Document ID: SEC-2017-1886-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq BX, Inc.
Posted Date: 2017-11-17T05:00Z

[Federal Register Volume 82, Number 221 (Friday, November 17, 2017)]
[Notices]
[Pages 54460-54463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-24931]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82059; File No. SR-BX-2017-051]

Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Exchange's Options Pricing at Chapter XV, Section 2

November 13, 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 November

[[Page 54461]]

1, 2017, Nasdaq 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.
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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 the Options Pricing at Chapter XV, 
Section 2, entitled ``BX Options Market--Fees and Rebates,'' which 
governs pricing for BX members using the BX Options Market (``BX 
Options''). The Exchange proposes to modify certain fees for 
transactions in options overlying Select Symbols,\3\ as further 
discussed below.
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    \3\ The following are Select Symbols: ASHR, DIA, DXJ, EEM, EFA, 
EWJ, EWT, EWW, EWY, EWZ, FAS, FAZ, FXE, FXI, FXP, GDX, GLD, HYG, 
IWM, IYR, KRE, OIH, QID, QLD, QQQ, RSX, SDS, SKF, SLV, SRS, SSO, 
TBT, TLT, TNA, TZA, UNG, URE, USO, UUP, UVXY, UYG, VXX, XHB, XLB, 
XLE, XLF, XLI, XLK, XLP, XLU, XLV, XLY, XME, XOP, XRT. See Chapter 
XV, Section 2(1).
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqbx.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 proposes to amend Chapter XV, Section 2(1), which 
includes pricing for transactions in Select Symbol options, to increase 
the Firm \4\ fee to add liquidity and fee to remove liquidity in Select 
Symbols. Select Symbols represent some of the highest volume Penny 
Pilot options traded on the Exchange and in the industry. The fees and 
rebates applicable to Select Symbol options in Chapter XV, Section 2(1) 
are designed to attract more order flow to BX Options, particularly in 
these high volume symbols, and apply to Customers,\5\ BX Options Market 
Makers,\6\ Non-Customers \7\ and Firms as follows:
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    \4\ The term ``Firm'' or (``F'') applies to any transaction that 
is identified by a Participant for clearing in the Firm range at 
OCC. See Chapter XV.
    \5\ The term ``Customer'' or (``C'') applies to any transaction 
that is identified by a Participant for clearing in the Customer 
range at 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)). See Chapter XV.
    \6\ The term ``BX Options Market Maker'' or (``M'') is a 
Participant that has registered as a Market Maker on BX Options 
pursuant to Chapter VII, Section 2, and must also remain in good 
standing pursuant to Chapter VII, Section 4. In order to receive 
Market Maker pricing in all securities, the Participant must be 
registered as a BX Options Market Maker in at least one security. 
See Chapter XV.
    \7\ As set forth in note 1 to Chapter XV, Section 2(1), a Non-
Customer includes a Professional, Broker-Dealer and Non-BX Options 
Market Maker.
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    (1) Fees for Execution of Contracts on the BX Options Market:
* * * * *

                                                          Select Symbols Options Tier Schedule
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Rebate to add      Fee to add       Rebate to      Fee to remove      Fee to add
--------------------------------------------------------------------    liquidity        liquidity          remove         liquidity        liquidity
                                               When:                ----------------------------------    liquidity    ---------------------------------
--------------------------------------------------------------------     Customer        BX options   -----------------    BX options       BX options
                                                                    -----------------   market maker       Customer       market maker     market maker
                                                                                     -------------------------------------------------------------------
                                                                     Non-customer or                   Non-customer or                   Non-customer or
                                           Trading with:                BX options                        BX options                        BX options
                                                                      market maker,       Customer      market maker,       Customer      market maker,
                                                                         or firm                           or firm                           or firm
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tier 1........................  Participant executes less than                 $0.00            $0.44            $0.00            $0.42            $0.14
                                 0.05% of total industry customer
                                 equity and ETF option ADV
                                 contracts per month.
Tier 2........................  Participant executes 0.05% to less              0.10             0.44             0.25             0.42             0.10
                                 than 0.15% of total industry
                                 customer equity and ETF option ADV
                                 contracts per month.
Tier 3........................  Participant executes 0.15% or more              0.20             0.40             0.37             0.39             0.04
                                 of total industry customer equity
                                 and ETF option ADV contracts per
                                 month.
Tier 4........................  Participant executes greater than               0.25             0.29             0.37             0.25             0.00
                                 10,000 PRISM Agency Contracts per
                                 month; or Participant executes BX
                                 Options Market Maker volume of
                                 0.30% or more of total industry
                                 customer equity and ETF options
                                 ADV per month.
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[[Page 54462]]

