[Federal Register Volume 82, Number 76 (Friday, April 21, 2017)]
[Notices]
[Pages 18784-18790]
[FR Doc No: 2017-08056]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80466; File No. SR-Phlx-2017-29]

Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating To
Customer Rebates and Pricing for Multiply Listed Options

April 17, 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 April 3, 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.
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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: (i) Amend Section B of the Exchange's
Pricing Schedule to create a new Category D and make other amendments
to this section; and (ii) amend Section II of the Exchange's Pricing
Schedule entitled ``Multiply Listed Options Fees,'' \3\ to assess a
surcharge related to Complex Orders.\4\
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    \3\ These fees include options overlying equities, ETFs, ETNs
and indexes which are Multiply Listed.
    \4\ A Complex Order is any order involving the simultaneous
purchase and/or sale of two or more different options series in the
same underlying security, priced at a net debit or credit based on
the relative prices of the individual components, for the same
account, for the purpose of executing a particular investment
strategy. Furthermore, a Complex Order can also be a stock-option
order, which is an order to buy or sell a stated number of units of
an underlying stock or ETF coupled with the purchase or sale of
options contract(s). See Rule 1098.
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    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 purpose of the proposed rule change is to amend the Pricing
Schedule: (i) At Section B to create an additional incentive to
encourage market participants to send Customer Complex Order flow to
Phlx; and (ii) at Section II to adopt certain surcharges for
electronically-delivered Complex Orders so that the Exchange may pay
increased Customer Rebates. Each of the proposed amendments is
discussed in greater detail below.
Customer Rebate Program
    The Exchange proposes to amend Section B, entitled ``Customer
Rebate Program,'' to amend Category C and add a new Category D to
continue existing incentives to direct Customer Complex Order flow to
the Exchange and create additional incentives. Currently, the Exchange
has a Customer Rebate Program consisting of the following five tiers
that pay Customer rebates on three Categories, A,\5\ B \6\ and C,\7\ of
transactions:
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    \5\ The Category A Rebate is paid to members executing
electronically-delivered Customer Simple Orders in Penny Pilot
Options and Customer Simple Orders in Non-Penny Pilot Options in
Section II symbols.
    \6\ The Category B Rebate is paid on Customer PIXL Orders in
Section II symbols that execute against non-Initiating Order
interest. In the instance where member organizations qualify for
Tier 4 or higher in the Customer Rebate Program, Customer PIXL
Orders that execute against a PIXL Initiating Order are paid a
rebate of $0.14 per contract. Rebates on Customer PIXL Orders are
capped at 4,000 contracts per order for Simple PIXL Orders.
    \7\ The Category C Rebate is paid to members executing
electronically-delivered Customer Complex Orders in Penny Pilot
Options and Non-Penny Pilot Options in Section II symbols. Rebates
are paid on Customer PIXL Complex Orders in Section II symbols that
execute against non-Initiating Order interest. Customer Complex PIXL
Orders that execute against a Complex PIXL Initiating Order are not
paid a rebate under any circumstances. The Category C Rebate is not
paid when an electronically-delivered Customer Complex Order,
including Customer Complex PIXL Order, executes against another
electronically-delivered Customer Complex Order. Rebates on Customer
PIXL Orders are capped at 4,000 contracts per order leg for Complex
PIXL Orders.

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                                        Percentage thresholds of
                                        national customer volume
                                           in multiply-listed
         Customer rebate tiers           equity and ETF options     Category A      Category B      Category C
                                         classes, excluding SPY
                                            options (monthly)
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Tier 1................................  0.00%-0.60%.............           $0.00           $0.00           $0.00
Tier 2................................  Above 0.60%-1.10%.......            0.10            0.10            0.17
Tier 3................................  Above 1.10%-1.60%.......            0.15            0.12            0.17
Tier 4................................  Above 1.60%-2.50%.......            0.20            0.16            0.22
Tier 5................................  Above 2.50%.............            0.21            0.17            0.22
----------------------------------------------------------------------------------------------------------------

