Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 38979 

23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

thereby promoting market transparency. 

The Exchange may halt trading during 

the day in which an interruption to the 

dissemination of the IOPV occurs, or the 

value of the underlying Futures 

Contracts occurs. If the interruption to 

the dissemination of the IOPV or the 

value of the underlying Futures 

Contracts persists past the trading day 

in which it occurred, the Exchange will 

halt trading no later than the beginning 

of the trading day following the 

interruption. If the Exchange becomes 

aware that the NAV, the NAV per Share 

and the Disclosed Portfolio with respect 

to a series of Managed Trust Securities 

are not disseminated to all market 

participants at the same time, it will halt 

trading in such series until such time as 

the NAV, the NAV per Share and the 

Disclosed Portfolio are available to all 

market participants. Trading in Shares 

of the Trust will be halted if the circuit 

breaker parameters under NYSE Arca 

Equities Rule 7.12 have been reached or 

because of market conditions or for 

reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable. Moreover, prior to the 

commencement of trading, the Exchange 

will inform its ETP Holders in the 

Bulletin of the special characteristics 

and risks associated with trading the 

Shares. 

The proposed rule change is designed 

to perfect the mechanism of a free and 

open market and, in general, to protect 

investors and the public interest given 

that it will facilitate the listing and 

trading of an additional type of 

exchange-traded product that will 

principally hold futures contracts and 

that will enhance competition among 

market participants, to the benefit of 

investors and the marketplace. As noted 

above, the Exchange has in place 

surveillance procedures relating to 

trading in the Shares and may obtain 

information via the ISG from other 

exchanges that are members of the ISG 

or with which the Exchange has entered 

into a CSSA. In addition, as noted 

above, investors will have ready access 

to information regarding the IOPV and 

quotation and last sale information for 

the Shares. 

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 Exchange Act. 

The Exchange notes that the proposed 

rule change will facilitate the listing and 

trading of an additional type of activelymanaged exchange-traded product that 

will principally hold futures contracts, 

and that will enhance competition 

among market participants, to the 

benefit of investors and the marketplace. 

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 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 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 rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2017–85 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–2017–85. 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– 

NYSEArca–2017–85 and should be 

submitted on or before September 6, 

2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2017–17275 Filed 8–15–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81374; File No. SR–Phlx– 

2017–63] 

Self-Regulatory Organizations; 

NASDAQ PHLX LLC; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend 

Chapter VI, Section A of Its Pricing 

Schedule Relating to the Exchange’s 

Monthly Permit Fees for PSX Only 

Members 

August 10, 2017. 

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 July 31, 

2017, 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. 


asabaliauskas on DSKBBXCHB2PROD with NOTICES
38980 Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 

3 15 U.S.C. 78f(b). 

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

5Securities Exchange Act Release No. 51808 

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

(‘‘Regulation NMS Adopting Release’’). 

6NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 

2010). 

7See NetCoalition, at 534–535. 

8 Id. at 537. 

9 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)). 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Chapter VI, Section A of its Pricing 

Schedule relating to the Exchange’s 

monthly permit fees for PSX only 

members. The text of the proposed rule 

change is available on the Exchange’s 

Web site 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Chapter VI, Section A of its Pricing 

Schedule to add a new exemption from 

the $4,000 per month ‘‘PSX Only Permit 

Fee’’ that the Exchange assesses to ‘‘PSX 

only’’ members and member 

organizations. A ‘‘PSX only’’ member or 

member organization is one that only 

does business only [sic] on PSX and not 

on the PHLX options market. 

Presently, the Exchange waives this 

Permit Fee if a PSX only member or 

member organization executes at least 

1,000 shares per day, on average, in a 

given month. The Exchange proposes to 

also waive the Permit Fee during any 

month in which a PSX only member’s 

or member organization’s business on 

the Exchange is limited to ‘‘clearingonly.’’ For the purpose of the proposal, 

the term ‘‘clearing-only’’ means that the 

PSX only member or member 

organization: (1) Does not execute any 

trades on PSX throughout a given 

month; (2) maintains no active 

connections to execute trades on PSX 

during that month (either through its 

own MPID or through a sponsored 

access relationship on behalf of another 

member or member organization); and 

(3) maintains PSX membership for the 

sole purpose of clearing trades on behalf 

of another member or member 

organization that is actively trading on 

PSX. 

The purpose of the proposal is to 

enhance its fee structure for members 

and member organizations that limit 

their business on the Exchange during a 

given month to only clearing trades on 

behalf of others. The Exchange has 

determined that assessing clearing-only 

members and member organizations a 

monthly PSX Only Permit Fee is 

unnecessary given that the PSX Only 

Permit Fee exists for two purposes that 

do not apply to those that engage in 

clearing-only. First, the PSX Only 

Permit Fee serves as the price that 

members and member organizations pay 

for the privilege of executing trades on 

PSX. However, unlike other PSX 

members and member organizations, 

clearing firms do not obtain their PSX 

membership to execute trades and they 

do not, in fact, execute trades on PSX. 

