[Federal Register Volume 79, Number 66 (Monday, April 7, 2014)]
[Notices]
[Pages 19139-19141]
[FR Doc No: 2014-07633]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71836; File No. SR-CBOE-2014-027]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Renew an Existing Pilot Program

April 1, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 25, 2014, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I and II 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 renew an existing pilot program until
November 3, 2014. Under the existing pilot program, the Exchange is
permitted to list P.M.-settled options on broad-based indexes that
expire on: (a) Any Friday of the month, other than the third Friday-of-
the-month (``End of Week Expirations'' or ``EOWs''), and (b) the last
trading day of the month (``End of Month Expirations'' or ``EOMs'').
The text of the proposed rule change is provided below. (additions are
italicized; deletions are [bracketed])
* * * * *

Chicago Board Options Exchange, Incorporated

Rules

* * * * *

Rule 24.9. Terms of Index Option Contracts

    (a)-(d) No change.
    (e) End of Week/End of Month Expirations Pilot Program (``EOW/
EOM Pilot Program'')
    (1) End of Week (``EOW'') Expirations. The Exchange may open for
trading EOWs on any broad-based index eligible for regular options
trading to expire on any Friday of the month, other than the third
Friday-of-the-month. EOWs shall be subject to all provisions of this
Rule and treated the same as options on the same underlying index
that expire on either the Saturday following the third Friday of the
month, for series expiring prior to February 1, 2015, or on the
third Friday of the expiration month, for series expiring on or
after February 1, 2015; provided, however, that EOWs shall be P.M.-
settled.
    (2) End of Month (``EOM'') Expirations. The Exchange may open
for trading EOMs on any broad-based index eligible for regular
options trading to expire on last trading day of the month. EOMs
shall be subject to all provisions of this Rule and treated the same
as options on the same underlying index that expire on either the
Saturday following the third Friday of the month, for series
expiring prior to February 1, 2015, or on the third Friday of the
expiration month, for series expiring on or after February 1, 2015;
provided, however, that EOMs shall be P.M.-settled.
    (3) Duration of EOW/EOM Pilot Program. The EOW/EOM Pilot Program
shall be through [April 14, 2014] November 3, 2014.
    (4) EOW/EOM Trading Hours on the Last Trading Day. On the last
trading day, transactions in expiring EOWs and EOMs may be effected
on the Exchange between the hours of 8:30 a.m. (Chicago time) and
3:00 p.m. (Chicago time). This subsection (4) applies to all
outstanding expiring EOW and EOM Expirations listed on or before May
6, 2011 and all EOWs and EOMs listed thereafter under the EOW/EOM
Pilot Program.
    . . . Interpretations and Policies:
    .01-.14 No change
* * * * *

    The text of the proposed rule change is also available on the
Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission.