    A Phlx member qualifies for a certain rebate tier based on the
percentage of total national customer volume in multiply-listed options
that it transacts monthly on Phlx. The Exchange calculates Customer \8\
volume in Multiply Listed Options by totaling electronically-delivered
and executed volume, excluding volume associated with electronic
Qualified Contingent Cross (``QCC'') Orders, as defined in Exchange
Rule 1080(o).\9\
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    \8\ 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 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)).
    \9\ In calculating electronically-delivered and executed
Customer volume in Multiply Listed Options, the numerator of the
equation includes all electronically-delivered and executed Customer
volume in Multiply Listed Options. The denominator of that equation
includes national customer volume in multiply-listed equity and ETF
options volume, excluding SPY. See Section B of the Pricing
Schedule.
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    The Exchange proposes to amend Category C by decreasing the Tier 2
rebate from $0.17 to $0.16 per contract and increasing the Tier 3
rebate from $0.17 to $0.18 per contract. The Category C rebates will
continue to be paid on electronically-delivered Customer Complex Orders
in Penny Pilot Options, but will no longer be paid on Non-Penny Pilot
Options in Section II symbols, which are proposed to be subject to the
proposed Category D rebate. For Category C, rebates will continue to be
paid on Customer PIXL \10\ Complex Orders in Section II symbols that
execute against non-Initiating Order interest.\11\ Customer Complex
PIXL Orders that execute against a Complex PIXL Initiating Order will
continue to not be paid a Category C rebate under any circumstances.
The Category C rebate will continue to not be paid when an
electronically-delivered Customer Complex Order, including Customer
Complex PIXL Order, executes against another electronically-delivered
Customer Complex Order. The Exchange proposes to no longer cap rebates
on Customer PIXL Orders at 4,000 contracts per order leg for Complex
PIXL Orders, but will continue to cap them for Simple PIXL Orders are
[sic] noted in Category B.
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    \10\ PIXL\SM\ is the Exchange's price improvement mechanism
known as Price Improvement XL or PIXL. See Rule 1080(n).
    \11\ With respect to PIXL functionality, a Phlx member may
electronically submit for execution an order it represents as agent
on behalf of a public customer, broker-dealer, or any other entity
(``PIXL Order'') against principal interest or against any other
order (except as provided in Rule 1080(n)(i)(E)) it represents as
agent (``Initiating Order'') provided it submits the PIXL order for
electronic execution into the PIXL Auction (``Auction'') pursuant to
Rule 1080. Non-Initiating Order interest could be a PIXL Auction
Responder or a resting order or quote that was on the Phlx book
prior to the auction.
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    The Exchange will create a new Category D rebate which will pay: No
rebate for Tier 1; a $0.21 per contract rebate for Tier 2; a $0.22
rebate for Tier 3; a $0.26 rebate for Tier 4; and a $0.27 rebate for
Tier 5. There [sic] rebates are per contract. The Category D Rebates
will be paid to members executing electronically-delivered Customer
Complex Orders in Non-Penny Pilot Options in Section II symbols.
Rebates will be paid on Customer PIXL Complex Orders that execute
against non-Initiating Order interest. A Customer Complex PIXL Order
that executes against a Complex PIXL Initiating Order will not be paid
a rebate under any circumstances. The Category D Rebate

