[Federal Register Volume 82, Number 36 (Friday, February 24, 2017)]
[Notices]
[Pages 11666-11670]
[FR Doc No: 2017-03576]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80064; File No. SR-Phlx-2017-15]

Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend PIXL
pricing

February 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 February 8, 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 amend the Exchange's Pricing Schedule at
Section I, entitled ``Rebates and Fees for Adding and Removing
Liquidity in SPY,'' and Section IV, Part A entitled ``PIXL Pricing'' to
amend pricing related to PIXL \3\ executions.
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    \3\ PIXL\SM\ is the Exchange's price improvement mechanism known
as Price Improvement XL or PIXL. A member or member organization 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 pursuant to Rule 1080.
See Exchange Rule 1080(n).
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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
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend the Exchange's
Pricing Schedule at Section I, entitled ``Rebates and Fees for Adding
and Removing Liquidity in SPY,'' to amend PIXL Executions in Standard
and Poor's Depositary Receipts/SPDRs (``SPY'').\4\ The Exchange also
proposes to amend PIXL Pricing in Section IV, Part A, entitled ``PIXL
Pricing'' for all other Multiply-Listed options symbols.\5\
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    \4\ Options overlying Standard and Poor's Depositary Receipts/
SPDRs (``SPY'') are based on the SPDR exchange-traded fund
(``ETF''), which is designed to track the performance of the S&P 500
Index.
    \5\ The Exchange initially filed the proposed pricing changes on
February 2 [sic], 2017 (SR-Phlx-2017-10). On February 8, 2017, the
Exchange withdrew that filing and submitted this filing. The
Commission notes that the Exchange filed SR-PHXL-2017-10 on February
1, 2017.
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Proposed Amendments to Section I: Rebates and Fees for Adding and
Removing Liquidity in SPY
    Section I of the Pricing Schedule contains pricing for PIXL
Executions in SPY. Today, with respect to PIXL executions in SPY, the
Exchange assesses an Initiating Order fee of $0.05 per contract. Today,
the Initiating Order Fee for Professional,\6\ Firm,\7\ Broker-
Dealer,\8\ Specialist \9\ and Market Maker \10\ orders that are contra
to a Customer \11\ PIXL Order are reduced to $0.00 if the Customer PIXL
Order is greater than 399 contracts. Further, when the PIXL Order is
contra to the Initiating Order, a Customer PIXL Order is assessed $0.00
per contract and all other non-Customer market participants are
assessed a $0.38 per contract fee when contra to an Initiating Order.
When the PIXL Order is contra to other than the Initiating Order, the
PIXL Order is assessed $0.00 per contract, unless the order is a
Customer, in which case the Customer will receive a rebate of $0.38 per
contract. All other Non-Customer contra parties to the PIXL Order,
other than the Initiating Order, are assessed a Fee for Removing
Liquidity of $0.42 per contract or will receive the Rebate for Adding
Liquidity. The aforementioned applies to pricing in SPY.
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    \6\ The term ``Professional'' applies to transactions for the
accounts of Professionals, as defined in Exchange Rule 1000(b)(14).
    \7\ The term ``Firm'' applies to any transaction that is
identified by a member or member organization for clearing in the
Firm range at The Options Clearing Corporation.
    \8\ The term ``Broker-Dealer'' applies to any transaction which
is not subject to any of the other transaction fees applicable
within a particular category.
    \9\ The term ``Specialist'' applies to transactions for the
account of a Specialist (as defined in Exchange Rule 1020(a)).
    \10\ The term ``Market Maker'' includes Registered Options
Traders (``ROT''). See Exchange Rule 1014(b)(i) and (ii). A ROT
includes a Streaming Quote Trader or ``SQT,'' a Remote Streaming
Quote Trader or ``RSQT'' and a Non-SQT, which by definition is
neither a SQT nor a RSQT. A ROT is defined in Exchange Rule 1014(b)
as a regular member of the Exchange located on the trading floor who
has received permission from the Exchange to trade in options for
his own account. 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'').
    \11\ 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)).
