Federal Register / Vol. 81, No. 27 / Wednesday, February 10, 2016 / Notices 7163 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange does not currently assess a 

registered representative fee to its members. 

4The ORF would apply to all customer orders 

executed by a BX Participant on BX. Exchange rules 

require each BX Participant to submit trade 

information in order to allow the Exchange to 

properly prioritize and match orders and quotations 

and report resulting transactions to the OCC. See 

Exchange Rules Chapter V, Section 7. The Exchange 

represents that it has surveillances in place to verify 

that BX Participants comply with the Rule. 

determine whether the proposed rule 

change 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– 

NYSEArca–2016–23 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–NYSEArca–2016–23. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filing also will be available for 

inspection and copying at the principal 

offices 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– 

NYSEArca–2016–23, and should be 

submitted on or before March 2, 2016. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2016–02603 Filed 2–9–16; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–77053; File No. SR–BX– 

2016–007] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change to Adopt an 

Options Regulatory Fee 

February 4, 2016. 

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 

21, 2016, NASDAQ OMX BX, Inc. (‘‘BX’’ 

or ‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to institute a 

new transaction based ‘‘Options 

Regulatory Fee’’ or ‘‘ORF.’’ 

While fee changes pursuant to this 

proposal are effective upon filing, the 

Exchange has designated these changes 

to be operative on February 1, 2016. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://

nasdaqomxbx.cchwallstreet.com/, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend BX 

Options Rule at Chapter XV, Section 5, 

which is currently reserved, to adopt an 

ORF.3

In order to offset the cost of the 

Exchange’s regulatory programs, the 

Exchange proposes to [sic] an ORF of 

$0.0003 per contract. The ORF would be 

assessed by the Exchange to each BX 

Participant for all options transactions 

executed or cleared by the BX 

Participant that are cleared by The 

Options Clearing Corporation (‘‘OCC’’) 

in the Customer range, i.e., transactions 

that clear in the Customer account of the 

BX Participant’s clearing firm at OCC, 

regardless of the marketplace of 

execution. The Exchange would impose 

the ORF on all options transactions 

executed by a BX Participant, even if the 

transactions do not take place on BX.4

The ORF would also be assessed on 

transactions that are not executed by a 

BX Participants [sic] but are ultimately 

cleared by a BX Participant. For 

example, if a BX Participant executed a 

transaction and a BX Participant cleared 

the transaction, the ORF would be 

assessed to the BX Participant who 

executed the transaction. Also, if a nonBX Participant executed a transaction 

and a BX Participant cleared the 

transaction, the ORF would be assessed 

to the BX Participant who cleared the 

transaction. 

The Exchange believes it is 

appropriate to charge the ORF only to 

transactions that clear as Customer at 

OCC. The Exchange believes that its 

broad regulatory responsibilities with 

respect to BX Participants’ activities 

supports applying the ORF to 

transactions cleared but not executed by 

a BX Participant. The Exchange’s 

regulatory responsibilities are the same 

regardless of whether a BX Participant 

executes a transaction or clears a 

transaction executed on its behalf. The 


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7164 Federal Register / Vol. 81, No. 27 / Wednesday, February 10, 2016 / Notices 

5The Exchange also participates in The Options 

Regulatory Surveillance Authority (‘‘ORSA’’) 

national market system plan and in doing so shares 

information and coordinates with other exchanges 

designed to detect the unlawful use of undisclosed 

material information in the trading of securities 

options. ORSA is a national market system 

comprised of several self-regulatory organizations 

whose functions and objectives include the joint 

development, administration, operation and 

maintenance of systems and facilities utilized in the 

regulation, surveillance, investigation and detection 

of the unlawful use of undisclosed material 

information in the trading of securities options. The 

Exchange compensates ORSA for the Exchange’s 

portion of the cost to perform insider trading 

surveillance on behalf of the Exchange. The ORF 

will cover the costs associated with the Exchange’s 

arrangement with ORSA. 

