2834 Federal Register / Vol. 83, No. 13 / Friday, January 19, 2018 / Notices 

42 15 U.S.C. 78q–1(b)(3)(F). 

43 17 CFR 240.17Ad–22(e)(4)(i) and (e)(6)(i) and 

(v). 

44 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

exposures to its participants by 

establishing a risk-based margin system 

that, at a minimum, uses an appropriate 

method for measuring credit exposure 

that accounts for relevant product risk 

factors and portfolio effects across 

products. As described above, NSCC 

believes implementing the proposed 

enhancements to the VaR Charge would 

improve the risk-based methodology 

that NSCC employs to measure market 

price risk and would better limit NSCC’s 

credit exposures to Members, consistent 

with these requirements. 

NSCC believes that the above 

described burden on competition that 

could be created by the proposed 

changes would be appropriate in 

furtherance of the Act because such 

changes have been appropriately 

designed to assure the safeguarding of 

securities and funds which are in the 

custody or control of NSCC or for which 

it is responsible, as described in detail 

above. By introducing additional 

calculations for arriving at a Member’s 

final VaR Charge, each of which are 

designed to address the unique risks 

presented by Members’ Net Unsettled 

Positions, as described above, the 

proposal would allow NSCC to produce 

margin levels commensurate with the 

risks and particular attributes of each 

Member’s portfolio. Therefore, because 

the proposed changes were designed to 

provide NSCC with an appropriate 

measure of the risks presented by 

Members’ Net Unsettled Positions, 

NSCC believes the proposals are 

appropriately designed to meet its risk 

management goals and its regulatory 

obligations. 

NSCC believes that it has designed the 

proposed changes in a reasonable and 

appropriate way in order to meet 

compliance with its obligations under 

the Act. Specifically, implementing the 

proposed enhancements to the 

calculation of its VaR Charge would 

improve the risk-based margining 

methodology that NSCC employs to set 

margin requirements and better limit 

NSCC’s credit exposures to its Members. 

Therefore, NSCC believes the proposed 

changes are necessary and appropriate 

in furtherance of NSCC’s obligations 

under the Act, specifically Section 

17A(b)(3)(F) of the Act 42 and Rules 

17Ad–22(e)(4)(i) and Rule 17Ad– 

22(e)(6)(i) and (v) under the Act.43

Because the proposal to eliminate the 

MMD Charge would remove this charge 

from the margining methodology as 

applied to all Members, when 

applicable, NSCC does not believe the 

proposed change to eliminate the MMD 

Charge would have any impact on 

competition. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

While NSCC has not solicited or 

received any written comments relating 

to this proposal, NSCC has conducted 

outreach to Members in order to provide 

them with notice of the proposal. NSCC 

will notify the Commission of any 

written comments received by NSCC. 

III. Date of Effectiveness of the 

Proposed Rule Change, and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the clearing agency consents, the 

Commission will: 

(A) By order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

The proposal shall not take effect 

until all regulatory actions required 

with respect to the proposal are 

completed. 

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– 

NSCC–2017–020 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–NSCC–2017–020. 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 NSCC and on DTCC’s website 

(http://dtcc.com/legal/sec-rulefilings.aspx). 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–NSCC–2017–020 and 

should be submitted on or before 

February 9, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.44

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–00851 Filed 1–18–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–82499; File No. SR–Phlx– 

2018–02] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Adopt Pricing for 

NDXP 

January 12, 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 January 3, 

2018, Nasdaq 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 


daltland on DSKBBV9HB2PROD with NOTICES
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3See Securities and Exchange Act Release No. 

82341 (December 15, 2017), 82 FR 60651 (December 

21, 2017) (SR–Phlx–2017–79). 

4 Id. 

5 Id. 

6NDX represents options on the Nasdaq 100®

Index and is traded under the symbol NDX 

(‘‘NDX’’). 

7The term ‘‘Customer’’ or (‘‘C’’) applies to any 

transaction that is identified by a Participant for 

clearing in the Customer range at The Options 

Clearing Corporation (‘‘OCC’’) and which is not for 

the account of broker or dealer or for the account 

of a ‘‘Professional’’ (as that term is defined in 

Chapter I, Section 1(a)(48)). 