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    The Exchange proposes to continue to assess an Initiating Order fee
of $0.05 per contract for SPY Orders within PIXL. The Exchange proposes
to no longer offer the ability to not be assessed an Initiating Order
Fee for Professional, Firm, Broker-Dealer, Specialist and Market Maker
orders that are contra to a Customer PIXL Order, which are currently
reduced to $0.00 if the Customer PIXL Order is greater than 399
contracts. The Exchange is replacing the incentive which reduces the
Initiating Order Fee for Professional, Firm, Broker-Dealer, Specialist
and Market Maker orders that are contra to a Customer PIXL Order,
provided the

Customer PIXL Order is greater than 399 contracts, with another
incentive to attract more liquidity for SPY PIXL Orders.
    The Exchange proposes to offer Phlx members or member organizations
that qualify for Section B, Customer Rebate Tiers \12\ 2 through 6 or
qualify for the Monthly Firm Fee Cap \13\ a rebate of $0.10 per
contract for all SPY Complex PIXL Orders greater than 499 contracts,
provided the member or member organization executes an average of 2,500
contracts per day of SPY Complex PIXL Orders in a month. The Exchange
desires to incentivize members or member organizations to transact a
greater number of SPY Complex PIXL Orders while also incentivizing
members or member organizations to submit Customer order flow on Phlx.
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    \12\ Section B of the Pricing Schedule contains Customer Rebate
Tiers which are calculated by totaling Customer volume in Multiply
Listed Options (including SPY) that are electronically-delivered and
executed, except volume associated with electronic QCC Orders, as
defined in Exchange Rule 1080(o). Rebates are paid on Customer
Rebate Tiers according to certain categories. Members and member
organizations under Common Ownership may aggregate their Customer
volume for purposes of calculating the Customer Rebate Tiers and
receiving rebates. Affiliated Entities may aggregate their Customer
volume for purposes of calculating the Customer Rebate Tiers and
receiving rebates. See Section B of the Pricing Schedule.
    \13\ Firms are subject to a maximum fee of $75,000 (``Monthly
Firm Fee Cap''). Firm Floor Option Transaction Charges and QCC
Transaction Fees in Section II of the Pricing Schedule, in the
aggregate, for one billing month may not exceed the Monthly Firm Fee
Cap per member organization when such members are trading in their
own proprietary account. All dividend, merger, and short stock
interest strategy executions, as defined in Section II, will be
excluded from the Monthly Firm Fee Cap. Reversal and conversion,
jelly roll and box spread strategy executions, as defined in Section
II, will be included in the Monthly Firm Fee Cap. QCC Transaction
Fees are included in the calculation of the Monthly Firm Fee Cap.
Member organizations must notify the Exchange in writing of all
accounts in which the member is not trading in its own proprietary
account. The Exchange will not make adjustments to billing invoices
where transactions are commingled in accounts which are not subject
to the Monthly Firm Fee Cap.
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    The Exchange also proposes to amend its SPY PIXL pricing so that
when the PIXL Order is contra to other than the Initiating Order, the
PIXL Order will continue to be assessed $0.00 per contract, unless the
order is a Customer, in which case the Customer will receive an
increased rebate of $0.40 per contract (an increase from $0.38 per
contract). The Exchange also proposes to amend the SPY PIXL pricing so
that all other Non-Customer contra parties to the PIXL Order, other
than the Initiating Order, will be assessed an increased Fee for
Removing Liquidity of $0.50 per contract (an increase from $0.42 per
contract) or will receive the Rebate for Adding Liquidity.\14\ The
Exchange is increasing the Fee for Removing Liquidity because it seeks
to offer an increase rebate to attract additional SPY PIXL Orders.
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    \14\ The Rebates for Adding Liquidity for Simple Orders are in
Part A and for Complex Orders in Part B.
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    The Exchange proposes that when the PIXL Order is contra to a
Specialist or Market Maker quote, which was established at the
initiation of a PIXL auction, the Customer PIXL Order will not be
eligible for a rebate. The Exchange believes that this proposal will
encourage Specialists and Market Makers to quote their best price at
the initiation of a PIXL auction to obtain the rebate.
