[Federal Register Volume 80, Number 7 (Monday, January 12, 2015)]
[Notices]
[Pages 1534-1537]
[FR Doc No: 2015-00215]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73996; File No. SR-NYSE-2014-74]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending Its Price List Related to Fees for Trading Licenses To Extend
the Current Fee Schedule to February 27, 2015 and To Implement New
Trading License Fees Effective March 1, 2015

January 6, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on December 23, 2014, New York Stock Exchange LLC (``NYSE'' or
``Exchange'') 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 self-regulatory
organization. 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\ 15 U.S.C. 78a.
    \3\ 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 its Price List related to fees for
trading licenses to extend the current fee schedule to February 27,
2015 and to implement new trading license fees effective March 1, 2015.
The text of the proposed rule change is available on the Exchange's Web
site at www.nyse.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 self-regulatory organization
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 those 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 parts 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 Exchange proposes to amend its Price List to extend the current
fee schedule to February 27, 2015 and to implement new trading license
fees effective March 1, 2015.
    NYSE Rule 300(b) provides that, in each annual offering, up to
1,366 trading licenses for the following calendar year will be sold
annually at a price per trading license to be established each year by
the Exchange pursuant to a rule filing submitted to the Securities and
Exchange Commission (``Commission'') and that the price per trading
license will be published each year in the Exchange's Price List.
Currently, the Exchange charges an annual fee of $40,000 per license
for the first two trading licenses held by a member organization and
$25,000 for each additional trading license. For trading licenses
issued after July 1, 2013, fees are prorated for the portion of the
calendar year that the trading license is outstanding.\4\ However, if a
member organization is issued additional trading licenses between July
1, 2013 and December 31, 2014, and the total number of trading licenses
held by the member organization between July 1, 2013 and December 31,
2014 is greater than the total number of trading licenses held by the
member organization on July 1, 2013, the member organization would not
be charged a prorated fee for the period from July 3, 2013 to December
31, 2014 for those additional trading licenses above the number the