will not be paid when an electronically-delivered Customer Complex
Order, including a Customer Complex PIXL Order, executes against
another electronically-delivered Customer Complex Order.
    The Exchange proposes to adopt a new Category D rebate which will
be paid to members executing electronically-delivered Customer Complex
Orders in Non-Penny Pilot Options in Section II symbols. Rebates will
be paid on Customer PIXL Complex Orders in Section II symbols that
execute against non-Initiating Order interest. Customer Complex PIXL
Orders that execute against a Complex PIXL Initiating Order will not be
paid a rebate under any circumstances. The Category D Rebate will not
be paid when an electronically-delivered Customer Complex Order,
including a Customer Complex PIXL Order, executes against another
electronically-delivered Customer Complex Order. The Exchange will pay
no Tier 1 Category D rebate. The Exchange will pay a $0.21 per contract
Tier 2 Category D rebate. The Exchange will pay a $0.22 per contract
Tier 3 Category D rebate. The Exchange will pay a $0.26 per contract
Tier 4 Category D rebate. The Exchange will pay a $0.27 per contract
Tier 5 Category D rebate. Today, rebates are not paid on NDX and MNX
contracts in any Category, however NDX and MNX contracts count toward
the volume requirements to qualify for a Customer Rebate Tier. This
will be continue to be the case.
    Today, the Exchange pays a $0.02 per contract Category A and B
rebate and a $0.03 per contract Category C rebate in addition to the
applicable Tier 2 and 3 rebate, provided the Specialist,\12\ Market
Maker \13\ or Appointed MM \14\ has reached the Monthly Market Maker
Cap \15\ as defined in Section II, to: (1) A Specialist or Market Maker
who is not under Common Ownership \16\ or is not a party of an
Affiliated Entity; or (2) an OFP member or member organization
affiliate under Common Ownership; or (3) an Appointed OFP \17\ of an
Affiliated Entity. The Exchange proposes to pay an additional $0.03
rebate in addition to the applicable Tier 2 and 3 Category D rebates,
provided the Specialist, Market Maker or Appointed MM has reached the
Monthly Market Maker Cap as defined in Section II, to: (1) A Specialist
or Market Maker who is not under Common Ownership or is not a party of
an Affiliated Entity; or (2) an OFP member or member organization
affiliate under Common Ownership; or (3) an Appointed OFP of an
Affiliated Entity.
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    \12\ The term ``Specialist'' shall apply to the account of a
Specialist (as defined in Exchange Rule 1020(a)). A Specialist is an
Exchange member who is registered as an options specialist pursuant
to Rule 501(a). An options Specialist includes a Remote Specialist
which is defined as an options specialist in one or more classes
that does not have a physical presence on an Exchange floor and is
approved by the Exchange pursuant to Rule 501.
    \13\ The term ``Market Maker'' describes fees and rebates
applicable to Registered Options Traders (``ROTs''), Streaming Quote
Traders (``SQTs''), Remote Streaming Quote Traders (``RSQTs''). An
ROT is defined in Exchange Rule 1014(b) is a regular member or a
foreign currency options participant of the Exchange located on the
trading floor who has received permission from the Exchange to trade
in options for his own account. A ROT includes SQTs and RSQTs as
well as on and off-floor ROTS. An SQT is defined in Exchange Rule
1014(b)(ii)(A) as an ROT who has received permission from the
Exchange to generate and submit option quotations electronically in
options to which such SQT is assigned. An RSQT is defined in
Exchange Rule in 1014(b)(ii)(B) as an ROT that is a member
affiliated with an RSQTO with no physical trading floor presence who
has received permission from the Exchange to generate and submit
option quotations electronically in options to which such RSQT has
been assigned. A Remote Streaming Quote Trader Organization or
``RSQTO,'' which may also be referred to as a Remote Market Making
Organization (``RMO''), is a member organization in good standing
that satisfies the RSQTO readiness requirements in Rule 507(a).
RSQTs may also be referred to as Remote Market Markers (``RMMs'').
    \14\ An Appointed MM is a Phlx Market Maker or Specialist who
has been appointed by an Order Flow Provider (``OFP'') for purposes