Proposed Amendments to Section IV, Part A: PIXL Pricing
    Today, the PIXL pricing in all Multiply-Listed symbols except SPY
is as described below. The Exchange assesses an Initiating Order Fee of
$0.07 per contract. If the member or member organization qualifies for
the Tier 4 or 5 Customer Rebate in Section B the member or member
organization will be assessed $0.05 per contract. Today, if the member
or member organization executes equal to or greater than 3.00% of
National Customer Volume in Multiply-Listed equity and ETF Options
Classes (excluding SPY Options) in a given month, the member or member
organization will be assessed $0.00 per contract for Complex PIXL
Orders.
    Today, any member or member organization under Common Ownership
with another member or member organization that qualifies for a
Customer Rebate Tier 4 or 5 in Section B, or executes equal to or
greater than 3.00% of National Customer Volume in Multiply-Listed
equity and ETF Options Classes (excluding SPY Options) in a given month
will receive one of the PIXL Initiating Order discounts as described
above. Today, the Initiating Order Fee for Professional, Firm, Broker-
Dealer, Specialist and Market Maker orders that are contra to a
Customer PIXL Order will be reduced to $0.00 if the Customer PIXL Order
is greater than 399 contracts.
    The Exchange proposes to continue to assess an Initiating Order Fee
of $0.07 per contract. The Exchange proposes that if the member or
member organization qualifies for the Tier 3, 4 or 5 Customer Rebate in
Section B the member or member organization will be assessed $0.05 per
contract. The Tier 3 qualifier is being added to provide another means
to qualify for the lower fee. If the member or member organization
executes equal to or greater than 3.00% of National Customer Volume in
Multiply-Listed equity and ETF Options Classes (excluding SPY Options)
in a given month, the member or member organization will continue to be
assessed $0.00 per contract for Complex PIXL Orders. Any member or
member organization under Common Ownership with another member or
member organization that qualifies for a Customer Rebate Tier 4 or 5 in
Section B, or executes equal to or greater than 3.00% of National
Customer Volume in Multiply-Listed equity and ETF Options Classes
(excluding SPY Options) in a given month will continue to receive one
of the PIXL Initiating Order discounts as described above.
    The Exchange proposes to no longer offer the ability to not be
assessed an Initiating Order Fee for Professional, Firm, Broker-Dealer,
Specialist and Market Maker orders that are contra to a Customer PIXL
Order if the Customer PIXL Order is greater than 399 contracts.
Instead, the Exchange proposes to offer another incentive to attract
more liquidity for Complex PIXL Orders similar to proposed SPY PIXL
pricing. The Exchange proposes to offer Phlx members and member
organizations that qualify for Section B, Customer Rebate Tiers 2
through 6 \15\ or qualify for the Monthly Firm Fee Cap \16\ a rebate of
$0.10 per contract for all Complex PIXL Orders (excluding SPY Options)
greater than 499 contracts, provided the member or member organization
executes an average of 2,500 contracts per day of Complex SPY PIXL
Orders in a month. The Exchange desires to incentivize members and
member organizations to transact a greater number of SPY Complex PIXL
Orders while also incentivizing members and member organizations to
submit Customer order flow on Phlx to obtain the $0.10 rebate on all
Complex PIXL Orders (excluding SPY Options).
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    \15\ See note 12 above.
    \16\ See note 13 above.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\17\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\18\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair

discrimination between customers, issuers, brokers, or dealers.
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    \17\ 15 U.S.C. 78f(b).
    \18\ 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.'' \19\
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    \19\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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    Likewise, in NetCoalition v. Securities and Exchange Commission
\20\ (``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.\21\ 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.'' \22\
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    \20\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \21\ See NetCoalition, at 534-535.
    \22\ 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' . . . .'' \23\ 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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    \23\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008)
(SR-NYSEArca-2006-21)).