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
    On September 14, 2010, the Commission approved a CBOE proposal to
establish a pilot program under which the Exchange is permitted to list
P.M.-settled options on broad-based indexes to expire on (a) any Friday
of the month, other than the third Friday-of-the-month, and (b) the
last trading day of the month.\3\ Under the terms of the End of Week/
End of Month Expirations Pilot Program (``Program''), EOWs and EOMs are
permitted on any broad-based index that is eligible for regular options
trading. EOWs and EOMs are cash-settled and have European-style
exercise. The proposal became effective on a pilot basis for a period
of fourteen months that commenced on the next full month after approval
was received to establish the Program \4\ and was subsequently
extended.\5\ The Program is scheduled to expire on April 14, 2014. The
Exchange believes that the Program has been successful and well
received by its Trading Permit Holders and the investing public during
that the time that it has been in operation. The Exchange hereby
proposes to extend the Program until November 3, 2014. This proposal
does not request any other changes to the Program.
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    \3\ See Securities Exchange Act Release No. 62911 (September 14,
2010), 75 FR 57539 (September 21, 2010) (order approving SR-CBOE-
2009-075).
    \4\ Id.
    \5\ See Securities Exchange Act Release No. 65741 (November 14,
2011), 76 FR 72016 (November 21, 2011) (immediately effective rule
change extending the Program through February 14, 2013). See also
Securities Exchange Act Release No. 68933 (February 14, 2013), 78 FR
12374 (February 22, 2013) (immediately effective rule change
extending the Program through April 14, 2014).
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    Pursuant to the order approving the establishment of the Program,
two months prior to the conclusion of the pilot period, CBOE is
required to submit an annual report to the Commission, which addresses
the following areas: Analysis of Volume & Open Interest, Monthly
Analysis of EOW & EOM Trading Patterns and Provisional Analysis of
Index Price Volatility. The Exchange has submitted, under separate
cover, the annual report in connection with the present proposed rule
change. Confidential treatment under the Freedom of Information Act is
requested regarding the annual report.
    If, in the future, the Exchange proposes an additional extension of
the Program, or should the Exchange propose to make the Program
permanent (which the Exchange currently intends to do), the Exchange
will submit an annual report (addressing the same areas referenced
above and consistent with the order approving the establishment of the
Program) to the Commission at least two months prior to the expiration
date of the Program. The annual report will be provided to the
Commission on a confidential basis. Any positions established under the
Program will not be impacted by the expiration of the Program.
    The Exchange believes there is sufficient investor interest and
demand in the Program to warrant its extension. The Exchange believes
that the Program has provided investors with additional means of
managing their risk exposures and carrying out their investment
objectives. Furthermore, the Exchange has not experienced any adverse
market effects with respect to the Program.
    The Exchange believes that the proposed extension of the Program
will not have an adverse impact on capacity.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitation
transactions in securities, 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. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \8\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ Id.
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    In particular, the Exchange believes that the Program has been
successful to date and states that it has not encountered any problems
with the Program. The proposed rule change allows for an extension of
the Program for the benefit of market participants. Additionally, the
Exchange believes that there is demand for the expirations offered
under the Program and believes that that EOWs and EOMs will continue to
provide the investing public and other market participants increased
opportunities to better manage their risk exposure.

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

    CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. Specifically, the Exchange
believes that, by extending the expiration of the Program, the proposed
rule change will allow for further analysis of the Program and a
determination of how the Program shall be structured in the future. In
doing so, the proposed rule change will also serve to promote
regulatory clarity and consistency, thereby reducing burdens on the
marketplace and facilitating investor protection.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the 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 if consistent with the protection of investors
and the public interest, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6)(iii) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission.
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    The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing. The Commission believes that waiving the 30-day operative delay
is consistent with the protection of investors and the public interest,
as it will allow the pilot program to continue

uninterrupted, thereby avoiding investor confusion that could result
from a temporary interruption in the pilot program. For this reason,
the Commission designates the proposed rule change to be operative upon
filing.\11\
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    \11\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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 necessary or
appropriate in the public interest, for the protection of investors, or
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<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2014-027 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-CBOE-2014-027. 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 at 100 F Street NE., Washington,
DC 20549-1090 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-CBOE-2014-027, and should be
submitted on or before April 28, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-07633 Filed 4-4-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 112 (Monday, June 11, 2012)]
[Notices]
[Pages 34424-34426]
[FR Doc No: 2012-14077]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67137; File No. SR-EDGA-2012-21]

Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to
Temporarily Suspend the Requirements of EDGA Rule 2.6

June 5, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 5, 2012, EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II 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 is proposing to temporarily suspend the requirements
of EDGA Rule 2.6 and related EDGA Rules concerning the approval of new
Members in order to admit Apex Clearing Corporation (``Apex
Clearing''), f/k/a Ridge Clearing and Outsourcing Solutions, Inc.
(``Ridge''), as a Member of EDGA, subject to Apex Clearing complying
with the Exchange's Membership qualification rules within 30 calendar
days of the effective date of this filing. The Exchange is also
proposing to accept Apex Clearing's assumption of all of the existing
clearing agreements and arrangements currently in effect between Penson
Financial Services, Inc. (``PFSI'') and other EDGA Members by execution
of a global agreement thereto. The text of the proposed rule change is
available on the Exchange's Web site at www.directedge.com, at the
Exchange's principal office, and at the Public Reference Room of the
Commission.