8The Exchange proposes to add the words ‘‘per 

contract’’ to note 5 in Section II of the Pricing 

Schedule to make clear that the surcharge is 

assessed on a per contract basis. 

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 to add 

pricing for P.M.-settled options on 

broad-based indexes with nonstandard 

expiration dates for a period of twelve 

months, which the Commission recently 

approved.3

While changes to the Pricing 

Schedule pursuant to this proposal are 

effective upon filing, the Exchange has 

designated these changes to be operative 

on January 4, 2018. 

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 Exchange recently received 

approval to list P.M.-settled options on 

broad-based indexes with nonstandard 

expiration dates on a twelve month pilot 

basis, beginning on December 15, 2017.4

This pilot permits both Weekly 

Expirations and End of Month 

expirations similar to those of the A.M.- 

settled broad-based index options, 

except that the exercise settlement value 

will be based on the index value derived 

from the closing prices of component 

stocks.5 The Exchange proposes to list 

these aforementioned options, 

commencing on January 4, 2017, with 

the symbol ‘‘NDXP.’’ 

Specifically, the Exchange proposes to 

adopt the current index pricing 

applicable to NDX 6 today to NDXP. 

Customer Rebate 

Today, Customer Rebates in Section B 

of the Pricing Schedule are not paid on 

NDX in any Category. However, NDX 

will count toward the volume 

requirement to qualify for a Customer 7

Rebate Tier. The Exchange proposes to 

apply the same pricing for NDXP as it 

relates to Customer Rebates. The 

Exchange believes that this will 

continue to encourage market 

participants to add Customer liquidity 

on Phlx. 

Transaction Charges in Section II 

Today, electronic and floor Options 

Transaction Charges for NDX are $0.75 

per contract for all Non-Customers. No 

transaction charge for NDX applies to 

Customers. A $0.25 per contract 8

surcharge is assessed to Non-Customers 

in NDX. The Exchange proposes these 

options transaction charges for NDXP. 

Today, a $0.10 per contract surcharge 

will be assessed to electronic Complex 

Orders that remove liquidity from the 

Complex Order Book and auctions, 

excluding PIXL, in Non-Penny Pilot 

Options (excluding NDX). This 

exclusion would apply likewise to 

NDXP. 

Today, Specialists and Market Makers 

are subject to a ‘‘Monthly Market Maker 

Cap’’ of $500,000 for: (i) Electronic 

Option Transaction Charges, excluding 

surcharges and excluding options 

overlying NDX; and (ii) QCC 

Transaction Fees (as defined in 

Exchange Rule 1080(o) and Floor QCC 

Orders, as defined in 1064(e)). NDXP 

would likewise be excluded. 

Firms are subject to a maximum fee of 

$75,000 (‘‘Monthly Firm Fee Cap’’). 

Firm Floor Option Transaction Charges 

and QCC Transaction Fees, in the 

aggregate, for one billing month will not 

exceed the Monthly Firm Fee Cap per 

member organization when such 

members are trading in their own 

proprietary accounts. All dividend, 

merger, and short stock interest strategy 

executions (as defined in this Section II) 

are excluded from the Monthly Firm Fee 

Cap. NDX Options Transactions are 

excluded from the Monthly Firm Fee 

Cap. NDXP will likewise be excluded. 

The Firm Floor Options Transaction 

Charges will be waived for members 

executing facilitation orders pursuant to 

Exchange Rule 1064 when such 

members are trading in their own 

proprietary accounts (including Cabinet 

Options Transaction Charges). The Firm 

Floor Options Transaction Charges will 

be waived for the buy side of a 

transaction if the same member or its 

affiliates under Common Ownership 

represent both sides of a Firm 

transaction when such members are 

trading in their own proprietary 

accounts. In addition, the Broker-Dealer 

Floor Options Transaction Charge 

(including Cabinet Options Transaction 

Charges) will be waived for members 

executing facilitation orders pursuant to 

Exchange Rule 1064 when such 

members would otherwise incur this 

charge for trading in their own 

proprietary accounts contra to a 

Customer (‘‘BD-Customer Facilitation’’), 

if the member’s BD-Customer 

Facilitation average daily volume 

(including both FLEX and non-FLEX 

transactions) exceeds 10,000 contracts 

per day in a given month. NDX Options 

Transactions are excluded from each of 

the waivers set forth in the above 

paragraph. NDXP will likewise be 

excluded from the waivers. 

