1054 Federal Register / Vol. 83, No. 6 / Tuesday, January 9, 2018 / Notices 

26 17 CFR 240.19b–4(f)(6)(iii). 

27For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 28 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Specialist’’ applies to transactions for 

the account of a Specialist (as defined in Exchange 

Rule 1020(a)). A 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. 

4The term ‘‘ROT, SQT and RSQT’’ applies to 

transactions for the accounts of Registered Option 

Traders (‘‘ROTs’’), Streaming Quote Traders 

(‘‘SQTs’’), and Remote Streaming Quote Traders 

(‘‘RSQTs’’). For purposes of the Pricing Schedule, 

the term ‘‘Market Maker’’ will be utilized to 

describe fees and rebates applicable to ROTs, SQTs 

and RSQTs. RSQTs may also be referred to as 

Remote Market Markers (‘‘RMMs’’). 

5Options overlying Standard and Poor’s 

Depositary Receipts/SPDRs (‘‘SPY’’) are based on 

the SPDR exchange-traded fund (‘‘ETF’’), which is 

designed to track the performance of the S&P 500 

Index. 

6The 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 a broker or dealer or for 

the account of a ‘‘Professional’’ (as that term is 

defined in Rule 1000(b)(14)). 

19b–4(f)(6)(iii) 26 permits the 

Commission to designate a shorter time 

if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange notes that the 

proposal will promote consistency 

between the Exchange and its affiliated 

exchanges, and is part of a larger 

technology integration that will 

ultimately reduce complexity for Users 

of the Exchange that are also 

participants on other Cboe Affiliated 

Exchanges. The Exchange further notes 

that allowing the Exchange to move 

forward with the proposed changes 

without an operative delay will ensure 

that the technology integration can 

continue with periodic but measured 

changes rather than implementing 

several changes at once. Furthermore, 

the Exchange states that the 

implementation of the risk controls will 

help to avoid potentially erroneous 

executions. The Commission believes 

that waiver of the 30-day operative 

delay is consistent with the protection 

of investors and the public interest. 

Accordingly, the Commission hereby 

waives the operative delay and 

designates the proposed rule change as 

operative upon filing.27

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: (1) Necessary or appropriate in 

the public interest; (2) for the protection 

of investors; or (3) 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– 

CboeBZX–2017–022 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE, Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CboeBZX–2017–022. 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 website (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 website 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. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–CboeBZX–2017–022 and 

should be submitted on or before 

January 30, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–00158 Filed 1–8–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–82442; File No. SR–Phlx– 

2017–108] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the 

Exchange’s Pricing Schedule 

January 4, 2018. 

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 

21, 2017, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) 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 

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 

Exchange’s Pricing Schedule in the 

following respects: (i) Modify the 

Simple Order rebate applicable to 

Specialists 3 and Market Makers 4 for 

adding liquidity in SPY; 5 (ii) establish 

a new $0.05 per contract surcharge for 

Customers 6 whose SPY Complex Orders 

execute against simple Market Maker or 

Specialist orders resting on the Simple 

Order Book; (iii) reduce the per contract 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 6 / Tuesday, January 9, 2018 / Notices 1055 

7 If the away market transaction fee is $0.00 or the 

away market pays a rebate, then the Exchange 

provides the member organization with a credit 

equal to the applicable Fixed Fee only. 

credit that certain member organizations 

are entitled to receive when routing 

away more than 5,000 Customer 

contracts per day in a given month; and 

(iv) increase permit fees for Floor 

Brokers and Floor Specialists and 

Market Makers. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaqphlx.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 purpose of the proposed rule 

change is to amend the Exchange’s 

Pricing Schedule in the following 

respects: (i) Modify the Simple Order 

rebate applicable to Specialists and 

Market Makers for adding liquidity in 

SPY; (ii) establish a new $0.05 per 

contract surcharge for Customers whose 

SPY Complex Orders execute against 

simple Market Maker or Specialist 

orders resting on the Simple Order 

Book; (iii) reduce the per contract credit 

that certain member organizations are 

entitled to receive when routing away 

more than 5,000 Customer contracts per 

day in a given month; and (iv) increase 

permit fees for Floor Brokers and Floor 

Specialists and Market Makers. 