BX Options Select Symbol List

    The following are Select Symbols: ASHR, DIA, DXJ, EEM, EFA, EWJ, 
EWT, EWW, EWY, EWZ, FAS, FAZ, FXE, FXI, FXP, GDX, GLD, HYG, IWM, IYR, 
KRE, OIH, QID, QLD, QQQ, RSX, SDS, SKF, SLV, SRS, SSO, TBT, TLT, TNA, 
TZA, UNG, URE, USO, UUP, UVXY, UYG, VXX, XHB, XLB, XLE, XLF, XLI, XLK, 
XLP, XLU, XLV, XLY, XME, XOP, XRT.
     Firm fee to add liquidity and fee to remove liquidity in 
Select Symbols Options will be $0.33 per contract, regardless of 
counterparty.
     Non-Customer fee to add liquidity and fee to remove 
liquidity in Select Symbols Options will be $0.46 per contract, 
regardless of counterparty.
     BX Options Market Maker fee to remove liquidity in Select 
Symbols Options will be $0.46 per contract when trading with Firm, Non-
Customer, or BX Options Market Maker.
     Customer fee to add liquidity in Select Symbols Options 
when contra to another Customer is $0.33 per contract.
     Volume from all products listed on BX Options will apply 
to the Select Symbols Options Tiers.
* * * * *
    The Exchange proposes to increase the $0.33 per contract Firm fee 
to add liquidity and fee to remove liquidity in Select Symbols to raise 
revenue for the Exchange and help defray costs. As proposed, the Firm 
fee to add liquidity and fee to remove liquidity in Select Symbols will 
be $0.37 per contract, regardless of counterparty. The pricing for all 
other transactions in Select Symbol options as set forth above will 
remain unchanged.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\9\ 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that its proposal to increase the Firm fee to 
add liquidity and fee to remove liquidity in Select Symbols, as 
discussed above, is reasonable because the proposed change is a modest 
increase to help defray costs and remains lower than the Firm fee to 
add liquidity and fee to remove liquidity in all other Penny Pilot 
options that are not options in Select Symbols.\10\ As discussed above, 
the pricing for all other transactions in Select Symbol options will 
remain unchanged. Furthermore, the Exchange notes that the proposed 
Firm fees for Select Symbols remain competitive with the fees of other 
options markets.\11\ Accordingly, the Exchange believes that despite 
the proposed increase in Firm fees as described above, the pricing 
model in Chapter XV, Section 2(1) for Select Symbols will continue to 
attract order flow to BX Options, particularly in these high volume 
symbols, to the benefit of all market participants.
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    \10\ The Exchange currently charges a $0.45 per contract Firm 
fee to add liquidity and a $0.46 per contract Firm fee to remove 
liquidity in all other Penny Pilot options that are not in Select 
Symbol options. See Chapter XV, Section 2(1).
    \11\ See, e.g., MIAX Options Fee Schedule at: https://www.miaxoptions.com/sites/default/files/fee_schedule-files/MIAX_Options_Fee_Schedule_10112017.pdf. See also, e.g., Nasdaq PHLX 
LLC Pricing Schedule at: http://nasdaqphlx.cchwallstreet.com/NASDAQPHLXTools/PlatformViewer.asp?selectednode=chp_1_4_1&manual=%2Fnasdaqomxphlx%2Fphlx%2Fphlx-rulesbrd%2F.
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    The Exchange also believes that the proposed increase of the Firm 
fee to add liquidity and fee to remove liquidity in Select Symbols is 
equitable and not unfairly discriminatory because the Exchange will 
apply the same fee to all similarly situated members. For the reasons 
discussed above, the proposed fee continues to provide an incentive for 
Firms to transact order flow on the Exchange, which order flow brings 
increased liquidity to the Exchange for the benefit of all Exchange 
participants. To the extent the purpose of the proposed Firm fee is 
achieved, all market participants should benefit from the improved 
market liquidity.

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. As discussed above, the 
Exchange believes that the proposed Firm fees for Select Symbol options 
remain competitive with those on other options markets and will 
continue to attract order flow to the Exchange. 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 review, and consider adjusting, its fees and rebates 
to remain competitive with other exchanges. For the reasons described 
above, the Exchange believes that the proposed fee changes reflect this 
competitive environment.

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.\12\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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. 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 [email protected]. Please include 
File Number SR-BX-2017-051 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-BX-2017-051. 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

[[Page 54463]]

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. Persons submitting comments are cautioned that we do 
not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-BX-
2017-051, and should be submitted on or before December 8, 2017.

    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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-24931 Filed 11-16-17; 8:45 am]
 BILLING CODE 8011-01-P