of qualifying as an Affiliated Entity. An OFP is a member or member
organization that submits orders, as agent or principal, to the
Exchange.
    \15\ Specialists and Market Makers are subject to a ``Monthly
Market Maker Cap'' of $500,000 for: (i) Electronic and floor Option
Transaction Charges; (ii) QCC Transaction Fees (as defined in
Exchange Rule 1080(o) and Floor QCC Orders, as defined in 1064(e));
and (iii) fees related to an order or quote that is contra to a PIXL
Order or specifically responding to a PIXL auction. The trading
activity of separate Specialist and Market Maker member
organizations is aggregated in calculating the Monthly Market Maker
Cap if there is Common Ownership between the member organizations.
All dividend, merger, short stock interest, reversal and conversion,
jelly roll and box spread strategy executions (as defined in Section
II) are excluded from the Monthly Market Maker Cap.
    \16\ The term ``Common Ownership'' shall mean members or member
organizations under 75% common ownership or control.
    \17\ An Appointed OFP is an Order Flow Provider who has been
appointed by a Phlx Market Maker or Specialist for purposes of
qualifying as an Affiliated Entity.
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    Today, the Exchange pays a $0.05 per contract Category C rebate in
addition to the applicable Tier 2 and 3 rebates to members or member
organizations or member or member organization affiliated under Common
Ownership provided the member or member organization qualified for a
Tier 1 or 2 MARS Payments in Section IV, Part E. The Exchange is
proposing to expand this additional rebate to apply the $0.05 per
contract rebate to Category D and also expand the applicable Tiers from
2 and 3 to Tiers 2, 3, 4 or 5 rebate tiers for both Category C and D
rebates. Finally the Exchange is expanding the MARS qualification from
Tiers 1 and 2 to any MARS Payments \18\ for both Category C and D
rebates. The new rule text would provide, ``The Exchange will pay a
$0.05 per contract Category C and Category D rebate in addition to the
applicable Tier 2, 3, 4 and 5 rebates to members or member
organizations or member or member organization affiliated under Common
Ownership provided the member or member organization qualified for any
MARS Payments in Section IV, Part E.''
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    \18\ Today, Phlx members that have System Eligibility, as
described in Section IV, Part E, and have executed the requisite
number of Eligible Contracts, as described in Section IV, Part E, in
a month will be paid per contract rebates based on a 4 tier
structure which pays a certain MARS Payment based on Average Daily
Volume.
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    The Exchange believes that the proposed amendments will attract a
greater amount of Customer Complex Order liquidity to Phlx. Customer
liquidity benefits all market participants by providing more order flow
to the marketplace and more trading opportunities.
Multiply Listed Options
    The Exchange proposes to adopt certain surcharges for
electronically-delivered Complex Orders in order that it may pay
increased Customer Rebates. Customer liquidity benefits all market
participants by providing more liquidity with which market participants
may interact on Phlx. The Customer Rebates provide an additional
incentive to encourage market participants to send Customer Complex
Order flow to Phlx.
    The Exchange proposes to amend Section II to assess a surcharge of
$0.03 per contract on electronic Complex Orders that remove liquidity
from the Complex Order Book and auctions, excluding PIXL, in Penny
Pilot Options, excluding SPY. The Exchange proposes to assess a
surcharge of $0.10 per contract on electronic Complex Orders that
remove liquidity from the Complex Order Book and auctions, excluding
PIXL, in Non-Penny Pilot Options, excluding NDX and MNX.
    The Exchange notes that an order that is received by the trading
system first in time shall be considered an order adding liquidity and
an order that trades against that order shall be considered an order
removing liquidity.
    The Exchange is amending the rule text to make clear that
surcharges are not subject to the Monthly Market Maker Cap. Today, the
Exchange assesses surcharges for BKX, NDX and MNX. Those charges are
not included in the calculation of the Monthly Market