Simple Order Rebate for Adding 

Liquidity in SPY 

The Exchange first proposes to amend 

Section I.A. of the Exchange’s Pricing 

Schedule, which sets forth a schedule of 

rebates and fees for adding and 

removing liquidity in SPY with respect 

to Simple Orders. Presently, the Pricing 

Schedule provides that Customers and 

Specialists are entitled to a rebate to the 

extent that they add a requisite amount 

of electronically executed Simple Order 

contracts per day in a given month in 

SPY. The existing rebate varies on a five 

tier basis, which each tier corresponding 

to a range of average daily volumes 

(‘‘ADV’’) of Simple Order contracts in 

SPY added per month. The Exchange 

now proposes to add a sixth tier to this 

Pricing Schedule. Specifically, it 

proposes to amend Tier 4 by adjusting 

the applicable ADV range from 20,000 

to 49,999 to 20,000 to 34,999 contracts 

per day in SPY in a month and by 

decreasing the applicable per contract 

rebate from $0.31 to $0.27 per contract. 

The Exchange also proposes to establish 

a new Tier 5, which will provide for a 

$0.30 per contract rebate that Customers 

and Specialists will receive for adding 

an ADV of between 35,000 and 49,999 

contracts per day in SPY in a month. 

Finally, the Exchange proposes to 

rename the existing Tier 5 as Tier 6. The 

rebate applicable to the new Tier 6 will 

remain $0.35 per contract for an ADV of 

greater than 49,999 contracts per day in 

SPY in a month. 

The Exchange proposes the foregoing 

amendments, which will reduce the 

rebate amount from that which applies 

to existing Tier 4 to that which will 

apply to new Tiers 4 and 5, so as to 

provide a greater incentive to Specialists 

and Market Makers to seek to qualify for 

the top tier of rebates (new Tier 6). The 

Exchange also proposes to split the 

existing Tier 4 into two tiers to provide 

for a more graduated transition among 

tiers in the Pricing Schedule. 

Customer Complex Order Surcharge 

Second, the Exchange proposes to 

amend Section I.B of the Pricing 

Schedule, which sets forth a schedule of 

rebates and fees for adding and 

removing liquidity in SPY with respect 

to Complex Orders. Presently, the 

Pricing Schedule charges Customers no 

fees for adding or removing Complex 

Orders in SPY even as it charges fees to 

other categories of member 

organizations for doing the same, 

including Market Makers and 

Specialists. 

Customers submit Complex Orders to 

the Exchange because often, Customers 

are able to execute such Complex 

Orders immediately by executing the 

individual components thereof through 

interactions with Market Maker and 

Specialist quotes that rest on the 

Exchange’s Simple Order Book. These 

Customers benefit from not having to 

wait for counterparties that are willing 

to execute against their Complex Orders 

in the Complex Order Book. 

Going forward, the Exchange proposes 

to impose a $0.05 per contract surcharge 

on Customers that execute Complex 

Orders against Market Maker or 

Specialist quotes resting on the Simple 

Order Book. The Exchange proposes this 

surcharge to reduce the costs to it of 

such transactions. Not only does the 

Exchange receive no fees from 

Customers for engaging in these 

transactions, but the Exchange also pays 

rebates to the Market Makers and 

Specialists whose quotes execute 

against the Customers’ Complex Orders. 

Pursuant to Section I.A. of the 

Exchange’s Pricing Schedule, these 

rebates range from $0.15 to $0.35 per 

contact. 

Routing Credit 

Third, the Exchange proposes to 

amend Section V of its Pricing 

Schedule, which sets forth the fees it 

charges to Customers and NonCustomers for routing orders away from 

the Exchange. Presently, Section V pays 

a credit (equal to a Fixed Fee plus $0.05 

per contract) 7 to a member organization 

that qualifies for a Tier 2, 3, 4 or 5 rebate 

in the Customer Rebate Program in 

Section B of the Pricing Schedule and 

that routes away more than 5,000 

Customer contracts per day in a given 

month. The Exchange proposes to 

decrease the amount of the per contract 

portion of the credit from $0.05 to $0.01 

per contract. The Exchange proposes to 

decrease the amount of this credit 

because it no longer wishes to provide 

substantial subsidies to member 

organizations that route Customer 

orders away from the Exchange. 

Permit Fees 

Finally, the Exchange proposes to 

amend Section VI of the Pricing 

Schedule, which sets forth the 

Exchange’s membership fees. 

Specifically, the Exchange proposes to 

increase its monthly Permit Fees for 

Floor Brokers, Floor Specialists and 

Market Makers. The Exchange presently 

charges Floor Brokers a monthly Permit 

Fee of $3,000 and it now proposes to 

increase that fee to $4,000 per month. 

