing strategy, in 

addition to orders routed to the NYSE. 

Fee Codes M and U, Footnote 7 

The Exchange believes that its 

proposal to delete fee codes M and U 

and amend Footnote 7 would not affect 

intermarket nor intramarket competition 

because this change is not designed to 

amend any fee or rebate or alter the 

manner in which the Exchange assesses 

fees or calculates rebates. It is simply 

proposed in response to LavaFlow’s 

announcement that it will cease market 

operations and its last day of trading 

will be Friday, January 30, 2015. 

Non-Substantive and Organizational 

Changes to Fee Code and Associated 

Fees 

The Exchange believes that nonsubstantive and organizational changes 

to the Fee Schedule would not affect 

intermarket nor intramarket competition 

because none of these changes are 

designed to amend any fee or alter the 

manner in which the Exchange assesses 

fees or calculates rebates. These changes 

are intended to provide greater clarity to 

Members with regard to how the 

Exchange access fees and calculates 

rebates. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

Members or other interested parties. 

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) 

of the Act 15 and paragraph (f) of Rule 

19b–4 thereunder.16 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. 

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 rulecomments@sec.gov. Please include File 

Number SR–EDGA–2015–07 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–EDGA–2015–07. 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 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 31 / Tuesday, February 17, 2015 / Notices 8383 

17 17 CFR 200.30–3(a)(12). 

1OCC initially filed a similar advance notice on 

September 17, 2014. Securities Exchange Act 

Release No. 73343 (October 14, 2014), 79 FR 62684 

(October 20, 2014), (SR–OCC–2014–805). OCC 

withdrew that advance notice on October 28, 2104. 

Securities Exchange Act Release No. 73710 

(December 1, 2014), 79 FR 72225 (December 5, 

2014), (SR–OCC–2014–805). 

2 12 U.S.C. 5465(e)(1). The Financial Stability 

Oversight Council designated OCC a systemically 

important financial market utility on July 18, 2012. 

See Financial Stability Oversight Council 2012 

Annual Report, Appendix A, http://

www.treasury.gov/initiatives/fsoc/Documents/

2012%20Annual%20Report.pdf. Therefore, OCC is 

required to comply with the Clearing Supervision 

Act and file advance notices with the Commission. 

See 12 U.S.C. 5465(e). 

3 17 CFR 240.19b–4(n)(1)(i). 

4See Securities Exchange Act Release No. 74073 

(January 15, 2015), 80 FR 3287 (January 22, 2015) 

(SR–OCC–2014–812). OCC also filed the proposal 

contained in this advance notice as a proposed rule 

change under Section 19(b)(1) of the Act and Rule 

19b–4 thereunder, which was published for 

comment in the Federal Register on December 30, 

2014. 15 U.S.C. 78s(b)(1); 17 CFR 240.19b–4. See 

Securities Exchange Act Release No. 73907 

(December 22, 2014), 79 FR 78543 (December 30, 

2014) (SR–OCC–2014–24). The Commission did not 

receive any comments on the proposed rule change. 

5ELX Futures LP (‘‘ELX’’) previously submitted 

overnight trading activity to OCC, but currently 

does not submit such trades. OCC will re-evaluate 

ELX’s risk controls in the event ELX re-institutes its 

overnight trading sessions. 

6See CFE–2014–010 at http://cfe.cboe.com/

publish/CFErulefilings/SR-CFE-2014-010.pdf. 

7Comparable controls are applied to futures and 

future option trades executed in overnight trading 

sessions currently cleared by OCC, although such 

controls have been implemented by clearing futures 

commission merchants (‘‘clearing FCMs’’) pursuant 

to Commodity Futures Trading Commission 

(‘‘CFTC’’) Regulation 1.73. This requires clearing 

FCMs to monitor for adherence to such controls 

during regular and overnight trading sessions. Some 

of these risk control measures are similar to those 

proposed by OCC for use in clearing securities 

trades in overnight trading sessions. For instance, 

OCC confirmed that CFE maintains kill switch 

capabilities. 