The PSX Only Permit Fee also exists to 

defray the costs that the Exchange 

incurs to examine and oversee those of 

its members and member organizations 

for which the Exchange acts as the 

Designated Examination Authority. 

Again, however, the Exchange does not 

serve as the Designated Examination 

Authority for clearing-only firms and it 

therefore does not incur these costs. 

Moreover, the Exchange believes that 

the assessment of the monthly PSX Only 

Permit Fee to clearing-only members 

and member organizations serves as a 

disincentive for clearing firms to 

provide their valuable services to other 

Exchange members and member 

organizations. The Exchange wishes to 

encourage, rather than discourage, 

clearing firms to participate on the 

Exchange. Indeed, the Exchange hopes 

that waiving the PSX Only Permit Fee 

for clearing-only members and member 

organizations will not only attract new 

clearing firms to PSX, but it will also 

more generally attract additional trading 

participation and trading on PSX. This 

proposal is part of an effort to nurture 

the growth of PSX. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,3 in general, and furthers the 

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

of the Act,4 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.’’ 5

Likewise, in NetCoalition v. Securities 

and Exchange Commission 6

(‘‘NetCoalition’’) the D.C. Circuit upheld 

the Commission’s use of a market-based 

approach in evaluating the fairness of 

market data fees against a challenge 

claiming that Congress mandated a costbased approach.7 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.’’ 8

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’ . . . .’’ 9 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. 

The Exchange believes that waiving 

the monthly PSX Only Permit Fee for 

clearing-only members and member 

organization is reasonable because no 

justification exists for charging this Fee 

to members and member organizations 

that do not use their membership to 

execute trades on PSX and are not 


asabaliauskas on DSKBBXCHB2PROD with NOTICES
Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 38981 

10See also Securities Exchange Act Release No. 

34–72784 (Aug. 7, 2014), 79 FR 47506 (Aug. 13, 

2014) (discussing the Exchange’s rationale for its 

existing PSX Only Permit Fee waiver). 11 15 U.S.C. 78s(b)(3)(A)(ii). 12 17 CFR 200.30–3(a)(12). 

subject to examination by the Exchange. 

The Exchange also believes that its 

definition of ‘‘clearing-only’’ is 

reasonable because it excludes those 

firms that are PSX members for 

purposes other than simply to clear 

transactions, those that execute even 

small volumes of trades during a given 

month, and even those that maintain an 

active capacity to execute trades during 

a month, either through its own MPID 

or through a sponsored access 

relationship. Finally, the Exchange 

proposes reasonable steps to ensure that 

those clearing firms that request waivers 

of the PSX Only Permit Fee in fact 

qualify for the waiver. It will require 

such firms to attest in writing to their 

‘‘clearing-only’’ status as a condition of 

the Exchange granting them the waiver. 

The attestation form will also obligate 

firms to promptly notify the Exchange of 

any change in their statuses. 

The Exchange believes that the 

proposal is an equitable allocation and 

is not unfairly discriminatory because 

the Exchange will apply the same fee 

waiver to all similarly situated members 

and member organizations that utilize 

their membership on the Exchange only 

to engage in clearing activities. 

Moreover, the Exchange believes that its 

proposal does not discriminate against 

PSX only members and member 

organizations that execute trades on 

PSX because such members and 

member organizations can and typically 

do qualify for their own waivers of the 

monthly Permit Fee when, in a given 

month, they meet or exceed an average 

daily trading threshold of 1,000 shares. 

When PSX only members and member 

organizations do not meet or exceed this 

monthly trading threshold, the 

Exchange believes that it is justified in 

continuing to charge them the Permit 

Fee insofar as the transaction fees they 

generate for the Exchange are not 

sufficient to offset their shares of the 

Exchange’s regulatory oversight costs.10

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. In terms of 

inter-market competition, the Exchange 

notes that it operates in a highly 

competitive market in which market 

participants can readily favor competing 

venues if they deem fee levels at a 

particular venue to be excessive, or 

rebate opportunities available at other 

venues to be more favorable. In such an 

environment, the Exchange must 

continually adjust its fees to remain 

competitive with other exchanges and 

with alternative trading systems that 

have been exempted from compliance 

with the statutory standards applicable 

to exchanges. Because competitors are 

free to modify their own fees in 

response, and because market 

participants may readily adjust their 

order routing practices, the Exchange 

believes that the degree to which fee 

changes in this market may impose any 

burden on competition is extremely 

limited. 

In this instance, the proposed waiver 

of the monthly PSX Only Permit Fee 

will not impose any burden on 

competition. To the contrary, the 

Exchange believes that its proposal is 

pro-competitive because it may 

encourage additional clearing firms to 

provide clearing services on the 

Exchange, which in turn may attract 

additional trading participants and 

trading activity. 

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.11

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

Phlx–2017–63 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2017–63. 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–Phlx– 

2017–63, and should be submitted on or 

before September 6, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2017–17276 Filed 8–15–17; 8:45 am] 

BILLING CODE 8011–01–P 


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