Maker Cap. The proposed surcharges will not be included in the Monthly
Market Maker Cap.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Pricing
Schedule is consistent with Section 6(b) of the Act,\19\ in general,
and furthers the objectives of Section 6(b)(4) and (b)(5) of the
Act,\20\ 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 its facilities, and is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
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    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(4), (5).
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    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.'' \21\
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    \21\ Securities Exchange Act Release No. 51808 (June 29, 2005),
70 FR 37496 at 37499 (File No. S7-10-04) (``Regulation NMS Adopting
Release'').
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    Likewise, in NetCoalition v. Securities and Exchange Commission
\22\ (``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 cost-based
approach.\23\ 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.'' \24\
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    \22\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \23\ See id. at 534-535.
    \24\ See id. at 537.
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    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 broker-dealers 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' . . . .'' \25\ 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.
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    \25\ See id. at 539 (quoting Securities Exchange Act Commission
at Release No. 59039 (December 2, 2008), 73 FR 74770 at 74782-74783
(December 9, 2008) (SR-NYSEArca-2006-21)).
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Customer Rebates
    The Exchange's proposal to amend Section B, entitled ``Customer
Rebate Program,'' to amend Category C and add a new Category D is
reasonable because today the Exchange pays a Customer Complex Order
rebate on both Penny and Non-Penny Pilot Options. The Exchange will
continue to pay rebates for both Penny and Non-Penny Pilot Options, but
will amend the rebates paid for Non-Penny Pilot Options as proposed for
Category D. The Exchange notes that today it assesses different fees
for Penny and Non-Penny Pilot Options.\26\
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    \26\ See Section II of the Pricing Schedule.
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    The Exchange's proposal to amend Section B, entitled ``Customer
Rebate Program,'' to amend Category C and add a new Category D is
equitable and not unfairly discriminatory because the Exchange will
uniformly pay Customer rebates to all qualifying market participants.
Any market participant may qualify for a Customer Rebate.
    With respect to the Tier 2 Category C rebate, which is decreased
from $0.17 to $0.16 per contract, and the Tier 3 Category C rebate,
which is increased from $0.17 to $0.18 per contract, the Exchange
believes that these proposed changes are reasonable because the
Exchange currently pays the same $0.17 per contract rebate for these
two tiers. The Exchange desires to pay a lower rebate for Tier 2, which
requires National Customer Volume \27\ of above 0.60%-1.10%, and a
higher rebate for Tier 3, which requires National Customer Volume of
above 1.10%-1.60%, because of the difference in the volume
requirements. The Exchange believes that it is reasonable to pay a
higher rebate for the Tier 3 Category C rebate because of the higher
volume requirement.
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    \27\ The National Customer Volume would be in Multiply-Listed
Equity and ETF Options Classes, excluding SPY Options, on a monthly
basis.
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    With respect to the Tier 2 Category C rebate, which is decreased
from $0.17 to $0.16 per contract, and the Tier 3 Category C rebate,
which is increased from $0.17 to $0.18 per contract, the Exchange
believes that these proposed changes are equitable and not unfairly
discriminatory because the Exchange will uniformly pay Customer rebates
to all qualifying market participants. Any market participant may
qualify for a Customer Rebate.
    With respect to the proposed rebates for Category D, the Exchange
believes that it is reasonable to pay no rebate for Tier 1, which has a
National Customer Volume requirement between 0.00%-0.60%, because no
other Category pays a rebate for this level of volume. The Exchange
believes that it is reasonable to pay the proposed Tier 2 through 5
rebates,\28\ progressively higher rebates which are commensurate with
the increased National Customer Volume requirement for each Tier.
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    \28\ Category D pays: A $0.21 rebate for Tier 2 (National
Customer Volume above 0.60%-1.10%); a $0.22 rebate for Tier 3
(National Customer Volume above 1.10%-1.60%); a $0.26 rebate for
Tier 4 (National Customer Volume above 1.60%-2.50%); and a $0.27
rebate for Tier 5 (National Customer Volume above 2.50%).
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    With respect to the proposed rebates for Category D, the Exchange
believes the proposed rebates are equitable and not unfairly
discriminatory because the Exchange will uniformly pay Customer rebates
to all qualifying market participants. Any market participant may
qualify for a Customer Rebate.
    The Exchange's proposal to no longer cap rebates on Customer PIXL
Orders at 4,000 contracts per order leg for Complex PIXL Orders is
reasonable because the Exchange will potentially attract a greater
amount of Customer liquidity to the Exchange without a cap. Customer
orders bring valuable liquidity to the market which liquidity benefits
other market participants. 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's proposal to no longer cap rebates on Customer PIXL
Orders at 4,000 contracts per order leg for Complex PIXL Orders is
equitable and not unfairly discriminatory because the Exchange will
uniformly not cap Category C rebates for any market participant.
    The Exchange's proposal to structure the Category D rebate similar
to the Category C rebate is reasonable because today, electronically-
delivered Customer Complex Orders in Non-Penny Pilot Options in Section
II symbols, will be [sic] subject to the same terms. Rebates will
continue to be paid on Customer PIXL Complex Orders in Section II
symbols that execute