The Exchange presently charges Floor 

Specialists and Market Makers a 

monthly Permit Fee of $4,500 and it 

now proposes to increase that Fee to 

$6,000 per month. The Exchange 

proposes to increase the amounts of 

these Permit Fees to recoup its financial 

investment in building a new Trading 

Floor for the Exchange as well as the 

costs associated with developing and 

deploying new and more advanced 

technologies for use on the new Trading 

Floor by Floor Brokers, Floor 

Specialists, and Market Makers. 


sradovich on DSK3GMQ082PROD with NOTICES
1056 Federal Register / Vol. 83, No. 6 / Tuesday, January 9, 2018 / Notices 

8 15 U.S.C. 78f(b). 

9 15 U.S.C. 78f(b)(4) and (5). 

10Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) 

(‘‘Regulation NMS Adopting Release’’). 

11NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 

2010). 

12See NetCoalition, at 534–535. 

13 Id. at 537. 

14 Id. at 539 (quoting Securities Exchange Act 

Release No. 59039 (December 2, 2008), 73 FR 

74770, 74782–83 (December 9, 2008) (SR– 

NYSEArca–2006–21)). 15See Rule 1014 titled ‘‘Obligations and 

Restrictions Applicable to Specialists and 

Registered Options Traders.’’ 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,8 in general, and furthers the 

objectives of Sections 6(b)(4) and 6(b)(5) 

of the Act,9 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, and is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

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, while 

adopting a series of steps to improve the 

current market model, the Commission 

highlighted the importance of market 

forces in determining prices and SRO 

revenues and, also, recognized that 

current regulation of the market system 

‘‘has been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 10

Likewise, in NetCoalition v. Securities 

and Exchange Commission 11

(‘‘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 costbased approach.12 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.’’ 13

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 brokerdealers 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’. . . .’’ 14 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. 

Simple Order Rebate for Adding 

Liquidity in SPY 

The Exchange believes that its 

proposal is reasonable to decrease the 

amounts of its mid-tier rebates to Market 

Makers and Specialists that add 

liquidity in SPY because the Exchange 

seeks to provide a greater incentive to 

Market Makers and Specialists to 

increase their ADVs of contracts in SPY 

so as to qualify for the top rebate tier, 

which will be new Tier 6. The Exchange 

believes that this proposal is an 

equitable allocation and is not unfairly 

discriminatory because the same 

decrease in rebates will apply to all 

similarly situated Market Makers and 

Specialists. Further, Market Makers and 

Specialists and Market Makers have 

obligations to the market and regulatory 

requirements, which normally do not 

apply to other market participants.15

They have obligations to make 

continuous markets, engage in a course 

of dealings reasonably calculated to 

contribute to the maintenance of a fair 

and orderly market, and not make bids 

or offers or enter into transactions that 

are inconsistent with a course of 

dealings. The differentiation as between 

Specialists and Market Makers and all 

other market participants recognizes the 

differing contributions made to the 

liquidity and trading environment on 

the Exchange by these market 

participants. 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. 

Customer Complex Order Surcharge 

The Exchange believes that its 

proposal is reasonable to impose a $0.05 

per contract surcharge on Customers 

that execute Complex Orders against 

Market Maker or Specialist Quotes that 

rest on the Simple Order Book. 

Specifically, the Exchange believes that 

it is reasonable for it to impose this 

surcharge as a means to reduce the 

Exchange’s costs associated with these 

transactions because each such 

transaction costs the Exchange between 

$0.15 and $0.35 per contract in rebates 

to Market Makers and Specialists. 

Moreover, it is reasonable to impose this 

surcharge on Customers because 

Customers benefit the most from being 

able to achieve immediate executions of 

their Complex Orders in the relevant 

scenario. The Exchange believes that the 

surcharge is minimal and will not be 

substantial enough to eliminate or even 

significantly diminish the benefits to 

Customers of being able to achieve 

immediate executions in this manner. 

Finally, the Exchange notes that all 

other account categories—Professionals, 

Firms, Broker-Dealers, Specialists, and 

Market Makers—pay higher fees 

(between $0.43 and $0.50 per contract) 

for removing liquidity from the 

Complex Order Book than Customers 

would pay under the proposal when 

they execute their Complex Orders 

against Simple Orders of Market Makers 

and Specialists that are resting on the 

Simple Order Book. 

The Exchange believes that the 

proposal is an equitable allocation and 

is not unfairly discriminatory because 

the Exchange will uniformly apply the 

fee to all similarly situated Customers. 