Marketing Fees 

No Marketing Fees are assessed on 

transactions in NDX. NDXP will 

likewise be excluded. 

PIXL Pricing 

Options overlying NDX are not 

subject to Section IV.A.—PIXL Pricing. 

NDX transactions in PIXL will be 

subject to Section II pricing. NDXP will 

not be subject to PIXL Pricing, similar 

to NDX, NDXP will be subject to the 

Section II pricing noted herein. 

FLEX Transaction Fees 

The Monthly Firm Fee Cap, Monthly 

Market Maker Cap, Strategy Caps and 

the Options Surcharge described in 

Section II of the Pricing Schedule apply 

to FLEX Transaction Fees for NDX and 

will likewise apply to NDXP in the same 

manner. 

Market Access and Routing Subsidy 

(‘‘MARS’’) 

MARS Payment [sic] are made to Phlx 

members that have System Eligibility 

and have routed the requisite number of 

Eligible Contracts daily in a month, 


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2836 Federal Register / Vol. 83, No. 13 / Friday, January 19, 2018 / Notices 

9 15 U.S.C. 78f(b). 

10 15 U.S.C. 78f(b)(4) and (5). 

11Securities Exchange Act Release No. 51808 

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

(‘‘Regulation NMS Adopting Release’’). 

12NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 

2010). 

13See NetCoalition, at 534—535. 

14 Id. at 537. 

15 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)). 

16Nasdaq intends to list NDXP on other Nasdaqowned self-regulatory organizations in addition to 

Phlx at a later date. 

17Today, electronic and floor Options 

Transaction Charges for options overlying NDX are 

$0.75 per contract for all Non-Customers. No 

transaction charge for NDX applies to Customers. A 

$0.25 per contract surcharge is assessed to NonCustomers in NDX. Also, a $0.10 per contract 

surcharge is assessed to electronic Complex Orders 

that remove liquidity from the Complex Order Book 

and auctions, excluding PIXL, in Non-Penny Pilot 

Options (excluding NDX). 

18See Chicago Board Options Exchange, 

Incorporated’s (‘‘CBOE’’) Fees Schedule. Russell 

2000 Index (‘‘RUT’’) options transactions on CBOE, 

except customers, are assessed a $0.45 per contract 

surcharge. CBOE assesses Professionals and BrokerDealers a manual and AIM transaction fee of $0.25 

per contract and a non-AIM transaction fee of $0.65 

per contract. CBOE assesses Clearing Trade Permit 

Holders a transaction fee of $0.22 per contract, 

subject to a sliding scale. 

19By way of example, in analyzing an obvious 

error, the Exchange would have additional data 

points available in establishing a theoretical price 

for a Multiply Listed Option as compared to a 

proprietary product, which requires additional 

analysis and administrative time to comply with 

Exchange rules to resolve an obvious error. 

which were executed on Phlx. Options 

overlying NDX are not considered 

Eligible Contracts. NDXP will not be 

considered Eligible Contracts. 

The Exchange believes that the abovereferenced pricing for NDX continues to 

be competitive and attract volume to 

Phlx. The Exchange believes that the 

proposed pricing is suitable because 

NDXP represent similar options on the 

same underlying, the Nasdaq 100®

Index. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,9 in general, and furthers the 

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

of the Act,10 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.’’ 11

Likewise, in NetCoalition v. Securities 

and Exchange Commission 12

(‘‘NetCoalition’’) the DC 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.13 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.’’ 14

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’. . . .’’ 15 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. 

Customer Rebate 

The Exchange’s proposal to not pay 

the Customer Rebates in Section I of the 

Pricing Schedule on NDXP and count 

NDXP volume toward qualifying for a 

Customer Rebate Tier, similar to NDX, 

is reasonable because the Exchange 

desires to calculate and pay rebates on 

NDXP in a similar manner to NDX. NDX 

and NDXP represent similar options on 

the same underlying, the Nasdaq 100®

Index. Further, it is reasonable to not 

pay Customer Rebates on NDXP in any 

Category (A, B or C) because this index 

will be exclusively listed on Nasdaq 

exchanges only.16 The original intent of 

the Customer Rebate Program was to 

pay rebates on electronically-delivered 

Multiply-Listed Options. By definition, 

NDXP will not be a Multiply-Listed 

Option. The Exchange does not desire to 

pay rebates on NDXP because of its 

exclusivity. The Exchange believes it is 

reasonable to continue to count NDXP 

in the total volume to qualify a market 

participant for a Customer Rebate. 