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Proposed Amendments to Section I: Rebates and Fees for Adding and
Removing Liquidity in SPY
    The Exchange's proposal to no longer offer the ability to not be
assessed an Initiating Order Fee for Professional, Firm, Broker-Dealer,
Specialist and Market Maker orders that are contra to a Customer SPY
PIXL Order if the Customer SPY PIXL Order is greater than 399 contracts
and instead offer Phlx members or member organizations that qualify for
Section B, Customer Rebate Tiers \24\ 2 through 6 or qualify for the
Monthly Firm Fee Cap \25\ a rebate of $0.10 per contract for all SPY
Complex PIXL Orders greater than 499 contracts, provided the member or
member organization executes an average of 2,500 contracts per day of
SPY Complex PIXL Orders in a month is reasonable. The proposed rebate
will incentivize members and member organizations to transact a greater
number of SPY Complex PIXL Orders will also incentivizing members and
member organizations to submit Customer order flow on Phlx. All members
and member organizations are eligible for this rebate which may be
obtained by either sending in the requisite amount of Customer order,
thereby benefitting all participants with order flow with which to
interact or benefitting members and member organizations that have
$75,000 in transaction fees for the month, which contributed to the
Exchange's revenue. The Exchange desires to incentivize members and
member organizations to transact a greater amount of Complex SPY Orders
as compared to Simple SPY Orders. The quantity of orders is being
increased to receive the rebate, which order flow benefits all
participants through order interaction.
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    \24\ See note 12 above.
    \25\ See note 13 above.
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    The Exchange's proposal to no longer offer the ability to not be
assessed an Initiating Order Fee for Professional, Firm, Broker-Dealer,
Specialist and Market Maker orders that are contra to a Customer SPY
PIXL Order if the Customer SPY PIXL Order is greater than 399 contracts
and instead offer Phlx members and member organizations that qualify
for Section B, Customer Rebate Tiers 2 through 6 or qualify for the
Monthly Firm Fee Cap a rebate of $0.10 per contract for all SPY Complex
PIXL Orders greater than 499 contracts, provided the member or member
organization executes an average of 2,500 contracts per day of SPY
Complex PIXL Orders in a month is equitable and not unfairly
discriminatory. All members and member organizations are eligible for
the proposed rebate, provided they met the requisite qualifications.
Members and member organizations would be uniformly paid the new
rebate. No member or member organization will be eligible to eliminate
the Initiating Order Fee for Professional, Firm, Broker-Dealer,
Specialist and Market Maker orders that are contra to a Customer SPY
PIXL Order if the Customer SPY PIXL Order is greater than 399
contracts.
    The Exchange's proposal to amend its SPY PIXL pricing so that when
the PIXL Order is contra to other than the Initiating Order, the PIXL
Order will continue to be assessed $0.00 per contract, unless the order
is a Customer, in which case the Customer will receive an increased
rebate of $0.40 per contract is reasonable. The Exchange is increasing
this rebate from $0.38 per contract to incentivize members and member
organizations to transact a greater number of SPY PIXL Orders to earn
the increased rebate.
    The Exchange's proposal to amend its SPY PIXL pricing so that when
the PIXL Order is contra to other than the Initiating Order, the PIXL
Order will continue to be assessed $0.00 per contract, unless the order
is a Customer, in which case the Customer will receive an increased
rebate of $0.40 per contract is equitable and not unfairly
discriminatory because the Exchange will uniformly pay this rebate.
    The Exchange's proposal to amend the SPY PIXL pricing so that all
other Non-Customer contra parties to the PIXL Order, other than the
Initiating Order, will be assessed an increased Fee for Removing
Liquidity of $0.50 per contract or will receive the Rebate for Adding
Liquidity is reasonable.\26\ The Exchange is increasing the fee from
$0.42 to $0.50 per contract so that it may offer members and member
organizations increased SPY Complex PIXL rebates as proposed herein.
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    \26\ The Rebates for Adding Liquidity for Simple Orders are in
Part A and for Complex Orders in Part B.
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    The Exchange's proposal to amend the SPY PIXL pricing so that all
other Non-Customer contra parties to the PIXL Order, other than the
Initiating Order, will be assessed an increased Fee for Removing
Liquidity of $0.50 per contract or will receive the Rebate for Adding
Liquidity is equitable and not unfairly discriminatory because the
Exchange will uniformly assess the increased Fee for Removing Liquidity
to all applicable members and member organizations.