6The Exchange expects that implementation of 

the proposed ORF will result generally in many 

traditional brokerage firms paying less regulatory 

fees while Internet and discount brokerage firms 

will pay more. 

7The Exchange and other options SROs are 

parties to a 17d–2 agreement allocating among the 

SROs regulatory responsibilities relating to 

compliance by the common members with rules for 

expiring exercise declarations, position limits, OCC 

trade adjustments, and Large Option Position 

Report reviews. See Securities Exchange Act 

Release No. 63430 (December 3, 2010), 75 FR 76758 

(December 9, 2010). The Commission notes that the 

current effective version of this 17d–2 plan is 

reflected in Securities Exchange Act Release No. 

76310 (Oct. 29, 2015), 80 FR 68354 (Nov. 4, 2015). 

8COATS effectively enhances intermarket 

options surveillance by enabling the options 

exchanges to reconstruct the market promptly to 

effectively surveil certain rules. 

9 ISG is an industry organization formed in 1983 

to coordinate intermarket surveillance among the 

SROs by cooperatively sharing regulatory 

information pursuant to a written agreement 

between the parties. The goal of the ISG’s 

information sharing is to coordinate regulatory 

efforts to address potential intermarket trading 

abuses and manipulations. 

10See Exchange Act Section 6(h)(3)(I). 

Exchange regularly reviews all such 

activities, including performing 

surveillance for position limit 

violations, manipulation, front-running, 

contrary exercise advice violations and 

insider trading.5 These activities span 

across multiple exchanges. 

The Exchange believes the initial 

level of the fee is reasonable because it 

relates to the recovery of the costs of 

supervising and regulating BX 

Participants. The proposed amount of 

the ORF is fair and reasonably allocated 

because it represents less than the 

Exchange’s actual costs in administering 

its regulatory program. The ORF would 

be collected indirectly from BX 

Participants through their clearing firms 

by OCC on behalf of the Exchange. The 

Exchange expects that BX Participants 

will pass-through the ORF to their 

Customers in the same manner that 

firms pass-through to their Customers 

the fees charged by Self-Regulatory 

Organizations (‘‘SROs’’) to help the 

SROs meet their obligations under 

Section 31 of the Exchange Act. 

The ORF is designed to recover a 

material portion of the costs to the 

Exchange of the supervision and 

regulation of BX Participants, including 

performing routine surveillances, 

investigations, as well as policy, 

rulemaking, interpretive and 

enforcement activities. The Exchange 

believes that revenue generated from the 

ORF, when combined with all of the 

Exchange’s other regulatory fees, will 

cover a material portion, but not all, of 

the Exchange’s regulatory costs. The 

Exchange notes that its regulatory 

responsibilities with respect to BX 

Participant compliance with options 

sales practice rules have been allocated 

to FINRA under a 17d–2 agreement. The 

ORF is not designed to cover the cost of 

options sales practice regulation. 

The Exchange would monitor the 

amount of revenue collected from the 

ORF to ensure that it, in combination 

with its other BX regulatory fees and 

fines, does not exceed the Exchange’s 

total regulatory costs. The Exchange 

expects to monitor BX regulatory costs 

and revenues at a minimum on an 

annual basis. If the Exchange 

determines BX regulatory revenues 

exceed regulatory costs, the Exchange 

would adjust the ORF by submitting a 

fee change filing to the Commission. 

The Exchange would notify BX 

Participants of adjustments to the ORF 

via a Regulatory Information Circular. 

The Exchange believes the proposed 

ORF is equitably allocated because it 

would be charged to all BX Participants 

on all their Customer options business. 

The amount of resources required by the 

Exchange to regulate non-Customer 

trading activity is significantly less than 

the amount of resources the Exchange 

must dedicate to regulate Customer 

trading activity. The ORF seeks to 

recover the costs of supervising and 

regulating members, including 

performing routine surveillances, 

investigations, examinations, financial 

monitoring, and policy, rulemaking, 

interpretive, and enforcement activities. 

