Document ID: SEC-2015-0172-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2015-01-29T05:00Z

[Federal Register Volume 80, Number 19 (Thursday, January 29, 2015)]
[Notices]
[Pages 4958-4960]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-01644]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74125; File No. SR-PHLX-2015-05]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
MNX and NDX

January 23, 2015.
    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 21, 2015, 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 amend Section II \3\ of the Pricing 
Schedule entitled ``Multiply Listed Options Fees'' to assess an 
increased Options Surcharge in MNX \4\ and NDX.\5\
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    \3\ Section II of the Pricing Schedule includes options 
overlying equities, ETFs, ETNs and indexes which are Multiply 
Listed.
    \4\ MNX represents options on the one-tenth value of the Nasdaq 
100 Index traded under the symbol MNX (``MNX'').
    \5\ NDX represents options on the Nasdaq 100 Index traded under 
the symbol NDX (``NDX'').
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    While changes to the Pricing Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated the proposed 
amendment to be operative on February 2, 2015.
    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

[[Page 4959]]

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 Section II of the Pricing 
Schedule entitled ``Multiply Listed Options Fees'' to increase the 
Options Surcharge for transactions in MNX and NDX from $0.15 to $0.20 
per contract for Professionals,\6\ Market Makers,\7\ Specialists,\8\ 
Broker-Dealers \9\ and Firms.\10\ As is the case today, Customers \11\ 
will not be assessed an Options Surcharge in MNX an NDX. The Options 
Surcharge is assessed in addition to the Options Transactions Fees in 
Section II of the Pricing Schedule. This rule change applies to both 
electronic and floor transactions.
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    \6\ 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).
    \7\ 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.
    \8\ The term ``Specialist'' applies to transactions for the 
account of a Specialist as defined in Exchange Rule 1020(a).
    \9\ The term ``Broker-Dealer'' applies to any transaction which 
is not subject to any of the other transaction fees applicable 
within a particular category.
    \10\ 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 (``OCC'').
    \11\ The term ``Customer'' applies to any transaction that is 
identified by a member or member organization for clearing in the 
Customer range at OCC which is not for the account of a broker or 
dealer or for the account of a ``Professional'' as that term is 
defined in Rule 1000(b)(14).
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    The Exchange believes that these surcharges will assist the 
Exchange in remaining competitive in these options by recouping certain 
fees.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\12\ in general, and with 
Section 6(b)(4) and 6(b)(5) of the Act,\13\ 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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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange's proposal to increase the Options Surcharge for 
transactions in MNX and NDX from $0.15 to $0.20 per contract for all 
non-Customer market participants is reasonable because all non-Customer 
market participants will continue to be assessed the same surcharge. As 
is the case today, Customers will not be assessed an Options Surcharge. 
Also, the Options Surcharge remains competitive with fees at other 
options exchanges.\14\
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    \14\ See NYSE MKT LLC's (``NYSE AMEX'') Fee Schedule. NYSE AMEX 
assesses a Royalty Fee of $0.22 per contract for transactions in MNX 
and NDX. See also NYSE Arca Inc.'s (``NYSE Arca'') Fees and Charges. 
NYSE Arca, Inc. assesses a Royalty Fee of $0.22 per contract for 
transactions in MNX and NDX.
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    The Exchange's proposal to increase the Options Surcharge for 
transactions in MNX and NDX from $0.15 to $0.20 per contract for all 
non-Customer market participants is equitable and not unfairly 
discriminatory because the Exchange will continue to assess all non-
Customer market participants a uniform Options Surcharge. Customers are 
not assessed an Options Surcharge. Customer order flow is unique 
because Customer liquidity benefits all market participants by 
providing more trading opportunities, which attracts Specialists and 
Market Makers. An increase in the activity of these market participants 
in turn facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants. 
Finally, the Exchange believes that it is equitable and not unfairly 
discriminatory for non-Customer market participants who trade these 
products to pay the surcharge fee as the Exchange has entered into a 
licensing agreement to obtain intellectual property rights to list 
these products and seeks to recoup a portion of its costs.

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 because all non-Customer market 
participants will continue to be assessed a uniform Options Surcharge 
Fee for transactions in MNX and NDX, in addition to other transaction 
fees. Customer liquidity benefits all market participants by providing 
more trading opportunities, which attracts Specialists and Market 
Makers. An increase in the activity of these market participants in 
turn facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants. 
The Exchange operates in a highly competitive market, comprised of 
twelve 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, as described in the proposal, 
are influenced by these robust market forces and therefore must remain 
competitive with fees charged 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 
19(b)(3)(A)(ii) of the Act.\15\ 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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    \15\ 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-2015-05 on the subject line.

[[Page 4960]]

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549.

All submissions should refer to File Number SR-PHLX-2015-05. 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-2015-05 and should be 
submitted on or before February 19, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-01644 Filed 1-28-15; 8:45 am]
BILLING CODE 8011-01-P