Federal Register / Vol. 79, No. 214 / Wednesday, November 5, 2014 / Notices 65733 

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

2 17 CFR 240.19b–4. 

3The 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’’) 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)). 

4 Including BATS Exchange, Inc. (‘‘BATS’’), BOX 

Options Exchange LLC (‘‘BOX’’), the Chicago Board 

Options Exchange, Incorporated (‘‘CBOE’’), C2 

Options Exchange, Incorporated (‘‘C2’’), 

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

Miami International Securities Exchange, LLC 

(‘‘MIAX’’), NYSE Arca, Inc. (‘‘NYSE Arca’’), NYSE 

MKT LLC (‘‘NYSE Amex’’) and ISE Gemini, LLC 

(‘‘Gemini’’). 

5See Securities Exchange Act Release No. 71420 

(January 28, 2014), 79 FR 6256 (February 3, 2014) 

(SR–BX–2014–004) (an immediately effective rule 

change to utilize NES for outbound order routing 

from BX). 

6The Options Clearing Corporation (‘‘OCC’’) 

assesses $0.01 per contract side. 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(4), (5). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73469; File No. SR–BX– 

2014–052] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Routing Fees 

October 30, 2014. 

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 October 

23, 2014, 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 amend 

Chapter XV, Section 2 entitled ‘‘BX 

Options Market—Fees and Rebates.’’ 

Specifically, the Exchange is proposing 

to amend Routing Fees. 

While the changes proposed herein 

are effective upon filing, the Exchange 

has designated that the amendments be 

operative on November 3, 2014. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://nasdaqomxbx.cchwall

street.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 this filing is to amend 

the Routing Fees in Chapter XV, Section 

2(3) to recoup costs incurred by the 

Exchange to route orders to away 

markets. 

Today, the Exchange assesses a NonCustomer a $0.97 per contract Routing 

Fee to any options exchange. The 

Customer 3 Routing Fee for option 

orders routed to The NASDAQ Options 

Market LLC (‘‘NOM’’) and NASDAQ 

OMX PHLX LLC (‘‘PHLX’’) is a $0.12 

per contract Fixed Fee in addition to the 

actual transaction fee assessed. The 

Customer Routing Fee for option orders 

routed to all other options exchanges 4

(excluding NOM and PHLX) is a fixed 

fee of $0.22 per contract (‘‘Fixed Fee’’) 

in addition to the actual transaction fee 

assessed. If the away market pays a 

rebate, the Routing Fee is $0.12 per 

contract. 

With respect to the fixed costs, the 

Exchange incurs a fee when it utilizes 

Nasdaq Execution Services LLC 

(‘‘NES’’), a member of the Exchange and 

the Exchange’s affiliated broker-dealer 

exclusive order router.5 Each time NES 

routes an order to an away market, NES 

is charged a clearing fee 6 and, in the 

case of certain exchanges, a transaction 

fee is also charged in certain symbols, 

which fees are passed through to the 

Exchange. The Exchange currently 

recoups clearing and transaction charges 

incurred by the Exchange as well as 

certain other costs incurred by the 

Exchange when routing to away 

markets, such as administrative and 

technical costs associated with 

operating NES, membership fees at 

away markets, Options Regulatory Fees 

(‘‘ORFs’’), staffing and technical costs 

associated with routing options. The 

Exchange assesses the actual away 

market fee at the time that the order was 

entered into the Exchange’s trading 

system. This transaction fee is 

calculated on an order-by-order basis 

since different away markets charge 

different amounts. 

The Exchange is proposing to increase 

its Non-Customer Routing Fees from 

$0.97 to $0.99 per contract to any 

options exchange. The Exchange is 

proposing to increase its Customer 

Routing Fixed Fees to NOM and PHLX 

from $0.12 to $0.13 per contract, in 

addition to the actual transaction fee 

assessed to recoup an additional portion 

of the costs incurred by the Exchange 

for routing these orders. The Exchange 

is proposing to increase its Customer 

Routing Fixed Fees to all other options 

exchanges (excluding NOM and PHLX) 

from $0.22 to $0.23 per contract, in 

addition to actual transaction fees 

assessed. The Exchange would also 

increase the Customer Routing Fee to all 

other options exchanges if the away 

market pays a rebate from a fee of $0.12 

to $0.13 per contract, because the 

Exchange would continue to retain the 

rebate to offset the cost to route orders 

to offset the cost to route orders to these 

away markets. The Exchange desires to 

recoup additional costs at this time. 