The Exchange believes the proposed 

ORF is reasonable because it will raise 

revenue related to the amount of 

Customer options business conducted 

by BX Participants and thus the amount 

of Exchange regulatory services required 

by those BX Participants.6

As a fully-electronic exchange 

without a trading floor, the amount of 

resources required by the Exchange to 

regulate non-Customer trading activity 

is significantly less than the amount of 

resources the Exchange must dedicate to 

regulate Customer trading activity. This 

is because regulating Customer trading 

activity is much more labor intensive 

and requires greater expenditure of 

human and technical resources than 

regulating non-Customer trading 

activity, which tends to be more 

automated and less labor-intensive. As a 

result, the costs associated with 

administering the Customer component 

of the Exchange’s overall regulatory 

program are materially higher than the 

costs associated with administering the 

non-Customer component (e.g., market 

maker) of its regulatory program. 

The Exchange believes it is reasonable 

and appropriate for the Exchange to 

charge the ORF for options transactions 

regardless of the exchange on which the 

transactions occur. The Exchange has a 

statutory obligation to enforce 

compliance by BX Participants and their 

associated persons with the Exchange 

Act and the Rules of the Exchange and 

to surveil for other manipulative 

conduct by market participants 

(including non-BX Participants) trading 

on the Exchange. The Exchange cannot 

effectively surveil for such conduct 

without looking at and evaluating 

activity across all options markets. 

Many of the Exchange’s market 

surveillance programs require the 

Exchange to look at and evaluate 

activity across all options markets, such 

as surveillance for position limit 

violations, manipulation, front-running 

and contrary exercise advice violations/ 

expiring exercise declarations.7 Also, 

the Exchange and the other options 

exchanges are required to populate a 

consolidated options audit trail 

(‘‘COATS’’) system in order to surveil 

BX Participant activities across 

markets.8

In addition to its own surveillance 

programs, the Exchange works with 

other SROs and exchanges on 

intermarket surveillance related issues. 

Through its participation in the 

Intermarket Surveillance Group 

(‘‘ISG’’),9 the Exchange shares 

information and coordinates inquiries 

and investigations with other exchanges 

designed to address potential 

intermarket manipulation and trading 

abuses. The Exchange’s participation in 

ISG helps it to satisfy the Exchange Act 

requirement that it have coordinated 

surveillance with markets on which 

security futures are traded and markets 

on which any security underlying 

security futures are traded to detect 

manipulation and insider trading.10

The Exchange believes that charging 

the ORF across markets will avoid 

having BX Participants direct their 

trades to other markets in order to avoid 

the fee and to thereby avoid paying for 

their fair share of regulation. If the ORF 

did not apply to activity across markets 


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Federal Register / Vol. 81, No. 27 / Wednesday, February 10, 2016 / Notices 7165 

11See other options exchanges such as the 

Chicago Board Options Exchange, Incorporated 

(‘‘CBOE’’), C2 Options Exchange, Inc. (‘‘C2’’), 

NASDAQ OMX PHLX, LLC (‘‘Phlx’’), the 

International Securities Exchange, LLC (‘‘ISE’’), 

NYSE Arca, Inc. (‘‘NYSEArca’’) and [sic] NYSE 

AMEX LLC (‘‘NYSEAmex’’), BATS Exchange, Inc. 

(‘‘BATS’’) and The NASDAQ Options Market LLC 

(‘‘NOM’’). 

12See Securities Exchange Act Release No. 47946 

(May 30, 2003), 68 FR 3402 [sic] (June 6, 2003). 

13 15 U.S.C. 78f(b). 

14 15 U.S.C. 78f(b)(4) and (5). 

15See Securities Exchange Act Release No. 50700 

(November 18, 2004), 69 FR 71256 (December 8, 

2004) (‘‘Concept Release’’). 

16See Securities Exchange Act Release No. 50700 

(November 18, 2004), 69 FR 71256 (December 8, 

2004) (‘‘Concept Release’’) [sic]. 

