Document ID: SEC-2014-0253-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2014-02-11T05:00Z

[Federal Register Volume 79, Number 28 (Tuesday, February 11, 2014)]
[Notices]
[Pages 8221-8223]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-02879]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71491; File No. SR-Phlx-2014-06]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Pricing for SPY Options

February 5, 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 January 29, 2014, NASDAQ OMX 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

[[Page 8222]]

prepared by the Exchange. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Pricing Schedule to 
amend Simple Order pricing in Section I, entitled Rebates and Fees for 
Adding and Removing Liquidity in SPY.\3\
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    \3\ Options overlying Standard and Poor's Depositary Receipts/
SPDRs (``SPY'') are based on the SPDR exchange-traded fund 
(``ETF''), which is designed to track the performance of the S&P 500 
Index.
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    While the changes proposed herein are effective upon filing, the 
Exchange has designated that the amendments be operative on February 3, 
2014.
    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 is proposing to amend the Simple Order Fees for 
Removing Liquidity in Section I applicable to transactions overlying 
SPY. The Exchange currently assesses Customers, Specialists,\4\ Market 
Makers,\5\ Firms,\6\ Broker-Dealers \7\ and Professionals \8\ a $0.45 
per contract Fee for Removing Liquidity in SPY Simple Orders. The 
Exchange is proposing to increase the Fee for Removing Liquidity in SPY 
Simple Orders from $0.45 to $0.47 per contract for all market 
participants. Despite the increased fees, the Exchange believes that 
these fees remain competitive with other exchanges.
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    \4\ A ``Specialist'' is an Exchange member who is registered as 
an options specialist pursuant to Rule 1020(a).
    \5\ A ``Market Maker'' includes Registered Options Traders (Rule 
1014(b)(i) and (ii)), which includes Streaming Quote Traders (see 
Rule 1014(b)(ii)(A)) and Remote Streaming Quote Traders (see Rule 
1014(b)(ii)(B)). Directed Participants are also market makers.
    \6\ The term ``Firm'' applies to any transaction that is 
identified by a member or member organization for clearing in the 
Firm range at The Options Clearing Corporation.
    \7\ The term ``Broker-Dealer'' applies to any transaction which 
is not subject to any of the other transaction fees applicable 
within a particular category.
    \8\ 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). See Rule 
1000(b)(14).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\9\ in general, and with 
Section 6(b)(4) and 6(b)(5) of the Act,\10\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system which the Exchange operates or controls, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange's proposal to increase the Fee for Removing Liquidity 
in Simple Orders for options overlying SPY from $0.45 to $0.47 per 
contract for all market participants is reasonable because the increase 
is consistent with or less than rates assessed by other options 
exchanges, such Topaz Exchange, LLC (``Gemini''), NYSE ARCA, Inc. 
(``NYSE Arca''), BATS Exchange, Inc. (``BATS'') and NASDAQ Options 
Market LLC (``NOM'').\11\ The Exchange believes that its Fees for 
Removing Liquidity remain competitive with other options markets. While 
the Exchange is increasing these fees, these transactions are included 
in the calculation of Customer volume for purposes of qualifying for 
Customer Rebates in Section B of the Pricing Schedule.
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    \11\ See Gemini's Fee Schedule. Gemini assesses taker fees for 
Priority Customer of $0.45 per contract and $0.48 per contract for 
all market participants. See NYSE Arca fees Schedule. NYSE Arca 
assesses all non-customer market participants a take liquidity fee 
of $0.48 per contract. Customers are assessed $0.45 per contract for 
removing liquidity. Gemini permits its members to lower certain of 
these fees provided they meet certain criteria. See BATS BZX 
Exchange Fee Schedule. BATS assesses a $0.48 charge per contract for 
a Professional, Firm or Market Maker order that removes liquidity 
and $0.47 per contract for a Customer order that removes liquidity. 
BATS permits its members to lower certain of these fees provided 
they meet certain criteria. See NOM Rules at Chapter XV, Section 2. 
NOM assesses $0.45 per contract for a Customer to remove liquidity 
and $0.49 per contract for all other market participants, except NOM 
Market Makers who are assessed $0.48 per contract. NOM Participants 
are provided the ability to reduce certain fees provided they add 
requisite liquidity.
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    The Exchange's proposal to increase the Fee for Removing Liquidity 
in Simple Orders for options overlying SPY from $0.45 to $0.47 per 
contract for all market participants is equitable and not unfairly 
discriminatory because all market participants will be assessed a 
uniform Fee for Removing Liquidity in Simple Orders for options 
overlying SPY of $0.47 per contract. The Exchange is assessing all 
market participants the same fee for removing liquidity in Simple 
Orders in SPY.

B. Self-Regulatory Organization's Statement on Burden on Competition

    Phlx does not believe that the proposed rule change will impose an 
undue burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act. The Exchange believes that increasing the 
SPY Simple Order Fees for Removing Liquidity for all market 
participants does not impose a burden on competition, but rather that 
the proposed rule change will continue to promote competition on the 
Exchange. All market participants will be assessed the same fee to 
remove SPY Simple Orders.
    The Exchange operates in a highly competitive market, comprised of 
twelve options exchanges, in which market participants can easily and 
readily direct order flow to competing venues if they deem fee levels 
at a particular venue to be excessive or rebates to be inadequate. 
Accordingly, the fees that are assessed and the rebates paid by the 
Exchange described in the above proposal are influenced by these robust 
market forces and therefore must remain competitive with fees charged 
and rebates paid by other venues and therefore must continue to be 
reasonable and equitably allocated to those members that opt to direct 
orders to the Exchange rather than competing venues.

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

[[Page 8223]]

19(b)(3)(A)(ii) of the Act.\12\ 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.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-2014-06 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2014-06. 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-Phlx-2014-06, and should be 
submitted on or before March 4, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-02879 Filed 2-10-14; 8:45 am]
BILLING CODE 8011-01-P