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–EDGA– 

2015–07, and should be submitted on or 

before March 10, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–03078 Filed 2–13–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74241; File No. SR–OCC– 

2014–812] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of No Objection to Advance Notice 

Concerning Extended and Overnight 

Trading Sessions 

February 10, 2015. 

On December 12, 2014, The Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) advance 

notice SR–OCC–2014–812 (‘‘Advance 

Notice’’) 1 pursuant to Section 806(e)(1) 

of the Payment, Clearing, and 

Settlement Supervision Act of 2010 

(‘‘Clearing Supervision Act’’) 2 and Rule 

19b–4(n)(1)(i) under the Securities 

Exchange Act of 1934 (‘‘Exchange 

Act’’).3 The Advance Notice was 

published for comment in the Federal 

Register on January 22, 2015.4 The 

Commission did not receive any 

comments on the Advance Notice. This 

publication serves as a notice of no 

objection to the Advance Notice. 

I. Description of the Advance Notice 

Description of Change 

This advance notice was filed in 

connection with OCC’s proposed change 

to its operations concerning the 

clearance of confirmed trades executed 

in overnight trading sessions offered by 

exchanges for which OCC provides 

clearance and settlement services. OCC 

currently clears overnight trading 

activity for CBOE Futures Exchange, 

LLC (‘‘CFE’’).5 The total number of 

trades submitted to OCC from overnight 

trading sessions is nominal, typically 

less than 3,000 contracts per session. 

However, OCC has recently observed an 

industry trend whereby exchanges are 

offering overnight trading sessions 

beyond traditional hours. Exchanges 

offering overnight trading sessions have 

indicated to OCC that such sessions 

benefit market participants by providing 

additional price transparency and 

hedging opportunities for products 

traded in such sessions, which, in turn, 

promotes market stability.6 In light of 

this trend, OCC proposed to implement 

a framework for clearing trades executed 

in such sessions that includes: (1) 

Qualification criteria used to approve 

clearing members for overnight trading 

sessions, (2) systemic controls to 

identify trades executed during 

overnight trading sessions by clearing 

members not approved for such 

sessions, (3) enhancements to OCC’s 

overnight monitoring of trades 

submitted by exchanges during 

overnight trading sessions, (4) 

enhancements to OCC’s credit controls 

with respect to monitoring clearing 

members’ credit risk during overnight 

trading sessions, including procedures 

for contacting an exchange offering 

overnight trading sessions in order to 

invoke use of the exchange’s kill switch, 

and (5) taking appropriate disciplinary 

action against clearing members who 

attempt to clear during the overnight 

trading session without first obtaining 

requisite approvals. These changes 

(described in greater detail below) are 

designed to reduce and mitigate the 

risks associated with clearing trades 

executed in overnight trading sessions. 

In addition, the only products that will 

be eligible for clearing in overnight 

trading sessions are index options and 

index futures products. 

OCC’s framework for determining 

whether to provide clearing services for 

overnight trading sessions offered by an 

exchange is designed to work in 

conjunction with the risk controls of the 

exchange that offers overnight trading 

sessions. OCC will confirm an 

exchange’s risk controls as well as its 

staffing levels as they relate to overnight 

trading sessions to determine if OCC 

may reasonably rely on such risk 

controls to reduce the risk presented to 

OCC by the exchange’s overnight 

trading sessions. Such exchange risk 

controls will consist of: (1) Price 

reasonability checks, (2) controls to 

prevent orders from being executed 

beyond a certain percentage 

(determined by the exchange) from the 

initial execution price, (3) activity based 

protections which focus on risk beyond 

price, such as a high number of trades 

occurring in a set period of time, and (4) 

kill switch capabilities, which may be 

initiated by the exchange and can cancel 

all open quotes or all orders of a 

particular participant. OCC believes that 

confirming the existence of applicable 

pre-trade risk controls as well as 

overnight staffing at the relevant 

exchanges is essential to mitigating risks 

presented to OCC from overnight 

trading sessions.7 OCC believes that 

providing clearing services to exchanges 

offering such sessions is consistent with 


tkelley on DSK3SPTVN1PROD with NOTICES