against non-Initiating Order interest. Customer Complex PIXL Orders
that execute against a Complex PIXL Initiating Order will continue to
not be paid a rebate under any circumstances. The Category D Rebate
will continue to not be paid when an electronically-delivered Customer
Complex Order, including a Customer Complex PIXL Order, executes
against another electronically-delivered Customer Complex Order. Also,
the Exchange is proposing to remove the 4,000 contracts per order cap,
as noted above, for the Category C rebates and the cap will not be
applicable for the Category D rebates.
    The Exchange's proposal to structure the Category D rebate similar
to the Category C rebate is equitable and not unfairly discriminatory
because the Exchange will uniformly apply the Category D rebates to all
market participants.
    The Exchange's proposal to pay a $0.03 per contract Category D
rebate, in addition to the applicable Tier 2 and 3 rebates, provided
the Specialist, Market Maker or Appointed MM has reached the Monthly
Market Maker Cap as defined in Section II, to: (1) A Specialist or
Market Maker who is not under Common Ownership or is not a party of an
Affiliated Entity; or (2) an OFP member or member organization
affiliate under Common Ownership; or (3) an Appointed OFP of an
Affiliated Entity is reasonable. Today, market participants sending
electronically-delivered Customer Complex Orders in Non-Penny Pilot
Options in Section II symbols are paid the $0.03 per contract rebate in
addition to the Tier 2 and 3 rebate in Category C, provided the
requirements are met. The Exchange believes it is reasonable to
continue to pay this additional rebate provide [sic] the requirements
are met.
    The Exchange's proposal to pay a $0.03 per contract Category D
rebate, in addition to the applicable Tier 2 and 3 rebates, provided
the Specialist, Market Maker or Appointed MM has reached the Monthly
Market Maker Cap as defined in Section II, to: (1) A Specialist or
Market Maker who is not under Common Ownership or is not a party of an
Affiliated Entity; or (2) an OFP member or member organization
affiliate under Common Ownership; or (3) an Appointed OFP of an
Affiliated Entity is equitable and not unreasonably discriminatory. The
Exchange will uniformly pay the additional $0.03 rebate in addition to
the Tier 2 and 3 Category D rebates to all qualifying market
participants. Any market participant may qualify for a Customer Rebate.
    The Exchange's proposal to amend the manner in which the Exchange
pays the $0.05 per contract rebate on electronically-delivered Customer
Complex Orders in Non-Penny Pilot Options is reasonable. Today,
electronically-delivered Customer Complex Orders in Non-Penny Pilot
Options are paid a $0.05 per contract rebate in addition to the
applicable Tier 2 and 3 rebates to members or member organizations or
member or member organization affiliated under Common Ownership,
provided the member or member organization qualified for a Tier 1 or 2
MARS Payment in Section IV, Part E. The Exchange proposes, with respect
to both Category C and D, to expand the applicable tiers from only
Tiers 2 and 3 to Tiers 2, 3, 4 or 5. This is reasonable because it will
allow additional market participants to take advantage of the
additional rebate, provided the requirements are met. Also, the
Exchange's proposal to expand the MARS qualification from Tiers 1 and 2
to any MARS Payments \29\ is reasonable because it will allow
additional market participants to take advantage of the additional
rebate.
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    \29\ Today, Phlx members that have System Eligibility, as
described in Section IV, Part E, and have executed the requisite
number of Eligible Contracts, as described in Section IV, Part E, in
a month will be paid per contract rebates based on a 4 tier
structure which pays a certain MARS Payment based on Average Daily
Volume.
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    The Exchange's proposal to amend the manner in which the Exchange
pays the $0.05 per contract rebate on electronically-delivered Customer
Complex Orders in Non-Penny Pilot Options is equitable and not
unreasonably discriminatory because the Exchange will uniformly pay the
additional $0.05 rebate to the applicable expanded rebate tiers and
MARS tiers provided the market participant qualifies. Any market
participant may qualify for a Customer Rebate.
Multiply Listed Options
    The Exchange's proposal to adopt a surcharge of $0.03 per contract
on electronic Complex Orders that remove liquidity from the Complex
Order Book and auctions, excluding PIXL, in Penny Pilot Options,
excluding SPY and a surcharge of $0.10 per contract on electronic
Complex Orders that remove liquidity from the Complex Order Book and
auctions, excluding PIXL, in Non-Penny Pilot Options, excluding NDX and
MNX is reasonable. The Exchange is adopting these surcharges, which
will be applied on transactions that remove liquidity from the Complex
Order Book, in order to help offset the increased rebates which are
proposed to be given to Complex Orders in Section B. The Exchange
believes that it is reasonable to only assess this surcharge to those
orders which remove liquidity from the market because the Exchange
wants to continue to encourage market participation and price
improvement for those participants that seek to add liquidity on Phlx.
The Exchange believes that not assessing the surcharge on PIXL and SPY
orders is reasonable. PIXL has its own pricing,\30\ and the Exchange
wants to continue to encourage price improvement within PIXL. SPY has
its own rebate program separate and apart from Section B.\31\ Limiting
the surcharges to electronically-delivered transactions is reasonable
because the Section B rebates apply only to electronically-delivered
Customer orders. Further, limiting the surcharge to orders entered
electronically is equitable and not unfairly discriminatory because the
Exchange has expended considerable resources to develop its electronic
trading platforms and seeks to recoup the costs of such expenditures.
Finally, excluding NDX and MNX is reasonable because these symbols are
currently subject to a surcharge.\32\
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    \30\ See Section IV, Part A of the Pricing Schedule.
    \31\ See Section I of the Pricing Schedule.
    \32\ See Section II of the Pricing Schedule.
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    The Exchange's proposal to adopt a surcharge of $0.03 per contract
on electronic Complex Orders that remove liquidity from the Complex
Order Book and auctions, excluding PIXL, in Penny Pilot Options,
excluding SPY and a surcharge of $0.10 per contract on electronic
Complex Orders that remove liquidity from the Complex Order Book and
auctions, excluding PIXL, in Non-Penny Pilot Options, excluding NDX and
MNX is equitable and not unfairly discriminatory. The surcharges will
be applied uniformly to all market participants.
    The Exchange's proposal to amend the rule text to make clear that
surcharges are not subject to the Monthly Market Maker Cap is
reasonable because today, the Exchange does not count surcharges for
BKX, NDX and MNX toward the Monthly Market Maker Cap, only Options
Transaction Charges.
    The Exchange's proposal to amend the rule text to make clear that
surcharges are not subject to the Monthly Market Maker Cap is equitable
and not unfairly discriminatory because all Specialists and Market
Makers will be uniformly applied the cap. Specialists and Market Makers
have obligations to the market and regulatory requirements, which
normally do not