member organization held on July 1, 2013.\5\
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    \4\ For a trading license that is in place for 15 calendar days
or less in a calendar month, proration for that month would be at a
flat rate of $100 per day with no tier pricing involved. For a
trading license that is in place for 16 calendar days or more in a
calendar month, proration for that month would be computed based on
the number of days as applied to the applicable annual fee for the
trading license. See Price List at current n. 16.
    \5\ See Securities Exchange Act Release No. 71215 (December 31,
2013), 79 FR 885 (January 7, 2014) (SR-NYSE-2013-82). See also Price
List at current n. 15. If a firm becomes a member organization after
July 1, 2013, the firm is assigned a baseline of one trading license
and charged a prorated fee for that license. Any trading licenses in
addition to the first trading license are not charged a prorated fee
for the period from July 3, 2013 to December 31, 2014. If a member
organization merges with another member organization on or after
July 1, 2013, the total combined number of trading licenses held by
each member organization on July 1, 2013 is considered the baseline
number of trading licenses for the successor member organization as
of the date of the merger. See generally id.
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    For 2015, the Exchange proposes to extend the current fee schedule
relating to trading license fees through February 27, 2015 and amend
the trading license fees effective March 1, 2015.
    For the period between January 2, 2015 and February 27, 2015, the
Exchange proposes to retain the current fee schedule relating to
trading licenses, including the fee relief for additional licenses. As
a result, an annual fee would not apply to the number of trading
licenses issued to a member organization between July 3, 2013 and
February 27, 2015 that exceeds the total number of trading licenses
held by the member organization on July 1, 2013. The Exchange proposes
to maintain July 1, 2013 as the baseline date so that a consistent
point in time would be used to determine how many trading licenses for
which a member organization would be charged. The fee calculation for
new or merged member organizations would also be extended. Thus, for
any firm that becomes a member organization after July 1, 2013, the
firm would be considered to have one trading license as of July 1, 2013
and charged a fee for that one license through February 27, 2015. The
Exchange proposes to extend the current fee schedule for the first two
months of 2015 in order to maintain the existing fee schedule relating
to trading licenses and provide member organizations with advance
notice of the trading license fee changes that the Exchange proposes to
introduce on March 1, 2015.
    Effective March 1, 2015, the Exchange proposes to charge an annual
fee of $50,000 for the first license held by a member organization and
$15,000 for each additional license. The Exchange proposes to eliminate
the existing fee relief for additional licenses and delete the relevant
text from current footnote 15.
    The Exchange also proposes to introduce a $25,000 annual
administrative fee for member organizations that do not own a trading
license and agree to be regulated by the Exchange pursuant to Rule
2(b)(ii) (``Regulated Only Members'') to offset the costs of this
membership category.\6\
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    \6\ Rule 2(b)(ii) recognizes as ``member organizations'' any
registered broker or dealer that is a member of the Financial
Industry Regulatory Authority (``FINRA'') or a registered securities
exchange consistent with the requirements of Rule 2(b)(i) and
``which does not own a trading license and agrees to be regulated by
the Exchange as a member organization and which the Exchange has
agreed to regulate.'' Regulated Only Members cannot enters orders
on, or clear through, the Exchange but are subject to regulation by
the Exchange, including periodic examination by FINRA on the
Exchange's behalf.
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    The Exchange proposes to continue prorating license fees for any
portion of the year that a license may be outstanding, including the
administrative fee for Regulated Only members.\7\
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    \7\ See note 4, supra. Firms becoming member organizations
between January 2, 2015 and February 27, 2015 would pay a prorated
fee for one license at the current rate of $40,000 until February
27, 2015 and then pay a prorated amount of the new proposed fee of
$50,000 for the remainder of 2015. Firms becoming Regulated Only
Members between January 2, 2015 and February 27, 2015 would pay no
fee and would pay a prorated fee beginning March 1, 2015 for the
remainder of the year.
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    The Exchange also proposes to correct a typographical error in the
heading of the Price List where the word ``Licenses'' is misspelled.
    The proposed change is not otherwise intended to address any other
issues, and the Exchange is not aware of any problems that members and
member organizations would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\8\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\9\ in
particular, because it provides for the equitable allocation of
reasonable dues, fees, and other charges among its members, issuers and
other persons using its facilities and does not unfairly discriminate
between customers, issuers, brokers or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed change is reasonable
because maintaining the current fee structure through February 27,
2014[sic], including fee relief for the number of trading licenses that
exceeds the total number of trading licenses held by the member
organization on July 1, 2013, would maintain the existing fee schedule
relating to trading licenses while at the same time providing member
organizations with a reasonable period to assess the impact of the new
permanent fees the Exchange proposes for March 1, 2015 and effectuate
an orderly transition to the new fee schedule. The Exchange believes
that maintaining the current fee structure for the first two months of
2015 would also continue to encourage member organizations to hold
additional trading licenses during that time, which would increase the
number of market participants trading on the floor of the Exchange,
thereby promoting liquidity, price discovery and the opportunity for
price improvement for the benefit of all market participants. The
Exchange also believes that it is reasonable to maintain July 1, 2013
as the applicable baseline date so that a consistent point in time
would be used to determine how many trading licenses for which a member
organization would be charged, which would continue to provide member
organizations with greater flexibility in managing their personnel.
    The Exchange further believes that the proposal to maintain the
current fee schedule through February 27, 2015 is equitable and not
unfairly discriminatory because all similarly situated member
organizations would continue to be subject to the same trading license
fee structure and because access to the Exchange's market would
continue to be offered on fair and nondiscriminatory terms. The
Exchange also believes that the proposal to maintain the current fee
schedule is equitable and not unfairly discriminatory because all
member organizations would continue to have the opportunity to enjoy
the benefits of the fee relief with respect to additional trading
licenses. The Exchange believes that it is equitable and not unfairly
discriminatory to continue to assign new member organizations a
baseline of one trading license because this will continue to encourage
firms to become member organizations, thereby encouraging trading
activity on the Exchange, which benefits all market participants.
    The Exchange believes that the proposal to institute a new fee
structure on March 1, 2015, which would eliminate fee relief for
additional licenses and introduce a simpler model, is reasonable
because member organizations would be able to purchase the initial
license for slightly more than the current rate and add unlimited
additional licenses at a significantly lower rate. The Exchange
believes that the proposed trading license change would encourage
additional firms to become member organizations on the Exchange, which
would contribute to the quality of the Exchange's market and increase
the number of market participants trading on the floor of the