17Concept Release at 71268. 

18 Governance Release at 71142. 19See note 11 above. 

then BX Participants would send their 

orders to the lowest cost, least regulated 

exchange. Other exchanges could 

impose a similar fee on their member’s 

activity, including the activity of those 

members on BX. In addition to the ORF 

that is currently in place at other 

exchanges,11 the Exchange notes that 

there is established precedent for an 

SRO charging a fee across markets, 

namely, FINRA’s Trading Activity 

Fee.12 While the Exchange does not 

have all the same regulatory 

responsibilities as FINRA, the Exchange 

believes that, like the other exchanges 

that assess an ORF, its broad regulatory 

responsibilities with respect to BX 

Participants’ activities, irrespective of 

where their transactions take place, 

supports a regulatory fee applicable to 

transactions on other markets. Unlike 

FINRA’s Trading Activity Fee, the ORF 

would apply only to a BX Participant’s 

Customer options transactions. 

While fee changes pursuant to this 

proposal are effective upon filing, the 

Exchange has designated these changes 

to be operative on February 1, 2016. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 13 in general, and furthers the 

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

of the Act 14 in particular, in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

among members and issuers and other 

persons using any facility or system 

which the Exchange operates or 

controls, and is not designed to permit 

unfair discrimination between 

Customers, issuers, brokers, or dealers. 

The Exchange believes the ORF is 

objectively allocated to BX Participants 

because it would be charged to all BX 

Participants on all their transactions 

that clear as Customer at the OCC. The 

Exchange believes it is appropriate to 

charge the ORF only to transactions that 

clear as Customer at the OCC because 

the Exchange is assessing higher fees to 

those Participants that require more 

Exchange regulatory services based on 

the amount of Customer options 

business they conduct. As a fullyelectronic exchange without a trading 

floor, the amount of resources required 

by the Exchange to regulate nonCustomer trading activity is 

significantly less than the amount of 

resources the Exchange must dedicate to 

regulate Customer trading activity. This 

is because regulating Customer trading 

activity is much more labor intensive 

and requires greater expenditure of 

human and technical resources than 

regulating non-Customer trading 

activity, which tends to be more 

automated and less labor-intensive. 

Moreover, the Exchange believes the 

ORF ensures fairness by assessing 

higher fees to those BX Participants that 

require more Exchange regulatory 

services based on the amount of 

Customer options business they 

conduct. The ORF seeks to recover the 

costs of supervising and regulating 

Options Participants including 

performing routine surveillances, 

investigations, examinations, financial 

monitoring, and policy, rulemaking, 

interpretive, and enforcement activities. 

The Exchange’s regulatory 

responsibilities are the same regardless 

of whether a BX Participant executes a 

transaction or clears a transaction 

executed on its behalf. The Exchange 

believes that this proposal is reasonable, 

equitable and not unfairly [sic] for the 

foregoing reasons. 

The Commission has addressed the 

funding of an SRO’s regulatory 

operations in the Concept Release 

Concerning Self-Regulation 15 and the 

release on the Fair Administration and 

Governance of Self-Regulatory 

Organizations.16 In the Concept Release, 

the Commission states that: ‘‘Given the 

inherent tension between an SRO’s role 

as a business and [sic] a regulator, there 

undoubtedly is a temptation for an SRO 

to fund the business side of its 

operations at the expense of 

regulation.’’ 17 In order to address this 

potential conflict, the Commission 

proposed in the Governance Release 

rules that would require an SRO to 

direct monies collected from regulatory 

fees, fines, or penalties exclusively to 

fund the regulatory operations and other 

programs of the SRO related to its 

regulatory responsibilities.18 The 

Exchange has designed the ORF to 

generate revenues that would recover a 

material portion of BX’s regulatory 

costs, which is consistent with the 

Commission’s view that regulatory fees 

be used for regulatory purposes and not 

to support the Exchange’s business side. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. In terms of 

