Document ID: SEC-2014-1504-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2014-09-09T04:00Z

[Federal Register Volume 79, Number 174 (Tuesday, September 9, 2014)]
[Notices]
[Pages 53485-53488]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-21363]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72969; File No. SR-Phlx-2014-56]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Collection of Information Related to Aggregation of Activity of 
Affiliates

September 3, 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 August 20, 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 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to harmonize the process by which it collects 
and aggregates information from its equity and option members and 
member organizations for the purposes of assessing charges or credits 
for options and equities trading.
    The Exchange requests that this filing become operative on December 
1, 2014.

[[Page 53486]]

    The text of the proposed rule change is set forth below. Proposed 
new language is in italics; deleted text is in brackets.
* * * * *

NASDAQ OMX PHLX LLC \1\ PRICING SCHEDULE

    ALL BILLING DISPUTES MUST BE SUBMITTED TO THE EXCHANGE IN WRITING 
AND MUST BE ACCOMPANIED BY SUPPORTING DOCUMENTATION. ALL DISPUTES MUST 
BE SUBMITTED NO LATER THAN SIXTY (60) DAYS AFTER RECEIPT OF A BILLING 
INVOICE, EXCEPT FOR DISPUTES CONCERNING NASDAQ OMX PSX FEES, 
PROPRIETARY DATA FEED FEES AND CO-LOCATION SERVICES FEES. AS OF JANUARY 
3, 2011, THE EXCHANGE WILL CALCULATE FEES ON A TRADE DATE BASIS.

    \1\ PHLX[supreg] is a registered trademark of The NASDAQ OMX 
Group, Inc.
* * * * *

PREFACE

    For purposes of assessing options fees and paying rebates, the 
following references should serve as guidance.
    The term ``Customer'' applies to any transaction that is identified 
by a member or member organization 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 Rule 1000(b)(14)).\2\
    The term ``Specialist'' applies to transactions for the account of 
a Specialist \3\ (as defined in Exchange Rule 1020(a)).
    The term ``ROT, SQT and RSQT'' applies to transactions for the 
accounts of Registered Option Traders \4\ (``ROTs''), Streaming Quote 
Traders (``SQTs''),\5\ and Remote Streaming Quote Traders 
(``RSQTs'').\6\ For purposes of the Pricing Schedule, the term ``Market 
Maker'' will be utilized to describe fees and rebates applicable to 
ROTs, SQTs and RSQTs.
    The term ``Firm'' applies to any transaction that is identified by 
a member or member organization for clearing in the Firm range at OCC.
    The term ``Professional'' applies to transactions for the accounts 
of Professionals (as defined in Exchange Rule 1000(b)(14)).
    The term ``Broker-Dealer'' applies to any transaction which is not 
subject to any of the other transaction fees applicable within a 
particular category.
    The term ``Joint Back Office'' or ``JBO'' \7\ applies to any 
transaction that is identified by a member or member organization for 
clearing in the Firm range at OCC and is identified with an origin code 
as a JBO. A JBO will be priced the same as a Broker-Dealer as of 
September 1, 2014.
    The term ``Common Ownership'' shall mean members or member 
organizations under 75% common ownership or control.

For Purposes of Common Ownership Aggregation of Activity of Affiliated 
Members and Member Organizations

    (a) For purposes of applying any options transaction fee or rebate 
where the fee assessed, or rebate provided by the Exchange depends upon 
the volume of a member or member organization's activity, a member or 
member organization may request that the Exchange aggregate its 
activity with the activity of its affiliates.
    (1) A member or member organization requesting aggregation of 
affiliate activity shall be required to certify to the Exchange the 
affiliate status of entities whose activity it seeks to aggregate prior 
to receiving approval for aggregation, and shall be required to inform 
the Exchange immediately of any event that causes an entity to cease to 
be an affiliate. The Exchange shall review available information 
regarding the entities, and reserves the right to request additional 
information to verify the affiliate status of an entity. The Exchange 
shall approve a request unless it determines that the certification is 
not accurate.
    (2) If two or more members or member organizations become 
affiliated on or prior to the sixteenth day of a month, and submit the 
required request for aggregation on or prior to the twenty-second day 
of the month, an approval of the request by the Exchange shall be 
deemed to be effective as of the first day of that month. If two or 
more members or member organizations become affiliated after the 
sixteenth day of a month, or submit a request for aggregation after the 
twenty-second day of the month, an approval of the request by the 
Exchange shall be deemed to be effective as of the first day of the 
next calendar month.
    (b) For purposes of applying any option transaction fee or rebate 
where the fee assessed, or rebate provided by the Exchange depends upon 
the volume of a member or member organization's activity, references to 
an entity (including references to a ``member'' or ``member 
organization'') shall be deemed to include the entity and its 
affiliates that have been approved for aggregation.
    (c) For purposes of this provision, the term ``affiliate'' of a 
member or member organization shall mean any member or member 
organization under 75% common ownership or control of that member or 
member organization.
* * * * *