Moreover, Customers may avoid this 

new surcharge by executing their 

Complex Orders in the Exchange’s 

Complex Order Book or by sending 

them to other trading venues where the 

transaction costs to them will be less 

expensive. Even with this surcharge, 

Customers are assessed the least amount 

per contract for executions in SPY. As 

noted herein, Customers are not 

assessed fees for adding and removing 

liquidity for SPY Complex Orders. The 

Exchange believes that assessing 

Customers lower fees is equitable and 

not unfairly discriminatory because 

Customer orders bring valuable liquidity 

to the market, which liquidity benefits 

other market participants. Customer 

liquidity benefits all market participants 

by providing more trading 

opportunities, which attracts 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. 

Routing Credit 

The Exchange believes that its 

proposal is reasonable to reduce the 

amount of the credit it presently 

provides to certain member 

organizations that route away more than 

5,000 Customer orders per day in a 

given month. Although the Exchange 

wishes to continue providing incentives 

to member organizations to utilize its 

routing service, it seeks to reduce the 

incentive for member organizations to 

route orders to away markets. Despite 

the reduction, the Exchange believes the 

credit remains competitive. 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 6 / Tuesday, January 9, 2018 / Notices 1057 

16See Rule 1014 titled ‘‘Obligations and 

Restrictions Applicable to Specialists and 

Registered Options Traders.’’ 

The Exchange believes that the 

proposal is an equitable allocation and 

is not unfairly discriminatory because 

the same reduced credit will uniformly 

be assessed on all member organizations 

when routing orders. 

Permit Fees 

Finally, the Exchange believes that its 

proposal is reasonable to increase its 

monthly Permit Fees for Floor Brokers 

and Floor Specialists and Market 

Makers. The Exchange has made 

substantial investments in building a 

new state-of-the-art Trading Floor for 

the Exchange as well as developing and 

deploying new and more advanced 

technologies for use on the new Trading 

Floor to the benefit of Floor Brokers, 

Floor Specialists, and Market Makers. 

The increased Permit Fees are a 

reasonable way for the Exchange to 

recoup some of these investments. 

Moreover, it is reasonable for the 

Exchange to recoup these investments 

from those members and member 

organizations that utilize the new 

Trading Floor and associated 

technologies. 

The Exchange believes that the 

proposal is an equitable allocation and 

is not unfairly discriminatory because 

the same reduced credit will uniformly 

apply uniformly to all situated Floor 

Brokers, Specialists, and Market Makers 

that utilize the Trading Floor. Likewise, 

the Exchange does not believe that its 

proposal to increase Permit Fees will 

unduly burden competition because 

Floor Brokers, Market Makers, and 

Specialists may choose to utilize the 

Exchange’s electronic environment or 

become members of other exchanges’ 

trading floors if they conclude that the 

Exchange’s Permit Fees are 

prohibitively expensive. 

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 this instance, the proposed changes 

to the charges assessed and the credits 

and rebates available do not impose a 

burden on competition because the 

Exchange’s execution services are 

completely voluntary and subject to 

extensive competition both from other 

exchanges and from off-exchange 

venues. In sum, if the changes proposed 

herein are unattractive to market 

participants, it is likely that the 

Exchange will lose market share as a 

result. 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. 

Simple Order Rebate for Adding 

Liquidity in SPY 

The Exchange’s proposal to decrease 

the amounts of its mid-tier rebates to 

Market Makers and Specialists that add 

liquidity in SPY does not impose an 

undue burden on competition because 

Market Makers and Specialists and 

Market Makers have obligations to the 

market and regulatory requirements, 

which normally do not apply to other 

market participants.16 They have 

obligations to make continuous markets, 

engage in a course of dealings 

reasonably calculated to contribute to 

the maintenance of a fair and orderly 

market, and not make bids or offers or 

enter into transactions that are 

inconsistent with a course of dealings. 

The differentiation as between 

Specialists and Market Makers and all 

other market participants recognizes the 

differing contributions made to the 

liquidity and trading environment on 

the Exchange by these market 

participants. 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. 