inter-market competition, the Exchange 

notes that it operates in a highly 

competitive market in which market 

participants can readily favor competing 

venues if they deem fee levels at a 

particular venue to be excessive, or 

rebate opportunities available at other 

venues to be more favorable. In such an 

environment, the Exchange must 

continually adjust its fees to remain 

competitive with other exchanges and 

with alternative trading systems that 

have been exempted from compliance 

with the statutory standards applicable 

to exchanges. Because competitors are 

free to modify their own fees in 

response, and because market 

participants may readily adjust their 

order routing practices, the Exchange 

believes that the degree to which fee 

changes in this market may impose any 

burden on competition is extremely 

limited. 

In terms of intra-market competition, 

the ORF already exists on various 

options exchanges.19 Also, the ORF 

would be objectively allocated to all BX 

Participants on all their transactions 

that clear as Customer at the OCC. The 

Exchange believes it is appropriate to 

charge the ORF only to transactions that 

clear as Customer at the OCC because 

the Exchange is assessing higher fees to 

those Participants that require more 

Exchange regulatory services based on 

the amount of Customer options 

business they conduct. As a fullyelectronic exchange without a trading 

floor, the amount of resources required 

by the Exchange to regulate nonCustomer trading activity is 

significantly less than the amount of 

resources the Exchange must dedicate to 

regulate Customer trading activity. This 

is because regulating Customer trading 

activity is much more labor intensive 

and requires greater expenditure of 

human and technical resources than 

regulating non-Customer trading 

activity, which tends to be more 

automated and less labor-intensive. 


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7166 Federal Register / Vol. 81, No. 27 / Wednesday, February 10, 2016 / Notices 

20 15 U.S.C. 78s(b)(3)(A)(ii). 

21 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3A Professional will be treated in the same 

manner as an off-floor broker-dealer for purposes of 

Rules 1014(g)(except with respect to all-or-none 

orders, which will be treated like customer orders, 

except that orders submitted pursuant to Rule 

1080(n) for the beneficial account(s) of 

Professionals with an all-or-none designation will 

be treated in the same manner as off-floor brokerdealer orders), 1033(e), 1064.02 (except Professional 

orders will be considered customer orders subject 

to facilitation), 1080(n) and 1080.07 as well as 

Options Floor Procedure Advices B–6 and F–5. 

Member organizations must indicate whether orders 

are for Professionals. 

4The Exchange utilizes a special order origin 

code for Professional orders. The Exchange also 

disseminates the Professional designator over its 

new Top of Phlx Options Plus Orders (‘‘TOPO Plus 

Orders’’), which includes disseminated Exchange 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.20

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is: (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– 

BX–2016–007 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–BX–2016–007. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of 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–BX– 

2016–007 and should be submitted on 

or before March 2, 2016. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2016–02605 Filed 2–9–16; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–77054; File No. SR–Phlx– 

2016–10] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing of Proposed Rule Change 

Relating to Professional Customer 

Definition 

February 4, 2016. 

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 

21, 2016, NASDAQ OMX PHLX LLC 

(‘‘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 

Exchange Rule 1000(b)(14) 

(Applicability, Definitions and 

References) to add specificity to the 

definition of a Professional with respect 

to the manner in which the volume 

threshold will be calculated by the 

Exchange. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://nasdaqomxphlx.

cchwallstreet.com/, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend the 

definition of ‘‘Professional’’ in Rule 

1000(b)(14) to specify the manner in 

which the Exchange calculates orders to 

determine if an order should be treated 

as Professional. 

Background 

Exchange Rule 1000(b)(14) currently 

states, the term Professional means any 

person or entity that (i) is not a broker 

or dealer in securities, and (ii) places 

more than 390 orders in listed options 

per day on average during a calendar 

month for its own beneficial 

account(s).3 In order to properly 

represent orders entered on the 

Exchange member organizations are 

required to indicate whether Customer 

orders are ‘‘Professional’’ orders.’’ 4 To 


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