2. Statutory Basis 

BX believes that its proposal to amend 

its fees is consistent with Section 6(b) of 

the Act 7 in general, and furthers the 

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

the Act 8 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 BX 

operates or controls, and is not designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange believes that amending 

the Non-Customer Routing Fee for 

orders routed to any options exchange 

from a fee of $0.97 to $0.99 per contract, 

is reasonable because the Exchange 

desires to recoup an additional portion 

of the cost it incurs when routing NonCustomer orders. The Exchange is 

proposing to increase the Fixed Fee to 

recoup additional costs that are incurred 

by the Exchange in connection with 

routing these orders on behalf of its 

members. 

The Exchange believes that amending 

the Customer Routing Fee for orders 

routed to NOM and PHLX from a Fixed 

Fee of $0.12 to $0.13 per contract, in 

addition to the actual transaction fee, is 

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65734 Federal Register / Vol. 79, No. 214 / Wednesday, November 5, 2014 / Notices 

9See BX Rules at Chapter VI, Section 11(e) (Order 

Routing). 

10See Chapter VI, Section 11 of NOM and BX 

Rules. See also PHLX Rule 1080(m)(iii)(A). 

11See BX Rules at Chapter VI, Section 11(e) 

(Order Routing). 

12See Chapter VI, Section 11 of BX Rules. 

reasonable because the Exchange desires 

to recoup an additional portion of the 

cost it incurs when routing Customer 

orders to NOM or PHLX. Today, the 

Exchange assesses orders routed to 

NOM and PHLX a lower Fixed Fee for 

routing Customer orders as compared to 

the Fixed Fee assessed to other options 

exchanges. The Exchange is proposing 

to increase the Fixed Fee to recoup 

additional costs that are incurred by the 

Exchange in connection with routing 

these orders on behalf of its members. 

The Exchange believes that 

continuing to assess lower Fixed Fees to 

route Customer orders to NOM and 

PHLX, as compared to other options 

exchanges, is reasonable as the 

Exchange is able to leverage certain 

infrastructure to offer those markets 

lower fees as explained further below. 

The Exchange believes that amending 

the Customer Routing Fee to other away 

markets, other than NOM and PHLX, 

from a Fixed Fee of $0.22 to $0.23 per 

contract, in addition to the actual 

transaction fee, is reasonable because 

the Exchange desires to recoup an 

additional portion of the cost it incurs 

when routing orders to these away 

markets. The Fixed Fee for Customer 

orders is an approximation of the costs 

the Exchange will be charged for routing 

orders to away markets. While each 

destination market’s transaction charge 

varies and there is a cost incurred by the 

Exchange when routing orders to away 

markets, including, OCC clearing costs, 

administrative and technical costs 

associated with operating NES, 

membership fees at away markets, ORFs 

and technical costs associated with 

routing options, the Exchange believes 

that the proposed Routing Fees will 

enable it to recover the costs it incurs to 

route Customer orders to away markets. 

The Exchange believes that amending 

the Customer Routing Fee to other away 

markets, other than NOM and PHLX, if 

the away market pays a rebate, from 

$0.12 to $0.13 per contract is reasonable 

because the Exchange desires to recoup 

an additional portion of the cost it 

incurs when routing Customer orders to 

away markets, similar to the amount of 

Fixed Fee it proposes to assess for 

orders routed to NOM and PHLX. The 

Exchange is proposing to assess a Fixed 

Fee to recoup additional costs that are 

incurred by the Exchange in connection 

with routing these orders on behalf of its 

members. While the Exchange would 

continue to retain any rebate paid by 

away markets, the Exchange does not 

assess the actual transaction fee that is 

charged by away markets for Customer 

orders. As a general matter, the 

Exchange believes that the proposed 

fees for Customer orders routed to 

markets which pay a rebate would allow 

it to recoup and cover a portion of the 

costs of providing optional routing 

services for Customer orders because it 

better approximates the costs incurred 

by the Exchange for routing such orders. 