Exchange, thereby also promoting liquidity, price discovery and the
opportunity for price improvement for the benefit of all market
participants. The Exchange believes that the proposal would increase
the number of market participants trading on the floor of the Exchange
and continue to provide member organizations with greater flexibility
in managing their personnel.
    The Exchange further believes that the proposed new fee schedule is
equitable and not unfairly discriminatory because all similarly
situated member organizations would continue to be subject to the same
trading license fee structure and because access to the Exchange's
market would continue to be offered on fair and nondiscriminatory
terms. The Exchange further believes that the proposal to introduce a
$25,000 annual administrative fee for Regulated Only Members is
reasonable, equitable and not unfairly discriminatory because all
member organizations that seek this status under Rule 2(b)(ii) would be
subject to the same fee. The Exchange also believes that it is
equitable and not unfairly discriminatory to subject Regulated Only
Members to an administrative fee because such member organizations are
subject to the same membership costs as non-Regulated Only Members.
    The Exchange also believes that correcting a typographical error on
the Price List is consistent with the Act because it would add greater
clarity for member organizations.
    For these reasons, the Exchange believes that the proposal is
consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\10\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, the Exchange believes that the proposal
to maintain the current fee schedule through February 27, 2015 would
help to remove a potential burden on competition by making it easier
for member organizations to appropriately staff the floor of the
Exchange, which is a key feature of the Exchange's structure for
offering a fair and orderly market and competing with other exchanges.
Further, the Exchange believes that the proposed new fee schedule would
also contribute to making membership on the Exchange as a member
organization more economical and could therefore lead to increased
competition on the Exchange between member organizations.
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    \10\ 15 U.S.C. 78f(b)(8).
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    Finally, 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 and rebates 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 and credits 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. As a result of all of these considerations, the
Exchange does not believe that the proposed changes will impair the
ability of member organizations 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 solicited or received with respect to the
proposed rule change.

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

    The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \11\ of the Act and subparagraph (f)(2) of Rule
19b-4 \12\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such 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 under
Section 19(b)(2)(B) \13\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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    \13\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSE-2014-74 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-NYSE-2014-74. 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 Section, 100 F Street
NE., Washington, DC 20549-1090. Copies of the filing will also be
available for Web site viewing and printing at the NYSE's principal
office and on its Internet Web site at www.nyse.com. 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-NYSE-2014-74 and should be
submitted on or before February 2, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-00215 Filed 1-9-15; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 177 (Wednesday, September 12, 2012)]
[Notices]
[Page 56199]
[FR Doc No: 2012-22399]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. IN12-4-000]

Deutsche Bank Energy Trading LLC; Notice of Designation of
Commission Staff as Non-Decisional

    With respect to an order issued by the Commission on September 5,
2012 in the above-captioned docket, with the exceptions noted below,
the staff of the Office of Enforcement are designated as non-decisional
in deliberations by the Commission in this docket. Accordingly,
pursuant to 18 CFR 385.2202 (2012), they will not serve as advisors to
the Commission or take part in the Commission's review of any offer of
settlement. Likewise, as non-decisional staff, pursuant to 18 CFR
385.2201 (2012), they are prohibited from communicating with advisory
staff concerning any deliberations in this docket.
    Exceptions to this designation as non-decisional are:

 Larry D. Gasteiger
 Sean K. Collins
 Justin M. Shellaway
 Jette S. Gebhart
 Erin Mastrangelo
 Benjamin J. Jarrett