However, market participants in NDXP 

will not be paid the Customer rebates in 

any Category because of the exclusivity 

of this option. Market participants 

would continue to benefit from NDXP 

options volume in terms of qualifying 

for Customer Rebate Tiers. 

The Exchange’s proposal to not pay 

the Customer Rebates in Section I of the 

Pricing Schedule on NDXP and count 

NDXP volume toward qualifying for a 

Customer Rebate Tier, similar to NDX, 

is equitable and not unfairly 

discriminatory because the Exchange 

would apply its calculation to 

determine the eligibility and payment of 

Customer rebates in a uniform manner. 

Further, the Exchange would not pay 

Customer Rebates on any NDXP 

transaction to any market participant. 

Also, any market participant is eligible 

to earn a Customer Rebate. 

Transaction Charges in Section II 

The Exchange’s proposal to assess the 

same electronic and floor Options 

Transaction Charges for NDXP as it 

assesses for NDX 17 is reasonable 

because the Exchange’s transaction 

charges for its proprietary products are 

competitive when compared with 

similar proprietary products.18 The 

Exchange’s proposal to assess the same 

electronic and floor Options Transaction 

Charges for NDXP and NDX is equitable 

and not unfairly discriminatory because 

the Exchange would assess the same 

options transaction charges to all NonCustomer market participants. The 

Exchange believes that assessing 

Customers no transaction fee for NDXP 

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. 

The Exchange notes that the proposed 

transaction charges are reasonable, 

equitable and not unfairly 

discriminatory as NDXP will be an 

exclusively listed product. Similar to 

NDX, the Exchange seeks to recoup the 

operational costs 19 for listing 

proprietary products. Also, pricing by 

symbol is a common practice on many 

U.S. options exchanges as a means to 

incentivize order flow to be sent to an 


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20See pricing for RUT on CBOE’s Fees Schedule. 

21QQQ is an exchange-traded fund based on the 

Nasdaq-100 Index®. 

22QQQ options overlies[sic] the same Index as 

NDX, namely the Nasdaq 100® Index. This 

relationship between QQQ options and NDX 

options is similar to the relationship between RUT, 

the iShares Russell 2000 Index, and IWM which is 

the ETF on RUT. 

23This waiver applies when such members would 

otherwise incur this charge for trading in their own 

proprietary account contra to a Customer (‘‘BDCustomer Facilitation’’), if the member’s BDCustomer Facilitation average daily volume 

(including both FLEX and non-FLEX transactions) 

exceeds 10,000 contracts per day in a given month. 

24 Id. 

25 Id. 

26 Id. 

exchange for execution in particular 

products. Other options exchanges price 

by symbol.20 Further, the Exchange 

notes that with its products, market 

participants are offered an opportunity 

to either transact NDXP or separately 

execute options overlying PowerShares 

QQQ Trust (‘‘QQQ’’).21 Offering 

products such as QQQ provides market 

participants with a variety of choices in 

selecting the product they desire to 

utilize to transact the Nasdaq 100®

Index.22 When exchanges are able to 

recoup costs associated with offering 

proprietary products, it incentivizes 

growth and competition for the 

innovation of additional products. 

The Exchange’s proposal to add the 

words ‘‘per contract’’ to note 5 in 

Section II of the Pricing Schedule to 

make clear the surcharge is per contract 

is reasonable, equitable and not unfairly 

discriminatory because it will conform 

the language to the remainder of the 

transaction charges in Section II of the 

Pricing Schedule. 

The Exchange’s proposal to exclude 

NDXP from the Monthly Market Maker 

Cap and the Monthly Firm Fee Cap is 

reasonable because NDX, another 

proprietary product is likewise 

excluded today. Market Makers will 

continue to be able to utilize the cap to 

reduce electronic Option Transaction 

Charges, excluding surcharges, QCC 

transaction fees and Floor QCC Orders, 

NDX and now NDXP despite the 

exclusions. 