Customer Complex Order Surcharge 

The Exchange’s proposal to impose a 

$0.05 per contract surcharge on 

Customers that execute Complex Orders 

against Market Maker or Specialist 

Quotes that rest on the Simple Order 

Book does not impose an undue burden 

on competition because Customers may 

avoid this new surcharge by executing 

their Complex Orders in the Exchange’s 

Complex Order Book or by sending 

them to other trading venues where the 

transaction costs to them will be less 

expensive. Even with this surcharge, 

Customers are assessed the least amount 

per contract for executions in SPY. As 

noted herein, Customers are not 

assessed fees for adding and removing 

liquidity for SPY Complex Orders. The 

Exchange believes that assessing 

Customers lower fees is equitable and 

not unfairly discriminatory because 

Customer orders bring valuable liquidity 

to the market, which liquidity benefits 

other market participants. Customer 

liquidity benefits all market participants 

by providing more trading 

opportunities, which attracts 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. 

Routing Credit 

The Exchange’s proposal to reduce 

the amount of the credit it presently 

provides to certain member 

organizations that route away more than 

5,000 Customer orders per day in a 

given month does not impose an undue 

burden on competition because the 

reduced credit will uniformly be 

assessed on all member organizations 

when routing orders. 

Permit Fees 

The Exchange’s proposal to increase 

its monthly Permit Fees for Floor 

Brokers and Floor Specialists and 

Market Makers does not impose an 

undue burden on competition because 

the permit fees will be uniformly 

assessed to all Floor Brokers, 

Specialists, and Market Makers that 

utilize the Trading Floor. Likewise, the 

Exchange does not believe that its 

proposal to increase Permit Fees will 

unduly burden competition because 

Floor Brokers, Market Makers, and 

Specialists may choose to utilize the 

Exchange’s electronic environment or 

become members of other exchanges’ 

trading floors if they conclude that the 

Exchange’s Permit Fees are 

prohibitively expensive. 

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. 


sradovich on DSK3GMQ082PROD with NOTICES
1058 Federal Register / Vol. 83, No. 6 / Tuesday, January 9, 2018 / Notices 

17 15 U.S.C. 78s(b)(3)(A)(ii). 

18 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). 

4 17 CFR 240.19b–4(f)(6)(iii). 

5See Securities Exchange Act Release No. 79585 

(December 16, 2016), 81 FR 93988 (December 22, 

2016) (SR–BatsBZX–2016–68; SR–BatsBYX–2016– 

29; SR–BatsEDGA–2016–24; SR–BatsEDGX–2016– 

60). The Exchange notes that BYX and EDGA are 

also affiliated exchanges but do not operate options 

platforms and thus the integration described in this 

proposal is inapplicable to such exchanges. 

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.17

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 rule-comments@

sec.gov. Please include File Number SR– 

Phlx–2017–108 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–2017–108. 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 website (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 website 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. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–Phlx–2017–108, and should 

be submitted on or before January 30, 

2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–00214 Filed 1–8–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–82437; File No. SR– 

CboeEDGX–2017–009] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Adopt Risk 

Controls and Modify Rules 21.1, 21.10, 

and 21.17 in Connection With 

Technology Migration of Cboe 

Exchanges 

January 3, 2018. 

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 December 

21, 2017, Cboe EDGX Exchange, Inc. 

(the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated this proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6)(iii) 

thereunder,4 which renders it 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 

update Rule 21.1, Rule 21.10, and Rule 

21.17 to make modifications to the 

Exchange’s rules and functionality 

applicable to the Exchange’s options 

platform (‘‘EDGX Options’’) in 

preparation for the technology migration 

of the Exchange’s affiliated options 

exchanges onto the same technology as 

the Exchange. 

The text of the proposed rule change 

is available at the Exchange’s website at 

www.markets.cboe.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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

In 2016, the Exchange and its 

affiliates Cboe BYX Exchange, Inc. 

(‘‘BYX’’), Cboe EDGA Exchange, Inc. 

(‘‘EDGA’’), and Cboe BZX Exchange, 

Inc. (‘‘BZX’’) received approval to affect 

a merger (the ‘‘Merger’’) of the 

Exchange’s then-current indirect parent 

company, Bats Global Markets, Inc., 

with Cboe Global Markets f/k/a CBOE 

Holdings, Inc. (‘‘Cboe’’), the direct 

parent of Cboe Exchange, Inc. (‘‘Cboe 

Options’’) and Cboe C2 Exchange, Inc. 

(‘‘C2 Options’’, and together with the 

Exchange, BZX, and Cboe Options the 

‘‘Cboe Affiliated Exchanges’’).5 The 

Cboe Affiliated Exchanges are working 

to align certain system functionality, 

retaining only intended differences 

between the Cboe Affiliated Exchanges, 


sradovich on DSK3GMQ082PROD with NOTICES