VIII. NASDAQ OMX PSX FEES

* * * * *

Aggregation of Activity of Affiliated Member Organizations

    (a) For purposes of applying any PSX charge or credit where the 
charge assessed, or credit provided, by the Exchange depends upon the 
volume of a member organization's activity, a member organization may 
request that the Exchange aggregate its activity with the activity of 
its affiliates.
    (1) A member organization requesting aggregation of affiliate 
activity shall be required to certify to the Exchange the affiliate 
status of entities whose activity it seeks to aggregate prior to 
receiving approval for aggregation, and shall be required to inform the 
Exchange immediately of any event that causes an entity to cease to be 
an affiliate. [In addition, the Exchange reserves the right to request 
information to verify the affiliate status of an entity.] The Exchange 
shall review available information regarding the entities, and reserves 
the right to request additional information to verify the affiliate 
status of an entity. The Exchange shall approve a request unless it 
determines that the certification is not accurate.
    (2) If two or more member organizations become affiliated on or 
prior to the sixteenth day of a month, and submit the required request 
for aggregation on or prior to the twenty-second day of the month, an 
approval of the request by the Exchange shall be deemed to be effective 
as of the first day of that month. If two or more members become 
affiliated after the sixteenth day of a month, or submit a request for 
aggregation after the twenty-second day of the month, an approval of 
the request by the Exchange shall be deemed to be effective as of the 
first day of the next calendar month.
    (b) No Change.
    (c) No Change.
* * * * *

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

[[Page 53487]]

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 both the Preface of the Pricing 
Schedule, which applies to options, and Chapter VIII of the Pricing 
Schedule, which applies to equities, to harmonize the process by which 
the Exchange will collect information from members and member 
organizations that desire their activity to be aggregated for the 
purposes of assessing charges or credits. Today, equity and options 
members may aggregate affiliate activity based on volume of activity 
for purposes of pricing, but at different percentages (100 percent vs. 
75 percent).\3\ The Exchange believes that having the same process for 
equity and options members will provide consistency to its processes 
when aggregating pricing.
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    \3\ See Preface of the Pricing Schedule, which applies to 
options, and Chapter VIII of the Pricing Schedule, which applies to 
equities.
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    Today, a PSX member organization requesting aggregation of 
affiliate activity is required to certify to the Exchange the affiliate 
status of entities whose activity it seeks to aggregate prior to 
receiving approval for aggregation, and is required to inform the 
Exchange immediately of any event that causes an entity to cease to be 
an affiliate. In addition, the Exchange reserves the right to request 
information to verify the affiliate status of an entity.
    The Exchange proposes to make this language consistent with the 
requirements of The NASDAQ Stock Market LLC (``NASDAQ'') and NASDAQ OMX 
BX, Inc. (``BX'') \4\ by further stating that it will approve a request 
unless it determines that the certification is not accurate. Also, the 
Exchange proposes to adopt the following NASDAQ and BX equity process 
for determining the effective date for aggregation: ``If two or more 
member organizations become affiliated on or prior to the sixteenth day 
of a month, and submit the required request for aggregation on or prior 
to the twenty-second day of the month, an approval of the request by 
the Exchange shall be deemed to be effective as of the first day of 
that month. If two or more members become affiliated after the 
sixteenth day of a month, or submit a request for aggregation after the 
twenty-second day of the month, an approval of the request by the 
Exchange shall be deemed to be effective as of the first day of the 
next calendar month.''
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    \4\ See NASDAQ and BX Rules 7027(a).
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    The Exchange also proposes to add the same process that would exist 
for PSX members to the process that would be required for option 
members by also adding the same language, as specified above, to the 
Preface of the Pricing Schedule, which applies to options pricing. The 
Exchange believes that harmonizing the process for collecting this 
information will avoid confusion and simplify information requested of 
equity and options members by requesting consistent information.
    Finally, the Exchange proposes to add language to clarify that the 
defined terms in the Preface of the Pricing Schedule apply to options 
pricing, fees and rebates.
    The Exchange proposes to apply this pricing as of December 1, 2014 
and issue an Options Trader Alert to its members.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act\5\ in general, and furthers the objectives of Section 
6(b)(5) of the Act\6\ in particular, in that it is designed to promote 
just and equitable principles of trade, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general to protect investors and the public interest, 
in that the proposal will harmonize the process by which the Exchange 
collects information from equity and options members and member 
organizations regarding the aggregation of activity of affiliated 
member organizations for the purposes of assessing charges or credits.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that harmonizing this process by which the 
Exchange collects information related to aggregation for equity and 
options members to the process in place at NASDAQ and BX \7\ will 
provide consistency to market participants with respect to meeting the 
requirements to aggregate on NASDAQ, BX or Phlx. Also, the Exchange 
believes that adopting this method for collecting such information on 
aggregated pricing will ensure proper validation for firms entitled to 
the aggregation.
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    \7\ See note 4.
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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. The Exchange is merely seeking 
to harmonize the manner in which it collects information related to the 
aggregation of activity of affiliated member organizations for the 
purposes of assessing charges or credits for equity and options 
members. The Exchange intends to apply a uniform process to request 
such aggregation for all Phlx members and member organizations.

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

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(ii) of the Act \8\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \9\ 17 CFR 240.19b-4(f)(6).
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    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.

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

[[Page 53488]]

Number SR-Phlx-2014-56 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-2014-56. 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-2014-56 and should be 
submitted on or before September 30, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O' Neill,
Deputy Secretary.
[FR Doc. 2014-21363 Filed 9-8-14; 8:45 am]
BILLING CODE 8011-01-P