The Exchange’s proposal to exclude 

NDXP from the Monthly Market Maker 

Cap and the Monthly Firm Fee Cap is 

equitable and not unfairly 

discriminatory because no market 

participant would be eligible to count 

NDXP toward either the Monthly 

Market Maker Cap or the Monthly Firm 

Fee Cap. 

The Exchange’s proposal to exclude 

NDXP from the Firm Floor Options 

Transaction waivers for members 

executing facilitation orders pursuant to 

Exchange Rule 1064,23 from the buy 

side of a transaction, if the same 

member or its affiliates under Common 

Ownership represent both sides of a 

Firm transaction when such members 

are trading in their own proprietary 

account, and from the waiver for the 

Broker-Dealer Floor Options 

Transaction Charge for members 

executing facilitation orders pursuant to 

Exchange Rule 1064,24 is reasonable 

because NDX, another proprietary 

product is likewise excluded today. 

The Exchange’s proposal to exclude 

NDXP from the Firm Floor Options 

Transaction waivers for members 

executing facilitation orders pursuant to 

Exchange Rule 1064,25 from the buy 

side of a transaction, if the same 

member or its affiliates under Common 

Ownership represents both sides of a 

Firm transaction when such members 

are trading in their own proprietary 

account, and from the waiver for the 

Broker-Dealer Floor Options 

Transaction Charge for members 

executing facilitation orders pursuant to 

Exchange Rule 1064,26 is equitable and 

not unfairly discriminatory because no 

market participant would be eligible to 

count NDXP toward these waivers. 

Marketing Fee 

The Exchange’s proposal to exclude 

NDXP from the Marketing Fee is 

reasonable because NDXP is an 

exclusively listed product, similar to 

NDX, which is also excluded from the 

Marketing Fee. The Exchange notes that 

Specialists and Market Makers 

transaction fees will remain in line with 

other market participants for NDXP. 

The Exchange’s proposal to exclude 

NDXP from the Marketing Fee is 

equitable and not unfairly 

discriminatory because the Exchange 

will assess uniform transaction fees for 

all Non-Customers because the 

transaction charges, as proposed above, 

would otherwise be uniform for all 

market participants. The Exchange 

believes that assessing Customers no 

transaction fee for NDXP 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. 

PIXL Pricing 

The Exchange’s proposal to exclude 

NDXP from Section IV.A.—PIXL Pricing 

and instead assess NDXP transactions in 

PIXL the Section II pricing, similar to 

NDX, is reasonable because the 

Exchange believes that the PIXL pricing 

continues to be competitive despite the 

exclusion of NDXP. The Exchange’s 

proposal to exclude NDXP from the 

PIXL Pricing in Section IV, Part A and 

instead assess NDXP transactions in 

PIXL the Section II pricing is equitable 

and not unfairly discriminatory because 

the Exchange will uniformly exclude 

NDXP from PIXL pricing. 

FLEX Transaction Fees 

The Exchange’s proposal to assess 

NDXP the same FLEX Transaction Fees 

as are assessed for NDX today is 

reasonable because the Exchange desires 

to assess the same fees for index 

products. The Exchange’s proposal to 

assess NDXP the same FLEX 

Transaction Fees as are assessed for 

NDX today is equitable and not unfairly 

discriminatory because the Exchange 

will uniformly assess FLEX fees for 

NDXP in a uniform manner for all 

market participants. 

Market Access and Routing Subsidy 

(‘‘MARS’’) 

The Exchange’s proposal to exclude 

NDXP from Eligible Contracts for 

purposes of qualifying for a MARS 

Payment is reasonable because the 

Exchange believes that despite the 

exclusion of NDXP, MARS remains a 

competitive offering. The Exchange’s 

proposal to exclude NDXP from Eligible 

Contracts for purposes of qualifying for 

a MARS Payment is equitable and not 

unfairly discriminatory because the 

Exchange will uniformly exclude NDXP 

from MARS. 

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. The 

Exchange notes that with its products, 

market participants are offered an 

opportunity to either transact NDXP or 

separately execute options overlying 

PowerShares QQQ Trust (‘‘QQQ’’). 