    Dated: September 6, 2012.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2012-22399 Filed 9-11-12; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 78, Number 242 (Tuesday, December 17, 2013)]
[Notices]
[Pages 76358-76360]
[FR Doc No: 2013-29895]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71040; File No. SR-Phlx-2013-118]

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

December 11, 2013.
    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 December 2, 2013, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III, below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend Section V of the Pricing Schedule
entitled ``Routing Fees.''
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com/, at the principal
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

 1. Purpose
    The purpose of this filing is to amend the Routing Fees in Section
V of the Pricing Schedule in order to recoup costs the Exchange incurs
for routing and executing certain orders in equity options to away
markets. Today, the Exchange assesses a Non-Customer a $0.95 per
contract Routing Fee to any options exchange. The Customer Routing Fee
for option orders routed to The NASDAQ Options Exchange LLC (``NOM'')
is a $0.05 per contract Fixed Fee in addition to the actual transaction
fee assessed. The Customer Routing Fee for option orders routed to
NASDAQ OMX BX, Inc. (``BX Options'') is $0.00. The Customer Routing Fee
for option orders routed to all other options exchanges \3\ (excluding
NOM and BX Options) is a fixed fee of $0.15 per contract (``Fixed
Fee'') in addition to the actual transaction fee assessed. If the away
market pays a rebate, the Routing Fee is $0.00 per contract.\4\
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    \3\ Including BATS Exchange, Inc. (``BATS''), BOX Options
Exchange LLC (``BOX''), the Chicago Board Options Exchange,
Incorporated (``CBOE''), C2 Options Exchange, Incorporated (``C2''),
International Securities Exchange, LLC (``ISE''), the Miami
International Securities Exchange, LLC (``MIAX''), NYSE Arca, Inc.
(``NYSE Arca''), NYSE MKT LLC (``NYSE Amex'') and Topaz Exchange,
LLC (``Gemini'').
    \4\ For all Routing Fees, the transaction fee will continue to
be based on the away market's actual transaction fee or rebate for
particular market participants and in the case that there is no
transaction fee or rebate assessed by the away market, the Fixed
Fee. A member organization qualifying for a Tier 2, 3 or 4 rebate in
the Customer Rebate Program in Section B of the Pricing Schedule is
entitled to receive a credit equal to the applicable Fixed Fee plus
$0.05 per contract, unless the away market transaction fee is $0.00
or the away market pays a rebate, in which case the member
organization is entitled to receive a credit equal to the applicable
Fixed Fee.
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    The Exchange proposes to increase the Customer Routing Fixed Fee of
$0.15 per contract when an option order is routed to all other
exchanges to $0.20 per contract. With respect to the fixed costs, the
Exchange incurs a fee when it utilizes Nasdaq Options Services LLC
(``NOS''), a member of the Exchange and the Exchange's exclusive order
router.\5\ Each time NOS routes an order to an away market, NOS is
charged a clearing fee \6\ and, in the case of certain exchanges, a
transaction fee is also charged in certain symbols, which fees are
passed through to the Exchange. The Exchange currently recoups clearing
and transaction charges incurred by the Exchange as well as certain
other costs incurred by the Exchange when routing to away markets, such
as administrative and technical costs associated with operating NOS,
membership fees at away markets, Options Regulatory Fees (``ORFs'') and
technical costs associated with routing options. The Exchange assesses
the actual away market fee at the time that the order was entered into
the Exchange's trading system. This transaction fee would be calculated
on an order-by-order basis since different away markets charge
different amounts.
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    \5\ In May 2009, the Exchange adopted Rule 1080(m)(iii)(A) to
establish Nasdaq Options Services LLC (``NOS''), a member of the
Exchange, as the Exchange's exclusive order router. See Securities
Exchange Act Release No. 59995 (May 28, 2009), 74 FR 26750 (June 3,
2009) (SR-Phlx-2009-32). NOS is utilized by the Exchange's fully
automated options trading system, PHLX XL[supreg].
    \6\ The Options Clearing Corporation (``OCC'') assesses $0.01
per contract side.
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    A new market entrant recently adopted an ORF.\7\ The Exchange
proposes to increase its Fixed Fee from $0.15 to $0.20 per contract to
recoup costs associated with increased costs.
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    \7\ Gemini adopted an ORF of $0.0010 per contract. See
Securities Exchange Act Release No. 70200 (August 14, 2013), 78 FR
51242 (August 20, 2013) (SR-Topaz-2013-01).
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    The Exchange also proposes to correct a reference in the Routing
Fees to the Customer Rebate Program which was relocated from Section A
to Section B.