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 self-regulatory organization 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 temporarily suspend the requirements
of EDGA Rule 2.6 and related rules governing the qualification and
admission of Members in order to immediately approve Apex Clearing as
an EDGA Member. The Exchange proposes this temporary suspension on an
expedited basis to ensure that Apex Clearing can continue the clearing

operations of PFSI without unnecessary disruption, which could have a
significant collateral impact on a number of other Members. The
proposed temporary suspension is contingent upon Apex Clearing having
complied with all of the Exchange's Membership qualification
requirements within 30 calendar days of the effective date of this
filing.
    On May 31, 2012, Apex Clearing Holdings, LLC (``Apex Holdings''),
Apex Clearing Solutions, LLC, Broadridge Financial Solutions, Inc.
(``Broadridge''), PFSI and Penson Worldwide, Inc. (``PWI'') (together,
the ``Parties'') consummated a transaction resulting in a change in
ownership of Apex Clearing.\3\ Broadridge, Apex Holdings, PWI and PFSI
each made capital investments in Apex Holdings, the holding company
parent of Apex Clearing. PFSI also assigned all of its U.S. clearing
contracts and all customer and introducing broker proprietary accounts
along with key personnel to Apex Clearing (the ``Transferring
Accounts'').\4\
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    \3\ Prior to the Transaction, Apex Clearing's name was Ridge
Clearing & Outsourcing Solutions, Inc. Prior to the transaction,
Ridge Clearing & Outsourcing Solutions, Inc. contributed its
outsourcing operations and all associated personnel and systems to
its affiliated entity, Broadridge Securities Processing Solutions,
LLC (``BSPS'') where it will continue to provide operations support
and outsourcing services to a number of broker-dealers, including
Apex Clearing.
    \4\ See Penson Worldwide, Inc. Form 8-K dated May 31, 2012.
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    As a result of the Transaction, Apex Clearing, which is not
currently an EDGA Member, will provide the clearing services and
execution services currently provided to the Transferring Accounts by
PFSI. On May 31, 2012, Apex Clearing submitted an application to be
admitted as an EDGA Member. However because of the expedited nature of
the transaction, Apex Clearing was unable to fully comply in a timely
manner with EDGA Rule 2.6 and related Membership rules. Because of the
need for seamless continuity with respect to the Transferring Accounts,
Apex Clearing has requested that the Exchange temporarily suspend its
Membership qualification rules in order to enable Apex Clearing's
approval as a Member on an expedited basis. Pursuant to its request,
Apex Clearing has represented that it will fully comply with the
Exchange's Membership qualification requirements within 30 calendar
days of the effective date of this filing.
    EDGA Rule 2.6 establishes the requirements for applications for
Membership with the Exchange and requires prospective Members to submit
such information as the Exchange may require.
    Among other things, to be approved as an EDGA Member, an applicant
must:
     Provide the Exchange with an agreement to abide by, comply
with, and adhere to the provisions of the Exchange's Certificate of
Incorporation, its By-Laws, the Exchange's Rules, the policies,
interpretations and guidelines of the Exchange, and all orders and
decisions of the Exchange's Board and penalties imposed by the Board,
and any duly authorized committee; \5\
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    \5\ EDGA Rule 2.6(a)(1).
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     Agree to pay such dues, assessments, and other charges in
the manner and amount as shall from time to time be fixed by the
Exchange; \6\
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    \6\ EDGA Rule 2.6(a)(2).
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     Agree to maintain and make available to the Exchange, its
authorized employees and its Board or any duly authorized committee
such books and records as may be required to be maintained by the
Commission or the Exchange's Rules; \7\
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    \7\ EDGA Rule 2.6(a)(5).
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     Agree to supply other reasonable information with respect
to the applicant as the Exchange may require in its Membership
application (e.g., certificate of incorporation, by-laws, and other
corporate documents); \8\ and
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    \8\ EDGA Rule 2.6(a)(6).
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     Register all Authorized Traders with the Exchange \9\ in
compliance with the Exchange's registration requirements as outlined in
EDGA Rule 2.3(b) through (d).
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    \9\ EDGA Rule 2.3(b).
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    In addition, the Exchange reviews whether the applicant meets
applicable regulatory capital requirements and whether it has adopted
controls and procedures to comply with Exchange Rules.
    Due to the amount of information an applicant is required to
provide and have completed prior to being admitted as a Member, the
Member approval process generally takes several weeks to complete. The
length of time varies based on the timing of the applicant's responses
to requests for information and documentation.
    As proposed, Apex Clearing will continue the clearing and certain
other operations of PSFI as of June 6, 2012. In order to avoid
interruption of the services PSFI currently provides to other Exchange
Members, EDGA believes that Apex Clearing should be approved
immediately as an EDGA Member. The Exchange notes that Apex Clearing is
already a registered broker-dealer and FINRA member, which are
prerequisites for becoming an EDGA Member.\10\
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    \10\ See EDGA Rule 2.5(a).
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    The Exchange therefore proposes to temporarily suspend EDGA Rule
2.6 and related Membership rules (Rules 2.3 and 2.5), and immediately
approve Apex Clearing and its associated persons as a Member. As
proposed, this temporary suspension is contingent upon:
     Apex Clearing providing the Exchange with sufficient
information to confirm that Apex Clearing will satisfy its capital
requirements as an EDGA Member; and
     Within 30 calendar days of the effective date of this rule
filing, Apex Clearing and its associated persons shall have complied
with the Exchange's Member qualification requirements as set forth in
EDGA Rules 2.3, 2.5, and 2.6.
    As proposed, if Apex Clearing does not comply with all applicable
EDGA Member qualification requirements within 30 calendar days of the
effective date of this filing, its status as an approved EDGA Member
will no longer be effective.
    In addition, the Exchange proposes to permit Apex Clearing to
assume all existing clearing agreements and arrangements currently in
effect with other EDGA Members by execution of global agreements
thereto. Apex Clearing has represented that it will provide notice of
such assumption to impacted Members prior to the effective date
thereof.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
Section 6(b)\11\ of the Act and furthers the objectives of Section
6(b)(5)\12\ in that it is designed to promote just and equitable
principles of trade, to prevent fraudulent and manipulative acts, to
remove impediments to and to perfect the mechanism of a free and open
market and a national market system and to protect investors and the
public interest. The Exchange believes that permitting the expeditious
approval of Apex Clearing as an EDGA Member will avoid interruption of
the services PSFI currently provides to other Exchange Members. Based
on information and representations provided by Apex Clearing, a
temporary suspension of certain EDGA membership rules is needed based
on the expedited nature of the transaction to enable seamless
continuity with respect to the Transferring Accounts. Consequently,
EDGA believes that temporary

