Federal Register / Vol. 79, No. 203 / Tuesday, October 21, 2014 / Notices 62983 

21 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities and Exchange Release No. 55156 

(January 23, 2007), 72 FR 4759 (January 23, 2007) 

(SR–NYSEArca–2006–73). 

5See Securities and Exchange Release No. 61977 

(April 23, 2010), 75 FR 22884 (April 30, 2010) (SR– 

NYSEArca–2010–30). See also OLPP, available at, 

http://www.theocc.com/clearing/industry-services/ 

olpp.jsp. 

6Rule 6.4A codified Amendment No. 3 to the 

OLPP. See Securities and Exchange Release No. 

60531 (August 19, 2009) 74 FR 43173 (File No. 4– 

443). See also Rule 6.4A. 

7 Id., 74 FR at 43174. 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File No. 

SR–BYX–2014–027. This file number 

should be included on the subject line 

if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filing 

will also 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 No. SR–BYX–2014– 

027 and should be submitted on or 

before November 12, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–24944 Filed 10–20–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73362; File No. SR– 

NYSEArca–2014–117] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change Modifying Its Quote 

Mitigation Plan and Amending Rule 

6.86 

October 15, 2014. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on October 

2, 2014, NYSE Arca, Inc. (the 

‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. 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 the Substance 

of the Proposed Rule Change 

The Exchange proposes to modify its 

quote mitigation plan and to amend 

Rule 6.86 (Firm Quotes). The text of the 

proposed rule change is available on the 

Exchange’s Web site at www.nyse.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 

self-regulatory organization 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 those 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 

The Exchange is proposing to modify 

its quote mitigation plan and to amend 

Rule 6.86 (Firm Quotes). As discussed 

below, the Exchange believes the 

modified quote mitigation plan will 

adequately accommodate the number of 

quotations sent to the Exchange and the 

message traffic that the Exchange sends 

to the Options Price Reporting 

Authority (‘‘OPRA’’). 

Rule 6.86 

In connection with the adoption of 

the Penny Pilot Program, the Exchange 

adopted a quote mitigation plan 

designed to reduce the number of 

quotations generated by the Exchange 

for all options traded on the Exchange, 

not just issues included in the Penny 

Pilot Program.4 The current plan 

reduces the number of messages the 

Exchange sends to OPRA by only 

submitting quote messages for ‘‘active’’ 

series. Commentary .03 to Rule 6.86 

defines active series as: (i) The series 

has traded on any options exchange in 

the previous 14 calendar days; or, (ii) 

the series is solely listed on the 

Exchange; or (iii) the series has been 

trading ten days or less, or; (iv) the 

Exchange has an order in the series. 

Alternatively, the Exchange may define 

a series as active on an intraday basis if: 

(i) The series trades at any options 

exchange; (ii) the Exchange receives an 

order in the series; or (iii) the Exchange 

receives a request for quote from a 

Customer in that series. 

The Exchange believes it no longer 

needs the quote mitigation provided by 

Commentary .03 to Rule 6.86 because 

rules adopted since Commentary .03 to 

Rule 6.86 provide sufficient quote 

mitigation. 

Current Market Structure and Controls 

on the Exchange 

In 2010, the Exchange incorporated 

select provisions of the Options Listing 

Procedures Plan (‘‘OLPP’’) in Rule 6.4A 

as a quote mitigation strategy.5

The OLPP is a national market system 

plan that, among other things, sets forth 

procedures governing the listing of new 

options series. From the OLPP, the 

Exchange incorporated in Rule 6.4A, 

‘‘applied uniform standards to the range 

of options series exercise (or strike) 

prices available for trading on the 

[Exchange] as a quote mitigation 

strategy.’’ 6 In approving the OLPP 

provisions subsequently incorporated in 

Rule 6.4A, the Commission indicated 

that ‘‘adopting uniform standards to the 

range of options series exercise (or 

strike) prices available for trading on the 

[Exchange] should reduce the number of 

option series available for trading, and 

thus should reduce increases in the 

options quote message traffic because 

market participants will not be 

submitting quotes in those series.’’ 7

One year after adopting select 

provisions of the OLPP, the Exchange 

refined the quoting obligations 

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62984 Federal Register / Vol. 79, No. 203 / Tuesday, October 21, 2014 / Notices 

8See Securities and Exchange Release No. 65573 

(October 14, 2011), 76 FR 65305 (October 20, 2011) 

(SR–NYSEArca–2011–59). 