The Exchange believes that amending the Routing Fees to reflect the
correct location of the Customer Rebate Program will add clarity to the
Routing Fees.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Pricing
Schedule is consistent with Section 6(b) of the Act \8\ in general, and
furthers the objectives of Section 6(b)(4) and (b)(5) of the Act \9\ in
particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among members and issuers and
other persons using any facility or system which Phlx operates or
controls, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4), (5).
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    The Exchange believes that the proposed Routing Fees are reasonable
because they seek to recoup costs that are incurred by the Exchange
when routing orders to away markets on behalf of members. Each
destination market's transaction charge varies and there is a cost
incurred by the Exchange when routing orders to away markets. The costs
to the Exchange include clearing costs, administrative and technical
costs associated with operating NOS, membership fees at away markets,
ORFs and technical costs associated with routing options. The Exchange
believes that the proposed Routing Fees would enable the Exchange to
recover the costs it incurs to route orders to away markets in addition
to transaction fees assessed to market participants for the execution
of orders by the away market. Specifically, new entrants have added
costs associated with routing.\10\ The Exchange believes that it is
reasonable to recoup these costs borne by the Exchange on each
transaction. The proposed $0.20 per contract Customer Routing Fixed
Fee, which would be assessed when an option order is routed to all
other exchanges, represents the overall cost to the Exchange for
technical, administrative, clearing, regulatory, compliance and other
costs, in addition to the transaction fee assessed by the away market.
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    \10\ See note 7.
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    In addition, the Exchange believes that it is equitable and not
unfairly discriminatory to assess a $0.20 per contract Customer Routing
Fixed Fee when an option order is routed to all other exchanges because
this fee would be assessed uniformly on all market participants in
addition to the actual transaction fees on all orders routed to non-
NASDAQ OMX markets.
    The Exchange believes that it is equitable and not unfairly
discriminatory to assess a fixed cost of $0.05 per contract to route
orders to NOM and no cost to route orders to BX Options because the
cost, in terms of actual cash outlays, to the Exchange to route to
those markets is lower. For example, costs related to routing to NOM
and BX Options are lower as compared to other away markets because NOS
is utilized by all three exchanges to route orders.\11\ NOS and the
three NASDAQ OMX options (PHLX, BX Options and NOM) markets have a
common data center and staff that are responsible for the day-to-day
operations of NOS. Because the three exchanges are in a common data
center, Routing Fees are reduced because costly expenses related to,
for example, telecommunication lines to obtain connectivity are avoided
when routing orders in this instance. The costs related to connectivity
to route orders to other NASDAQ OMX exchanges are de minimis. When
routing orders to non-NASDAQ OMX exchanges, the Exchange incurs costly
connectivity charges related to telecommunication lines and other
related costs. The Exchange believes it is reasonable, equitable and
not unfairly discriminatory to pass along savings realized by
leveraging NASDAQ OMX's infrastructure. Market participants may submit
orders to the Exchange as ineligible for routing or ``DNR'' to avoid
Routing Fees.\12\ It is important to note that when orders are routed
to an away market they are routed based on price first.\13\
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    \11\ See Chapter VI, Section 11 of the NASDAQ and BX Options
Rules and PHLX Rule 1080(m)(iii)(A).
    \12\ See Rule 1066(h) (Certain Types of Orders Defined) and
1080(b)(i)(A) (PHLX XL and PHLX XL II).
    \13\ PHLX XL will route orders to away markets where the
Exchange's disseminated bid or offer is inferior to the national
best bid (best offer) (``NBBO'') price. See Rule 1080(m). The PHLX
XL II system will contemporaneously route an order marked as an
Intermarket Sweep Order (``ISO'') to each away market disseminating
prices better than the Exchange's price, for the lesser of: (a) The
disseminated size of such away markets, or (b) the order size and,
if order size remains after such routing, trade at the Exchange's
disseminated bid or offer up to its disseminated size. If contracts
still remain unexecuted after routing, they are posted on the book.
Once on the book, should the order subsequently be locked or crossed
by another market center, the PHLX XL II system will not route the
order to the locking or crossing market center, with some exceptions
noted in Rule 1080(m).
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    The Exchange believes its proposal to correct the reference to the
Customer Rebate Program at Section B is reasonable, equitable and not
unfairly discriminatory because it will add clarity to the Pricing
Schedule.