The Exchange believes that amending 

the Non-Customer Routing Fee for 

orders routed to any options exchange 

from a fee of $0.97 to $0.99 per contract, 

is equitable and not unfairly 

discriminatory because the Exchange 

would assess the same $0.99 per 

contract fee to all market participants 

utilizing routing for Non-Customer 

orders. 

The Exchange believes that amending 

the Customer Routing Fee for orders 

routed to NOM and PHLX from a Fixed 

Fee of $0.12 to $0.13 per contract, in 

addition to the actual transaction fee, is 

equitable and not unfairly 

discriminatory because the Exchange 

would assess the same Fixed Fee to all 

orders routed to NOM or PHLX in 

addition to the transaction fee assessed 

by that market. 

The Exchange would uniformly assess 

a $0.13 per contract Fixed Fee to orders 

routed to NASDAQ OMX exchanges 

because the Exchange is passing along 

the saving realized by leveraging 

NASDAQ OMX’s infrastructure and 

scale to market participants when those 

orders are routed to NOM or PHLX and 

is providing those saving to all market 

participants. Furthermore, it is 

important to note that when orders are 

routed to an away market they are 

routed based on price first.9 The 

Exchange believes that it is equitable 

and not unfairly discriminatory to 

assess a fixed cost of $0.13 per contract 

to route orders to NOM and PHLX 

because the cost, in terms of actual cash 

outlays, to the Exchange to route to 

those markets is lower. For example, 

costs related to routing to NOM and 

PHLX are lower as compared to other 

away markets because NES is utilized 

by all three exchanges to route orders.10

NES and the three NASDAQ OMX 

options markets have a common data 

center and staff that are responsible for 

the day-to-day operations of NES. 

Because the three exchanges are in a 

common data center, Routing Fees are 

reduced because costly expenses related 

to, for example, telecommunication 

lines to obtain connectivity are avoided 

when routing orders in this instance. 

The costs related to connectivity to 

route orders to other NASDAQ OMX 

exchanges are lower than the costs to 

route to a non-NASDAQ OMX 

exchange. When routing orders to nonNASDAQ OMX exchanges, the 

Exchange incurs costly connectivity 

charges related to telecommunication 

lines, membership and access fees, and 

other related costs when routing orders. 

The Exchange believes that amending 

the Customer Routing Fee to other away 

markets, other than NOM and PHLX, 

from a Fixed Fee of $0.22 to $0.23 per 

contract is equitable and not unfairly 

discriminatory because the Exchange 

would assess the same Fixed Fee to all 

orders routed to away markets other 

than NOM and PHLX in addition to the 

transaction fee, provided the away 

market does not pay a rebate. 

The Exchange’s proposal to increase 

the Customer Routing Fee to all other 

options exchanges that pay a rebate, 

other than NOM and PHLX, from $0.12 

to $0.13 per contract is equitable and 

not unfairly discriminatory because the 

Exchange would assess the same Fixed 

Fee that is proposed when routing 

Customer orders to a NASDAQ OMX 

exchange. All market participants that 

route an order to an away market, other 

than NOM or PHLX, would be assessed 

a uniform fee of $0.13 per contract if the 

away market (non-NASDAQ OMX 

exchange) pays a rebate. These 

proposals would apply uniformly to all 

market participants when routing to an 

away market that pays a rebate, other 

than NOM and PHLX. 

Finally, market participants may 

submit orders to the Exchange as 

ineligible for routing or ‘‘DNR’’ to avoid 

Routing Fees.11 Also, orders are routed 

to an away market based on price first.12

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

BX 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. The Exchange does 

not believe that the proposal creates a 

burden on intra-market competition 

because the Exchange is applying the 

same Routing Fees to all market 

participants in the same manner 

dependent on the routing venue, with 

the exception of Customers. The 

Exchange will continue to assess 

separate Customer Routing Fees. 