    The Exchange's proposal to not offer a rebate when the PIXL Order
is contra to a Specialist or Market Maker quote, which was established
at the initiation of a PIXL auction, the Customer PIXL Order is
reasonable. The Exchange believes that not paying a rebate to the PIXL
Order in this case is reasonable because the Exchange will be paying
Specialists and Market Makers the

Rebate for Adding Liquidity \27\ instead. Also, this proposal continues
to encourage Specialists and Market Makers to quote their best price at
the initiation of a PIXL auction to obtain the rebate.
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    \27\ Id.
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    The Exchange's proposal to not offer a rebate when the PIXL Order
is contra to a Specialist or Market Maker quote, which was established
at the initiation of a PIXL auction, the Customer PIXL Order is
equitable and not unfairly discriminatory. The Exchange will uniformly
not offer a rebate to any member or member organizations when the PIXL
Order is contra to a Specialist or Market Maker quote, which was
established at the initiation of a PIXL auction.
Proposed Amendments to Section IV, Part A: PIXL Pricing
    The Exchange's proposal that if the member or member organization
qualifies for the Tier 3, 4 or 5 Customer Rebate in Section B the
member or member organization will be assessed $0.05 per contract,
instead of the $0.07 per contract Initiating Order fee is reasonable
because the Exchange is offering members and member organizations a
greater opportunity to qualify for the lower fee by adding Tier 3 as a
qualifier.
    The Exchange's proposal that if the member or member organization
qualifies for the Tier 3, 4 or 5 Customer Rebate in Section B the
member or member organization will be assessed $0.05 per contract,
instead of the $0.07 per contract Initiating Order fee is equitable and
not unfairly discriminatory because the Exchange will assess the fee in
a uniform manner to all applicable members and member organizations.
    The Exchange's proposal to no longer offer the ability to not be
assessed an Initiating Order Fee for Professional, Firm, Broker-Dealer,
Specialist and Market Maker orders that are contra to a Customer PIXL
Order if the Customer PIXL Order is greater than 399 contracts and
instead replace this offer with a rebate to attract more liquidity for
Complex SPY PIXL Orders similar to proposed SPY PIXL pricing is
reasonable. The proposed rebate will incentivize members and member
organizations to transact a greater number of Complex SPY PIXL Orders
will also incentivizing members and member organizations to submit
Customer order flow on Phlx. All members and member organizations are
eligible for this rebate, which applies to all Complex PIXL Orders
excluding SPY Options,\28\ which may be obtained by either sending in
the requisite amount of Customer orders, thereby benefitting all
participants with order flow with which to interact, or benefitting
members and member organizations that have paid $75,000 in transaction
fees for the month, which contributed to the Exchange's revenue. The
Exchange desires to incentivize members and member organizations to
transact a greater amount of Complex SPY PIXL Orders. The quantity of
orders required to be transacted to earn the rebate (2,500 Complex SPY
PIXL Orders) will result in a greater amount of order flow to the
Exchange, which benefits all participants through order interaction.
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    \28\ The Exchange is offering a rebate for Complex SPY PIXL
Orders in Section I.
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    The Exchange's proposal to no longer offer the ability to not be
assessed an Initiating Order Fee for Professional, Firm, Broker-Dealer,
Specialist and Market Maker orders that are contra to a Customer PIXL
Order if the Customer PIXL Order is greater than 399 contracts and
instead replace this offer with a rebate to attract more liquidity for
PIXL SPY Complex Orders similar to proposed SPY PIXL pricing is
equitable and not unfairly discriminatory. All members and member
organizations are eligible for the proposed rebate, provide they met
the requisite qualifications. Members and member organizations would be
uniformly paid the rebate, provided they qualify. No member will be
eligible to eliminate the Initiating Order Fee for Professional, Firm,
Broker-Dealer, Specialist and Market Maker orders that are contra to a
Customer PIXL Order if the Customer PIXL Order is greater than 399
contracts.

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.