apply to other market participants.\33\ They have obligations to make
continuous markets, engage in a course of dealings reasonably
calculated to contribute to the maintenance of a fair and orderly
market, and not make bids or offers or enter into transactions that are
inconsistent with a course of dealings. The differentiation as between
Specialists and Market Makers and all other market participants
recognizes the differing contributions made to the liquidity and
trading environment on the Exchange by these market participants. 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.
For these reasons, the Exchange believes that it is equitable and not
unfairly discriminatory for Specialists and Market Makers to cap fees.
---------------------------------------------------------------------------

    \33\ See Rule 1014 titled ``Obligations and Restrictions
Applicable to Specialists and Registered Options Traders.''
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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. 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 sum, if the changes proposed herein are unattractive to market
participants, it is likely that the Exchange will lose market share as
a result. Accordingly, the Exchange does not believe that the proposed
changes will impair the ability of members or competing order execution
venues to maintain their competitive standing in the financial markets.
Customer Rebates
    The Exchange's proposal to amend Section B, entitled ``Customer
Rebate Program,'' to amend Category C and add a new Category D does not
impose an undue burden on intra-market competition because the Exchange
will uniformly pay Customer rebates to all qualifying market
participants. Any market participant may qualify for a Customer Rebate.
    With respect to the Tier 2 Category C rebate, which is decreased
from $0.17 to $0.16 per contract, and the Tier 3 Category C rebate,
which is increased from $0.17 to $0.18 per contract, the Exchange
believes that these proposed changes do not impose an undue burden on
intra-market competition because the Exchange will uniformly pay
Customer rebates to all qualifying market participants. Any market
participant may qualify for a Customer Rebate.
    With respect to the proposed rebates for Category D, the Exchange
believes the proposed rebates do not impose an undue burden on intra-
market competition because the Exchange will uniformly pay Customer
rebates to all qualifying market participants. Any market participant
may qualify for a Customer Rebate.
    The Exchange's proposal to no longer cap rebates on Customer PIXL
Orders at 4,000 contracts per order leg for Complex PIXL Orders does
not impose an undue burden on intra-market competition because the
Exchange will uniformly not cap Category C rebates for any market
participant.
    The Exchange proposal's to structure the Category D rebate similar
to the Category C rebate does not impose an undue burden on intra-
market competition because the Exchange will uniformly apply the
Category D rebates to all market participants.
    The Exchange's proposal to pay a $0.03 per contract Category D
rebate addition to the applicable Tier 2 and 3 rebate, provided the
Specialist, Market Maker or Appointed MM has reached the Monthly Market
Maker Cap as defined in Section II, to: (1) A Specialist or Market
Maker who is not under Common Ownership or is not a party of an
Affiliated Entity; or (2) an OFP member or member organization
affiliate under Common Ownership; or (3) an Appointed OFP of an
Affiliated Entity does not impose an undue burden on intra-market
competition. The Exchange will uniformly pay the additional $0.03
rebate in addition to the Tier 2 and 3 Category D rebates to all
qualifying market participants. Any market participant may qualify for
a Customer Rebate.
    The Exchange's proposal to amend the manner in which the Exchange
pays the $0.05 per contract rebate on electronically-delivered Customer
Complex Orders in Non-Penny Pilot Options does not impose an undue
burden on intra-market competition because the Exchange will uniformly
pay the additional $0.05 rebate to the applicable expanded rebate and
MARS tiers, provided the market participant qualifies. Any market
participant may qualify for a Customer Rebate.
Multiply Listed Options
    The Exchange's proposal to adopt a surcharge of $0.03 per contract
on electronic Complex Orders that remove liquidity from the Complex
Order Book and auctions, excluding PIXL, in Penny Pilot Options,
excluding SPY and a surcharge of $0.10 per contract on electronic
Complex Orders that remove liquidity from the Complex Order Book and
auctions, excluding PIXL, in Non-Penny Pilot Options, excluding NDX and
MNX does not impose on intra-market competition because the surcharges
will be applied uniformly to all market participants.
    The Exchange's proposal to amend the rule text to make clear that
surcharges are not subject to the Monthly Market Maker Cap does not
impose on intra-market competition because the all Specialists and
Market Makers will be uniformly applied the cap. Specialists and Market
Makers have obligations to the market and regulatory requirements,
which normally do not apply to other market participants.\34\ They have
obligations to make continuous markets, engage in a course of dealings
reasonably calculated to contribute to the maintenance of a fair and
orderly market, and not make bids or offers or enter into transactions
that are inconsistent with a course of dealings. The differentiation as
between Specialists and Market Makers and all other market participants
recognizes the differing contributions made to the liquidity and
trading environment on the Exchange by these market participants. 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.
For these reasons, the Exchange believes that it is equitable and not
unfairly discriminatory for Specialists and Market Makers to cap fees.
---------------------------------------------------------------------------