suspension of its Member qualification requirements so that Apex
Clearing can be approved immediately as an EDGA Member will help to
foster cooperation and coordination with persons engaged in
facilitating transactions in securities, and is therefore consistent
with the Act.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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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 that is not necessary or appropriate
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act\13\ and Rule 19b-4(f)(6) thereunder.\14\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act\15\ and Rule 19b-
4(f)(6)(iii) thereunder.\16\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires a self-regulatory organization to give the
Commission written notice of its intent to file the proposed rule
change at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as designated by the
Commission. The Commission is waiving this five-day pre-filing
requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6)\17\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange has asked the Commission to waive the five-day pre-
filing requirement and the 30-day operative delay so that the proposed
rule change may become operative immediately upon filing. The
Commission notes that the Exchange is proposing that certain of its
rules relating to membership requirements be temporarily suspended so
that Apex Clearing can be provisionally approved as an EDGA Member. The
proposed relief does not exempt Apex Clearing from Exchange rule
requirements governing Members. Apex Clearing would have a 30 calendar
day grace period within which to apply for and be approved under
relevant Exchange rules. Moreover, the Commission believes that waiver
of the 30-day operative delay is appropriate to ensure a smooth
transition of PFSI operations to Apex Clearing. In particular, given
the rapidity with which events have developed, waiver of the 30-day
operative delay is necessary to avoid significant disruption to PFSI's
existing customers and the market generally. Therefore, the Commission
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest and designates the
proposed rule change as operative upon filing.\19\
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    \19\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    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.

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-EDGA-2012-21 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-EDGA-2012-21. 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-EDGA-2012-21 and should be
submitted on or before July 2, 2012.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14077 Filed 6-8-12; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 45 (Tuesday, March 8, 2016)]
[Notices]
[Pages 12151-12153]
[FR Doc No: 2016-05125]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77285; File No. SR-NASDAQ-2016-029]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Access Services Fees Under Rule 7015