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. The Exchange believes that the
rule change would allow the Exchange to recoup its costs when routing
orders designated as available for routing by the market participant.
Market participants may submit orders to the Exchange as ineligible for
routing or ``DNR'' to avoid Routing Fees.\14\ It is important to note
that when orders are routed to an away market they are routed based on
price first.\15\ Today, other options exchanges also assess similar
fees to recoup costs incurred when routing orders to away markets.\16\
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    \14\ See note 12.
    \15\ See note 13.
    \16\ See Chicago Board of Options Exchange, Incorporated's Fee
Schedule. See NYSE Amex's Fee Schedule.
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    With respect to continuing to route orders to NOM and PHLX at a
lower cost as compared to other away markets, the Exchange does not
believe that the proposed amendments to increase those fees, while
maintaining the same fee differential imposes a burden because all
market participants would be assessed the same fees depending on the
away market. Also, the Exchange is proposing to recoup costs incurred
only when members request the Exchange route their orders to an away
market. The Exchange is passing along savings realized by leveraging
NASDAQ OMX's infrastructure and scale to market participants when those
orders are routed to NOM and PHLX and is providing those savings to all
market participants.

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.\17\ At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is

necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act. If
the Commission takes such action, the Commission shall institute
proceedings to determine whether the proposed rule should be approved
or disapproved.
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    \17\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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-2013-118 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-Phlx-2013-118. 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-2013-118 and should be
submitted on or before January 7, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29895 Filed 12-16-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 68 (Wednesday, April 9, 2014)]
[Notices]
[Pages 19678-19680]
[FR Doc No: 2014-07887]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71857; File No. SR-CBOE-2014-033]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to Exchange Rule 6.25

April 3, 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 April 1, 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 extend a pilot program related to Rule
6.25 (Nullification and Adjustment of Options Transactions). The text
of the proposed rule change is 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'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 this filing is to extend the effectiveness of the
Exchange's current rule applicable to obvious errors. Interpretation
and Policy .06 to Rule 6.25, explained in further detail below, is
currently operating on a pilot program set to expire on April 8, 2014.
The Exchange proposes to extend the pilot program to February 20, 2015.
    On April 5, 2013, the Commission approved, on a pilot basis,
amendments to Exchange Rule 6.25 that stated that options executions
will not be adjusted or nullified if the execution occurs while the
underlying security is in a limit or straddle state as defined by the
Plan. Under the terms of this current pilot program, though options
executions will generally not be adjusted or nullified while the
underlying security is in a limit or straddle state, such executions
may be reviewed by the Exchange should the Exchange decide to do so
under its own motion.
    Pursuant to a comment letter filed in connection with the order
approving the establishment of the pilot, the Exchange committed to
submit monthly data regarding the program.\3\ In addition, the Exchange
agreed to submit an overall analysis of the pilot in conjunction with
the data submitted under the Plan and any other data as requested by
the Commission.\4\ The Exchange now notes that each month, the Exchange
shall provide to the Commission, and the public, a dataset containing
the data for each straddle and limit state in optionable stocks that
had at least one trade on the Exchange.\5\ For each trade on the
Exchange, the Exchange will provide (a) the stock symbol, option
symbol, time at the start of the straddle or limit state, an indicator
for whether it is a straddle or limit state, and (b) for