    \34\ See Rule 1014 titled ``Obligations and Restrictions
Applicable to Specialists and Registered Options Traders.''

---------------------------------------------------------------------------

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.\35\
---------------------------------------------------------------------------

    \35\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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_ADDRESS>Please include
File Number SR-Phlx-2017-29 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-2017-29. 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-2017-29, and should be
submitted on or before May 12, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
---------------------------------------------------------------------------

    \36\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2017-08056 Filed 4-20-17; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 78 (Wednesday, April 22, 2020)]
[Notices]
[Pages 22421-22422]
[FR Doc No: 2020-08513]

-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings

    Take notice that the Commission has received the following Natural
Gas Pipeline Rate and Refund Report filings:

    Docket Numbers: RP20-783-000.
    Applicants: Columbia Gas Transmission, LLC.
    Description: Compliance filing X-103 Abandonment to be effective 3/
31/2020.
    Filed Date: 4/14/20.
    Accession Number: 20200414-5002.
    Comments Due: 5 p.m. ET 4/27/20.

    Docket Numbers: RP20-784-000.
    Applicants: Maritimes & Northeast Pipeline, L.L.C.
    Description: Sec.  4(d) Rate Filing: MNUS Cleanup Filing--Remove NC
Agrmt K9003 to be effective 5/14/2020.
    Filed Date: 4/14/20.
    Accession Number: 20200414-5003.
    Comments Due: 5 p.m. ET 4/27/20.

    Docket Numbers: RP20-785-000.
    Applicants: Kern River Gas Transmission Company.

    Description: Sec.  4(d) Rate Filing: 2020 Expiring Negotiated Rate
Agreements to be effective 5/1/2020.
    Filed Date: 4/15/20.
    Accession Number: 20200415-5036.
    Comments Due: 5 p.m. ET 4/27/20.

    Docket Numbers: RP20-786-000.
    Applicants: Gas Transmission Northwest LLC.
    Description: Sec.  4(d) Rate Filing: GTN 2020 Housekeeping Filing
to be effective 5/15/2020.
    Filed Date: 4/15/20.
    Accession Number: 20200415-5074.
    Comments Due: 5 p.m. ET 4/27/20.

    Docket Numbers: RP20-787-000.
    Applicants: Bison Pipeline LLC.
    Description: Sec.  4(d) Rate Filing: 2020 Bison Housekeeping Filing
to be effective 5/15/2020.
    Filed Date: 4/15/20.
    Accession Number: 20200415-5076.
    Comments Due: 5 p.m. ET 4/27/20.

    Docket Numbers: RP20-788-000.
    Applicants: Kinetica Energy Express, LLC.
    Description: Compliance filing Petition for Approval of Settlement.
    Filed Date: 4/15/20.
    Accession Number: 20200415-5137.
    Comments Due: 5 p.m. ET 4/27/20.

    Docket Numbers: RP20-789-000.
    Applicants: Enable Mississippi River Transmission, LLC.
    Description: Sec.  4(d) Rate Filing: Negotiated Rate Filing--CES
5801 RP18-923 & RP20-131 Settlement to be effective 1/1/2019.
    Filed Date: 4/15/20.
    Accession Number: 20200415-5166.
    Comments Due: 5 p.m. ET 4/27/20.

    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified date(s). Protests may be considered,
but intervention is necessary to become a party to the proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated: April 16, 2020.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2020-08513 Filed 4-21-20; 8:45 am]
 BILLING CODE 6717-01-P