    In terms of intra-market competition, the Exchange believes that
its proposed rebates and fees continue to remain competitive in SPY and
Multiply Listed Options. 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.
Proposed Amendments to Section I: Rebates and Fees for Adding and
Removing Liquidity in SPY
    The Exchange's proposal to no longer offer the ability to not be
assessed an Initiating Order Fee for Professional, Firm, Broker-Dealer,
Specialist and Market Maker orders that are contra to a Customer SPY
PIXL Order if the Customer SPY PIXL Order is greater than 399 contracts
and instead offer Phlx members and member organizations that qualify
for Section B, Customer Rebate Tiers 2 through 6 or qualify for the
Monthly Firm Fee Cap a rebate of $0.10 per contract for all SPY Complex
PIXL Orders greater than 499 contracts, provided the member or member
organization executes an average of 2,500 contracts per day of SPY
Complex PIXL Orders in a month does not impose an undue burden on
intra-market competition. All members and member organizations are
eligible for the proposed rebate, provide they met the requisite
qualifications. Members and member organizations would be uniformly
paid the new rebate. No member or member organization will be eligible
to eliminate the Initiating Order Fee for Professional, Firm, Broker-
Dealer, Specialist and Market Maker orders that are contra to a
Customer SPY PIXL Order if the Customer SPY PIXL Order is greater than
399 contracts.
    The Exchange's proposal to amend its SPY PIXL pricing so that when
the PIXL

Order is contra to other than the Initiating Order, the PIXL Order will
continue to be assessed $0.00 per contract, unless the order is a
Customer, in which case the Customer will receive an increased rebate
of $0.40 per contract does not impose an undue burden on intra-market
competition because the Exchange will uniformly pay this rebate.
    The Exchange's proposal to amend the SPY PIXL pricing so that all
other Non-Customer contra parties to the PIXL Order, other than the
Initiating Order, will be assessed an increased Fee for Removing
Liquidity of $0.50 per contract or will receive the Rebate for Adding
Liquidity does not impose an undue burden on intra-market competition
because the Exchange will uniformly assess the increased Fee for
Removing Liquidity to all applicable members and member organizations.
    The Exchange's proposal to not offer a rebate when the PIXL Order
is contra to a Specialist or Market Maker quote, which was established
at the initiation of a PIXL auction, the Customer PIXL Order does not
impose an undue burden on intra-market competition. The Exchange will
uniformly not offer a rebate to any member or member organization when
the PIXL Order is contra to a Specialist or Market Maker quote, which
was established at the initiation of a PIXL auction.
Proposed Amendments to Section IV, Part A: PIXL Pricing
    The Exchange's proposal that if the member or member organization
qualifies for the Tier 3, 4 or 5 Customer Rebate in Section B the
member or member organization will be assessed $0.05 per contract,
instead of the $0.07 per contract Initiating Order fee does not impose
an undue burden on intra-market competition because the Exchange will
assess the fee in a uniform manner to all applicable members and member
organizations.
    The Exchange's proposal to no longer offer the ability to not be
assessed an Initiating Order Fee for Professional, Firm, Broker-Dealer,
Specialist and Market Maker orders that are contra to a Customer PIXL
Order if the Customer PIXL Order is greater than 399 contracts and
instead replace this offer with a rebate to attract more liquidity for
PIXL SPY Complex Orders similar to proposed SPY PIXL pricing does not
impose an undue burden on intra-market competition. All members and
member organizations are eligible for the proposed rebate, provide they
met the requisite qualifications. Members and member organizations
would be uniformly paid the rebate, provided they qualify. No member or
member organization will be eligible to eliminate the Initiating Order
Fee for Professional, Firm, Broker-Dealer, Specialist and Market Maker
orders that are contra to a Customer PIXL Order if the Customer PIXL
Order is greater than 399 contracts.

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.\29\ 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.
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    \29\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-Phlx-2017-15 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-2017-15. 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-2017-15 and should be
submitted on or before March 17, 2017.
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    \30\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03576 Filed 2-23-17; 8:45 am]
 BILLING CODE 8011-01-P