the trades on the Exchange, the executed volume, time-weighted quoted
bid-ask spread, time-weighted average quoted depth at the bid, time-
weighted average quoted depth at the offer, high execution price, low
execution price, number of trades for which a request for review for
error was received during straddle and limit states, an indicator
variable for whether those options outlined above have a price change
exceeding 30% during the underlying stock's limit or straddle state
compared to the last available option price as reported by OPRA before
the start of the limit or straddle state (1 if observe 30% and 0
otherwise), and another indicator variable for whether the option price
within five minutes of the underlying stock leaving the limit or
straddle state (or halt if applicable) is 30% away from the price
before the start of the limit or straddle state.
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    \3\ See letter from Angelo Evangelou, Associate General Counsel,
Chicago Board Options Exchange, Incorporated, date April 4, 2013.
    \4\ Id.
    \5\ The Exchange also notes that it will be supplying the
Commission this data retroactively from April 2013-March 2014 as
soon as practicable. The Exchange will also provide the Commission
with this data on a monthly basis from March 2014 through the end of
the pilot.
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    In addition, the Exchange will provide to the Commission, no later
than September 30, 2014, assessments relating to the impact of the
operation of the obvious error rules during limit and straddle states
including: (1) An evaluation of the statistical and economic impact of
limit and straddle states on liquidity and market quality in the
options markets, and (2) an assessment of whether the lack of obvious
error rules in effect during the straddle and limit states are
problematic. This data will be submitted under separate cover.
Confidential treatment under the Freedom of Information Act is
requested regarding the analysis.
    The Exchange is now proposing to extend the pilot period until
February 20, 2015. The Exchange believes the benefits to market
participants from this provision should continue on a pilot basis. The
Exchange continues to believe that adding certainty to the execution of
orders in limit or straddle states will encourage market participants
to continue to provide liquidity to the Exchange, and, thus, promote a
fair and orderly market during these periods. Barring this provision,
the provisions of Rule 6.25 would likely apply in many instances during
limit and straddle states. The Exchange believes that continuing the
pilot will protect against any unanticipated consequences in the
options markets during a limit or straddle state. Thus, the Exchange
believes that the protections of current Rule should continue while the
industry gains further experience operating the Plan.
 2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
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
facilitating 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.
---------------------------------------------------------------------------

    In particular, the Exchange further believes that it is necessary
and appropriate in the interest of promoting fair and orderly markets
to exclude transactions executed during a limit or straddle state from
certain aspects of the Exchange Rule 6.25. The Exchange believes the
application of the current rule will be impracticable given the lack of
a reliable NBBO in the options market during limit and straddle states,
and that the resulting actions (i.e., nullified trades or adjusted
prices) may not be appropriate given market conditions. Extension of
this pilot would ensure that limit orders that are filled during a
limit or straddle state would have certainty of execution in a manner
that promotes just and equitable principles of trade, removes
impediments to, and perfects the mechanism of a free and open market
and a national market system. Thus, the Exchange believes that the
protections of the pilot should continue while the industry gains
further experience operating the Plan.

 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 pilot, the proposed
rule change will allow for further analysis of the pilot and a
determination of how the pilot 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.
---------------------------------------------------------------------------

    The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing. The Exchange stated that waiver of this requirement will allow
the Exchange to extend the pilot program prior to its expiration on
April 8, 2014. The Exchange also stated that the proposal will allow
for the least amount of market disruption as the pilot will continue as
it currently does maintaining the status quo. For these reasons, the
Commission believes that the proposed rule change presents no novel
issues and that waiver of the 30-day operative delay is consistent with
the protection of investors and the public interest. Therefore, 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).

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

    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-CBOE-2014-033 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-2014-033. 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-CBOE-2014-033 and should be
submitted on or before April 30, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

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

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-07887 Filed 4-8-14; 8:45 am]
BILLING CODE 8011-01-P