Customers will continue to receive the 

lowest fees as compared to nonCustomers when routing orders, as is 

the case today. Other options exchanges 

also assess lower Routing Fees for 

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Federal Register / Vol. 79, No. 214 / Wednesday, November 5, 2014 / Notices 65735 

13BATS assesses lower customer routing fees as 

compared to non-customer routing fees per the 

away market. For example BATS assesses ISE 

customer routing fees of $0.52 per contract and an 

ISE non-customer routing fee of $ 0.65 per contract. 

See BATS BZX Exchange Fee Schedule. 

14See CBOE’s Fees Schedule and ISE’s Fee 

Schedule. 

15See note 11. 

16See note 12. 

17 15 U.S.C. 78s(b)(3)(A)(ii). 18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 73094 

(September 15, 2014), 79 FR 56411 (‘‘Notice’’). 

4Regular Trading Hours is defined in Rule 1.5(w). 

5Pre-Opening Session is defined in Rule 1.5(r). 

6BATS Book is defined in Rule 1.5(e). 

customer orders as compared to noncustomer orders.13

The Exchange’s proposal would allow 

the Exchange to continue to recoup its 

costs when routing Customer orders to 

PHLX or NOM as well as away markets 

that pay a rebate when such orders are 

designated as available for routing by 

the market participant. The Exchange 

continues to pass along savings realized 

by leveraging NASDAQ OMX’s 

infrastructure and scale to market 

participants when Customer orders are 

routed to PHLX and NOM and is 

providing those savings to all market 

participants. Today, other options 

exchanges also assess fixed routing fees 

to recoup costs incurred by the 

exchange to route orders to away 

markets.14

Market participants may submit 

orders to the Exchange as ineligible for 

routing or ‘‘DNR’’ to avoid Routing 

Fees.15 Also, orders are routed to an 

away market based on price first.16

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.17 At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or 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–2014–052 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–BX–2014–052. 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–2014–052 and should 

be submitted on or before November 26, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26227 Filed 11–4–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73472; File No. SR–BYX– 

2014–018] 

Self-Regulatory Organizations; BATS 

Y-Exchange, Inc.; Order Granting 

Approval of a Proposed Rule Change 

To Establish an Opening Process 

October 30, 2014. 

I. Introduction 

On September 3, 2014, BATS YExchange, Inc. (the ‘‘Exchange’’ or 

‘‘BYX’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

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

Securities Exchange Act of 1934 

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

proposed rule change to add new BATS 

Rule (‘‘Rule’’) 11.23, entitled ‘‘Opening 

Process,’’ and to make several 

corresponding changes, in order to 

modify the manner in which the 

Exchange opens trading in individual 

securities at the beginning of the day 

and after trading halts. The proposed 

rule change was published for comment 

in the Federal Register on September 

19, 2014.3 The Commission did not 

receive any comments on the proposed 

rule change. This order approves the 

proposed rule change. 

II. Description of the Proposal 

The Exchange has proposed to 

implement a process for opening trading 

at the beginning of Regular Trading 

Hours 4 and re-opening trading in such 

securities following a trading halt. 

Currently, the Exchange accepts orders 

during the Pre-Opening Session,5 and 

any such orders are immediately eligible 

for execution. Orders that are on the 

BATS Book 6 at the beginning of Regular 

Trading Hours remain on the BATS 

Book, subject to the User’s instructions, 

and trading continues into Regular 

Trading Hours without any transition 

period. Upon a halt, the Exchange 

currently cancels all orders on the BATS 

Book and does not accept any orders 

until the halt is lifted. The Exchange 

does not currently have a Regular Hours 

Only (‘‘RHO’’) time-in-force. 

Under the proposal, the Exchange 

would amend its rules to allow orders 

to be designated RHO, and would accept 

and queue any such orders during the 

Pre-Opening Session for execution at 

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