March 3, 2016.
    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 February 23, 2016, The NASDAQ Stock Market LLC (``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 a proposal to [sic] amend the Exchange's
Access Services fees under Rule 7015 to: (i) Assess a $25/port/month
Disaster Recovery Port fee applied to FIX Trading Port [sic], OUCH,
RASH, and DROP protocol disaster recovery ports; and (ii) assess a
$100/port/month fee for Trading Ports used in Test Mode.
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaq.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 purpose of the proposed rule change to Rule 7015 is to amend
the Exchange's Access Services fees under Rule 7015 to: (i) Assess a
$25/port/month Disaster Recovery Port fee applied to FIX Trading Port
[sic], OUCH, RASH, and DROP protocol disaster recovery ports; and (ii)
assess a $100/port/month fee for Trading Ports used in Test Mode.
First Change
    The Exchange is in the process of transitioning its Disaster
Recovery (``DR'') functionality for the U.S. equities and options
markets from Ashburn, VA to its new Chicago, IL data center. The
Exchange has invested and installed new equipment in the Chicago data
center for client connectivity and for the infrastructure of Exchange
systems. The Exchange chose Chicago as the location of its new DR data
center as many other exchanges are using this same location for a
disaster recovery or a primary location and, as a result, many of our
market participants have a presence or connection at this location,
thus making it easier and less expensive for many market participants
to connect to the Exchange for DR.
    Under Rule 7015, member firms may subscribe to DR ports, which
provide backup connectivity in the event of a failure or disaster
rendering their primary connectivity at Carteret, NJ subscribed to
under Rule 7015 unavailable. To date, the Exchange has transitioned its
FIX Trading Ports, OUCH, RASH, and DROP Ports to the Chicago center
from Ashburn. Currently, the Exchange does not assess a fee for any DR
ports.
    The Exchange has incurred an initial cost associated with moving DR
ports to the Chicago center, including the purchase of upgraded
hardware and physical space to house the DR ports, which is more
expensive than the Ashburn location. The Exchange also incurs ongoing
costs in maintaining the DR ports, including costs incurred maintaining
servers and their physical

location, monitoring order activity, and other support, which is
collectively more expensive in Chicago than Ashburn. Accordingly, the
Exchange is proposing to assess a fee of $25 per port, per month for DR
Ports used with FIX Trading Ports, OUCH, RASH, and DROP Ports.
Second Change
    Under Rule 7015, Member [sic] firms may subscribe to Trading Ports
used in Test Mode, which are trading ports available in primary market
location in [sic] Carteret, NJ, that are exclusively used for testing
purposes, at no cost. These ports may not be used for trading in
securities in the System, but rather allow a member firm to test their
systems prior to connecting to the live trading environment. Test Ports
are identical to trading ports \3\ and share the same infrastructure,
but are restricted to only allow order entry into the System in test
symbols. A member firm may elect to designate a subscribed trading port
as either in ``production mode'' or in ``test mode.'' A Trading Port
that is in production mode allows a member firm to send orders for
execution on the Exchange system in the normal course. When a member
firm changes a trading port's status to test mode, the Exchange will
not allow normal order activity to occur through the port but rather it
limits all order activity to test symbols. Under Rule 7015, member
firms are assessed a monthly fee of $550 per port for each trading port
subscribed in production mode. Member firms are not currently assessed
a fee for Trading Ports used in Test Mode.
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    \3\ E.g., FIX, RASH, and OUCH.
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    The Exchange has audited the use of Trading Ports used in Test Mode
and found that a majority of Trading Ports used in Test Mode are not
used for testing, but rather remain idle. The Exchange incurs costs
associated with maintaining such ports, including costs incurred
maintaining servers and their physical location, monitoring order
activity, and other support. Accordingly, the Exchange is proposing to
assess a fee of $100 per port, per month.\4\
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    \4\ The Exchange bills Access Services subscriptions by
prorating the first monthly fee by the number of days that
subscription was subscribed and thereafter assesses the full monthly
fee, including the full month in which the subscription is
cancelled. If a subscriber elects to change a test mode port to a
production port in a given month, the Exchange will assess the
Trading Ports used in Test Mode fee, which may be prorated if
subscribed to in the same month, and will also assess the production
port fee, which will be prorated from the date the change is made
through the end of the month. Likewise, if a subscriber elects to
change a production mode port to a test mode port in a given month,
the Exchange will assess the monthly production port fee, which may
be prorated if subscribed to in the same month, and will also assess
the Trading Ports used in Test Mode fee, which will be prorated from
the date the change is made through the end of the month.
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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 Sections
6(b)(4) and 6(b)(5) of the Act \6\ 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (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.'' \7\ Likewise, in
NetCoalition v. Securities and Exchange Commission \8\
(``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.\9\ 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.'' \10\
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    \7\ Securities Exchange Act Release No. 51808 at 37499 (June 9,
2005) (``Regulation NMS Adopting Release'') [sic].
    \8\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \9\ See NetCoalition, at 534.
    \10\ 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'. . . .'' \11\
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    \11\ Id. at 539 (quoting ArcaBook Order, 73 FR at 74782-74783
[sic]).
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DR Port Fees
    The fee assessed for DR Ports used with FIX Trading Ports, OUCH,
RASH, and DROP ports is reasonable because it is based on the cost
incurred by the Exchange in purchasing and maintaining DR ports in the
Chicago data center.
    The Exchange does not currently have a means to recoup its
investment and costs associated with providing member firms with DR
ports in the Chicago data center. Thus, the Exchange believes that the
proposed fee is reasonable because the fee is intended to cover the
Exchange's costs incurred in maintaining DR ports. The proposed fee may
also allow the Exchange to make a profit to the extent the costs
associated with purchasing and maintaining DR ports are covered.
    The Exchange believes that the proposed fee is equitably allocated
and not unfairly discriminatory because it will apply equally to all
subscribers to DR ports based on the number of ports subscribed. Last,
the Exchange notes that, for most member firms, subscription to DR
ports is voluntary, and member firms may subscribe to as many or as few
ports they believe is necessary. A select number of member firms chosen
by the Exchange to participate in business continuity and disaster
recovery plan testing pursuant to Rule 1170 will be obligated to
subscribe to a DR port to participate in the annual test. Although
subscription to DR ports is not voluntary for member firms selected for
this once a year test, the Exchange believes that assessing the
proposed fee is an equitable allocation and not unfairly discriminatory
because such member firms will derive the same benefit as those members
that voluntarily elect to subscribe to DR ports and such members may
cancel their DR port subscription once their Rule 1170 testing
obligation is satisfied.
Trading Ports Used in Test Mode Fees
    The proposed fee is also reasonable because it is based on the cost
incurred by the Exchange in developing and maintaining multiple port
connections, which are not used in the production environment and are
designated as in test mode. As noted, the Exchange invests time and
capital in initiating, monitoring and maintaining port connections to
its system. Currently, the Exchange does not have a means to