Offering products such as QQQ provides 


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27See note 22 above. 28 15 U.S.C. 78s(b)(3)(A)(ii). 

market participants with a variety of 

choices in selecting the product they 

desire to utilize to transact the Nasdaq 

100 Index.27

Customer Rebate 

The Exchange’s proposal to not pay 

the Customer Rebates in Section I of the 

Pricing Schedule on NDXP and count 

NDXP volume toward qualifying for a 

Customer Rebate Tier, similar to NDX, 

does not impose an undue burden on 

competition because the Exchange 

would apply its calculation to 

determine the eligibility and payment of 

Customer rebates in a uniform manner. 

The Exchange’s proposal to not pay 

Customer Rebates on NDXP in any 

Category is equitable and not unfairly 

discriminatory because the Exchange 

would not pay Customer Rebates on any 

transaction with NDXP to any market 

participant. Also, any market 

participant is eligible to earn a Customer 

Rebate. 

Transaction Charges in Section II 

The Exchange’s proposal to assess for 

the same electronic and floor Options 

Transaction Charges for NDXP and NDX 

does not impose an undue burden on 

competition because the Exchange 

would assess the same options 

transaction charges to all Non-Customer 

market participants. The Exchange 

believes that assessing Customers no 

transaction fee for NDXP does not 

impose an undue burden on 

competition 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. 

The Exchange’s proposal to add the 

words ‘‘per contract’’ to note 5 in 

Section II of the Pricing Schedule to 

make clear the surcharge is per contract 

does not impose an undue burden on 

competition because it will conform the 

language to the remainder of the 

transaction charges in Section II of the 

Pricing Schedule. 

The Exchange’s proposal to exclude 

NDXP from the Monthly Market Maker 

Cap and the Monthly Firm Fee Cap does 

not impose an undue burden on 

competition because no market 

participant would be eligible to count 

NDXP toward either the Monthly 

Market Maker Cap or the Monthly Firm 

Fee Cap. 

The Exchange’s proposal to exclude 

NDXP from the Firm Floor Options 

Transaction waivers for members 

executing facilitation orders pursuant to 

Exchange Rule 1064, from the buy side 

of a transaction, if the same member or 

its affiliates under Common Ownership 

represents both sides of a Firm 

transaction when such members are 

trading in their own proprietary 

account, and from the waiver for the 

Broker-Dealer Floor Options 

Transaction Charge for members 

executing facilitation orders pursuant to 

Exchange Rule 1064, does not impose 

an undue burden on competition 

because no market participant would be 

eligible to count NDXP toward these 

waivers. 

Marketing Fee 

The Exchange’s proposal to exclude 

NDXP from the Marketing Fee does not 

impose an undue burden on 

competition because the Exchange will 

assess uniform transaction fees for all 

Non-Customers because the transaction 

charges, as proposed above, would 

otherwise be uniform for all market 

participants. The Exchange believes that 

assessing Customers no transaction fee 

for NDXP does not impose an undue 

burden on competition 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. 

PIXL Pricing 

The Exchange’s proposal to exclude 

NDXP from the PIXL Pricing in Section 

IV, Part A and instead assess NDXP 

transactions in PIXL the Section II 

pricing does not impose an undue 

burden on competition because the 

Exchange will uniformly exclude NDXP 

from PIXL pricing. 

FLEX Transaction Fees 

The Exchange’s proposal to assess 

NDXP the same FLEX Transaction Fees 

as are assessed for NDX today does not 

impose an undue burden on 

competition because the Exchange will 

uniformly assess FLEX fees for NDXP in 

a uniform manner for all market 

participants. 

MARS Subsidy 

The Exchange’s proposal to exclude 

NDXP from Eligible Contracts for 

purposes of qualifying for a MARS 

Payment does not impose an undue 

burden on competition because the 

Exchange will uniformly exclude NDXP 

from MARS. 

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.28

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–2018–02 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–2018–02. 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/ 


daltland on DSKBBV9HB2PROD with NOTICES
Federal Register / Vol. 83, No. 13 / Friday, January 19, 2018 / Notices 2839 

29 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Chapter IX of the Pricing Schedule defines a 

distributor as ‘‘any entity that receives a feed or 

data file of data directly from Nasdaq PHLX or 

indirectly through another entity and then 

distributes it either internally (within that entity) or 

externally (outside that entity).’’ 