9An ‘‘adjusted series’’ is ‘‘an option series 

wherein, as a result of a corporate action by the 

issuer of the underlying security, one option 

contract in the series represents the delivery of 

other than 100 shares of underlying stock or 

Exchange-Traded Fund Shares.’’ See Commentary 

.01 to Rule 6.37B. 

10See supra n. 8, 76 FR at 65306. 

11See the OPRA Capacity Guidelines, available 

here, http://www.opradata.com/pdf/ 

capacity_guidelines.pdf. 

12OPRA has delegated certain functions 

pertaining to planning the capacity of the OPRA 

System to an Independent System Capacity Advisor 

(‘‘ISCA’’) that ‘‘may provide less than all of the 

capacity that has been requested if it determines (a) 

that the capacity requests of one or more of the 

parties are unreasonable, or (b) that it is not 

reasonable to develop or maintain a System that has 

capacity sufficient to satisfy the requests of the 

parties.’’ See id. The Exchange has never been 

informed by the ISCA that the capacity it has 

requested cannot be met for any reason, including 

because the ISCA had deemed the request to be 

unreasonable. Thus, the Exchange believes that any 

increase in quote traffic that might be sent to OPRA 

as a result of the current proposal should not 

impact any other exchange’s capacity at OPRA. 

13See NYSE Arca Options Listing Policy 

Statement, available at, http://www.nyse.com/pdfs/ 

TraderNoticeArcaLOPSChanges092713.pdf. 

14See NYSE Arca Options Fee Schedule, 

available at, https://www.theice.com/publicdocs/

nyse/markets/arca-options/NYSE_Arca_Options_

Fee_Schedule.pdf. 

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

16 15 U.S.C. 78f(b)(5). 

applicable to Market Makers as a quote 

mitigation strategy.8 Specifically, the 

Exchange adopted Commentary .01 to 

Rule 6.37B, which states that Lead 

Market Makers’ and Market Makers’ 

continuous quoting obligations ‘‘shall 

not apply to Market Makers with respect 

to adjusted option series, and series 

with a time to expiration of nine months 

or greater, for options on equities and 

Exchange Traded Fund Shares, and 

series with a time to expiration of 

twelve months or greater for Index 

options.’’ 9 Because there are no Market 

Maker quoting obligations associated 

with adjusted options series, there is a 

reduction in quote traffic that is sent to 

OPRA. Indeed, in approving 

Commentary .01 to Rule 6.37B, the 

Commission noted, ‘‘. . . the 

Exchange’s proposal would reduce the 

burden on market makers to submit 

continuous quotes that the Exchange 

may not submit to OPRA.’’ 10

The Exchange believes that reliance 

on the OLPP, via Rule 6.4A, together 

with the refined Market Maker quoting 

obligations, pursuant to Commentary 

.01 to Rule 6.37B, is sufficient as a quote 

mitigation strategy and obviates the 

need for Rule 6.86. The Exchange 

believes that limiting the number of 

series listed on the Exchange is 

preferable to suppressing quotes of 

inactive series, as required under 

current Rule 6.86, because all quotes 

sent by Market Makers are actionable 

even if not displayed. 

The Exchange believes that both its 

own systems capacity and OPRA’s 

systems capacity are more than 

sufficient to accommodate any 

additional increase in quote traffic that 

might be sent to OPRA as a result of the 

deletion of Rule 6.86. The Exchange has 

already successfully conducted testing 

to ensure that its internal systems are 

equipped to handle any increase in 

quote traffic as a result of the proposed 

rule change. Further, the Exchange 

continually assesses its capacity needs 

and ensures that the capacity that it 

requests from OPRA is not only 

sufficient but also compliant with the 

requirements established in the OPRA 

Capacity Guidelines.11 In submitting its 

capacity requests, the Exchange has 

factored in the impact on capacity if all 

series currently subject to Rule 6.86 

were to become active and therefore 

sent to OPRA.12

In addition, the Exchange has in place 

the following measures that it believes 

serve as additional safeguards against 

excessive quoting: 

—Monitoring: The Exchange actively 

monitors the quotation activity of its 

Market Makers. When the Exchange 

detects that a Market Maker is 

disseminating an unusual number of 

quotes, the Exchange contacts that 

Market Maker and alerts it to such 

activity. Such monitoring may reveal 

that the Market Maker may have 

internal system issues or has 

incorrectly set system parameters that 

were not immediately apparent. 