recoup its investment and costs associated with providing member firms
with Trading Ports used in Test Mode. Thus, the Exchange believes that
the proposed fee is reasonable because the fee is intended to cover the
Exchange's costs incurred in maintaining test mode ports and is less
than what is charged for a trading port in production mode. The
proposed fee may also allow the Exchange to make a profit to the extent
the costs associated with developing and maintaining Trading Ports used
in Test Mode are covered.
    The Exchange believes that the proposed fee does not discriminate
unfairly as it will promote efficiency in the market by incentivizing
member firms to either place idle ports into production or cancel them
if unneeded. The Exchange believes the proposed fee is equitably
allocated because all Exchange member firms that voluntarily elect to
subscribe to trading ports, yet maintain them in test mode, will be
charged the fee equally on a per-port basis. Last, the Exchange notes
that subscription to Trading Ports used in Test Mode is voluntary, and
member firms may subscribe to as many or as few ports they believe is
necessary for their testing purposes.

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
this instance, the proposed fee merely allows the Exchange to recapture
the costs associated with maintaining member ports that are in test
mode and DR, and may provide the Exchange with a profit to the extent
its costs are covered. The Trading Port used in Test Mode fee is
applied uniformly to member firms that have such ports in the Carteret
data center, where the Exchange incurs expenses to support this port
configuration option. The proposed fee will also promote efficient use
of Trading Ports for testing.
    Similarly, the Exchange incurs greater costs in offering DR ports
in the new Chicago data center, which the Exchange is seeking to cover.
Any burden arising from the fees is necessary to cover costs associated
with the location of the functionality in Chicago. If the changes
proposed herein are unattractive to market participants, it is likely
that the Exchange will lose market share as a result as member firms
chose [sic] one of many alternative venues on which they may trade.
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.

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_ADDRESS>Please include
File Number SR-NASDAQ-2016-029 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-NASDAQ-2016-029. 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-NASDAQ-2016-029 and should
be submitted on or before March 29, 2016.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-05125 Filed 3-7-16; 8:45 am]
BILLING CODE 8011-01-P