Chapter IX of the Pricing Schedule defines a NonProfessional Subscriber as ‘‘a natural person who is 

neither: (i) Registered or qualified in any capacity 

with the Commission, the Commodities Futures 

Trading Commission, any state securities agency, 

any securities exchange or association, or any 

commodities or futures contract market or 

association; (ii) engaged as an ‘investment adviser’ 

as that term is defined in Section 201(11) of the 

Investment Advisors Act of 1940 (whether or not 

registered or qualified under that Act); nor (iii) 

employed by a bank or other organization exempt 

from registration under federal or state securities 

laws to perform functions that would require 

registration or qualification if such functions were 

performed for an organization not so exempt. A 

Non-Professional Subscriber may only use the data 

provided for personal purposes and not for any 

commercial purpose.’’ 

Chapter IX of the Pricing Schedule defines a 

Professional Subscriber as ‘‘any Subscriber that is 

not a Non-Professional Subscriber. If the Nasdaq 

Subscriber agreement is signed in the name of a 

business or commercial entity, such entity would be 

considered a Professional Subscriber.’’ 

4See Securities Exchange Act Release No. 62194 

(May 28, 2010) 75 FR 31830 (SR–Phlx–2010–48) 

(approving TOPO Plus fees) (‘‘TOPO Plus approval 

order’’). 

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; 

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– 

2018–02 and should be submitted on or 

before February 9, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.29

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–00856 Filed 1–18–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–82495; File No. SR–Phlx– 

2018–08] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the 

Exchange’s Fee Schedule at Chapter 

IX 

January 12, 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 January 9, 

2018, Nasdaq 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 

Exchange’s fee schedule at Chapter IX 

(Proprietary Data Feed Fees) to change 

the Internal Distributor fee for Top of 

PHLX Options Plus Orders to reflect 

substantial enhancements to the product 

since the current Distributor fees were 

set in 2010, as described further below. 

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 fee 

schedule at Chapter IX (Proprietary Data 

Feed Fees) to change the Internal 

Distributor fee for TOPO Plus Orders 

(‘‘TOPO Plus’’) to reflect substantial 

enhancements to the product since the 

current Distributor fees were set in 

2010. 

TOPO Plus is a direct, low-latency 

market data product that allows 

subscribers to connect to both the Top 

of PHLX Options (‘‘TOPO’’) data feed 

and the PHLX Orders data feed. TOPO 

provides subscribers a direct data feed 

that includes the Exchange’s best bid 

and offer position, with aggregate size, 

based on displayable order and quoting 

interest on the Exchange. TOPO also 

provides last sale information from 

PHLX. 

PHLX Orders includes the full limit 

order book and contains a real-time 

status of simple and complex orders on 

the PHLX order book for all PHLX-listed 

options. This includes new orders and 

changes to orders resting on the PHLX 

book. The PHLX Orders feed includes 

opening imbalance data, Price 

Improvement XL (PIXL) data and 

Complex Order Live Auction (COLA) 

information, in addition to the full limit 

order book data for both simple and 

complex orders. 

The fee for TOPO Plus varies, 

depending on whether the subscriber is 

an Internal Distributor, an External 

Distributor, a Non-Professional 

Subscriber, or a Professional 

Subscriber.3

Currently, the monthly fee for an 

Internal Distributor is $4,000, the 

monthly fee for an External Distributor 

is $5,000, the monthly fee for a NonProfessional Subscriber is $1, and the 

monthly fee for a Professional 

Subscriber is $40. The Exchange is now 

proposing to increase the monthly fee 

for an Internal Distributor to $4,500. 

Since its inception in 2010, the 

Exchange has not raised the Internal or 

External Distributor fee and yet has 

made substantial improvements to the 

product as illustrated below.4

While the Exchange has not raised the 

fees for TOPO Plus since its inception, 

the Exchange has added a number of 

functional enhancements to both TOPO 

and PHLX Orders in particular, and to 

Exchange systems in general, that 

enhance the value of the TOPO Plus 

data product. Specifically: 

• In July 2011, the Exchange began 

disseminating timestamp messages for 


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