Alerting a Market Maker to the 

heightened levels of activity will 

usually result in a change that reduces 

the number of quotes sent to the 

Exchange by the Market Maker. 

—New Listings: The Exchange has a 

business plan with respect to the 

listing of options on new underlying 

securities that is designed to help 

ensure that any new listings are 

sufficiently active to avoid listing 

options on underlying securities that 

generate quote volume without the 

offsetting benefit of trading volume.13

—Ratio Threshold Fees: The Exchange 

imposes a ratio fee that is designed to 

encourage the efficient use of 

orders.14

In connection with the foregoing, the 

Exchange proposes to amend paragraphs 

(b)(1) and (b)(2) of Rule 6.86 to delete 

references to the ‘‘Quote Mitigation 

Plan,’’ which refer to the plan set forth 

in Commentary .03 to Rule 6.86. In 

addition, the Exchange proposes to 

delete Commentary .03 to Rule 6.86 in 

its entirety, as it contains a discussion 

of the current quote mitigation plan. 

Implementation 

The Exchange will announce the 

implementation date of the proposed 

rule change by Trader Update to be 

published no later than 60 days 

following the effective date of this filing. 

The implementation date will be no 

later than 60 days following the 

issuance of the Trader Update. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the Act 15

in general and furthers the objectives of 

Section 6(b)(5) of the Act 16 in particular 

in that it should promote just and 

equitable principles of trade, serve to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and 

protect investors and the public interest. 

The Exchange believes that the 

proposed modifications to the quote 

mitigation plan, including the 

continued reliance on Rule 6.4A and 

Commentary .01 to Rule 6.37B, together 

with the other safeguards mentioned 

above, would promote just and 

equitable principles of trade, serve to 

remove impediments to and perfect the 

mechanism of a free and open market as 

it would increase transparency and 

enhance price discovery as all Market 

Maker quotes would be reflected in the 

market. Specifically, the Exchange 

believes that deleting Commentary .03 

to Rule 6.86 will remove impediments 

to and perfect the mechanism of a free 

and open market and a national market 

system because it will enable all 

actionable Market Maker quotes to be 

displayed, including in inactive series. 

The Exchange believes this would also 

protect investors and the public interest 

because available Market Maker 

liquidity in all series would be publicly 

displayed, thereby putting investors on 

notice of such liquidity. The Exchange 

further believes that the market 

structure initiatives adopted in recent 

years serve to reduce the potential for 

excessive quoting because the OLPP 

limits the number of series eligible to be 

listed, which reduces the number of 

series for which a Market Maker would 

be obligated to quote, and therefore 

reduces quote traffic. 

As discussed above, the Exchange 

believes that both its own systems 

capacity and OPRA’s systems capacity 

are more than sufficient to 

accommodate any additional increase in 

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Federal Register / Vol. 79, No. 203 / Tuesday, October 21, 2014 / Notices 62985 

17See supra n. 12. 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3A Member is defined as ‘‘any registered broker 

or dealer that has been admitted to membership in 

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

quote traffic that might be sent to OPRA 

as a result of the proposed rule change. 

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 that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Specifically, 

as discussed above, the Exchange 

believes that any increase in quote 

traffic that might be sent to OPRA as a 

result of the proposed rule change 

should not impact any other exchange’s 

capacity at OPRA.17

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

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 (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be 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 rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2014–117 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–2014–117. 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 

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– 

NYSEArca–2014–117, and should be 

submitted on or before November 12, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–24948 Filed 10–20–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73359; File No. SR–BATS– 

2014–047] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Changes Related to Fees for Use 

of BATS Exchange, Inc. 

October 15, 2014. 

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 October 

6, 2014, BATS Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BATS’’) 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 the Substance 

of the Proposed Rule Change 

The Exchange filed a proposal to 

amend the fee schedule applicable to 

Members 3 and non-members of the 

Exchange pursuant to BATS Rules 

15.1(a) and (c). Changes to the fee 

schedule pursuant to this proposal are 

effective upon filing. 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.batstrading.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to modify the 

‘‘Options Pricing’’ section of its fee 

schedule effective immediately, in order 

to modify pricing charged by the 

Exchange’s options platform (‘‘BATS 

Options’’) for orders routed away from 

the Exchange and executed at various 

away options exchanges. 

The Exchange currently charges 

certain flat rates for routing to other 

options exchanges that have been 

placed into groups based on the 

approximate cost of routing to such 

venues. The grouping of away options 

exchanges is based on the cost of 

mstockstill on DSK4VPTVN1PROD with NOTICES