[Federal Register Volume 75, Number 152 (Monday, August 9, 2010)]
[Notices]
[Pages 47869-47871]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19607]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62632; File No. SR-BX-2010-049]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Fee Schedule of the Boston Options Exchange Facility
August 3, 2010.
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 July 16, 2010, NASDAQ OMX BX, Inc. (the ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the self-regulatory organization. The Exchange filed
the proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the
Act,\3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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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 Fee Schedule of the Boston
Options Exchange Group, LLC (``BOX''). The text of the proposed rule
change is available from the principal office of the Exchange, at the
Commission's Public Reference Room and also on the Exchange's Internet
Web site at http://nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings/.
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 these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in Sections A, B, and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
(a) Changes to Trading Fees:
The BOX Fee Schedule currently lists certain execution fees as
`standard' trading fees, meaning that these execution fees are not
dependent upon whether the transaction added or removed liquidity on
BOX.\5\ These standard fees, specifically within Sections 1-3 of the
BOX Fee Schedule, are applicable to certain Public Customer PIP
Improvement Orders,\6\ Broker Dealer proprietary accounts and Market
Maker accounts, respectively. The standard fees are currently set at
$0.20 per contract executed for Broker Dealer proprietary accounts and
Market Maker accounts. The Exchange proposes to make the following
adjustments to trading fees effective Monday, July 19, 2010; with the
exception of the Public Customer Trading Fees, which will be effective
August 1, 2010:
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\5\ See Section 7 of the BOX Fee Schedule which sets forth any
applicable `liquidity fees and credits'.
\6\ According to Section 1 of the BOX Fee Schedule a Public
Customer is charged $0.15 per executed contract of an Improvement
Order on its behalf in the PIP where that order is not submitted as
a Customer PIP Order (``CPO'') whereby it is labeled as a ``non-
CPO''.
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Public Customer Trading Fees
The Exchange proposes to amend Section 1 of the BOX Fee Schedule
relating to standard transaction fees applicable to Public Customers.
Currently, except for non-CPO, there are no standard trading fees for
any Public Customer Orders which may be executed on BOX, including CPOs
and Public Customer Orders on the Book.\7\ The Exchange proposes to add
to the standard transaction fees for Public Customer accounts a $0.25
per executed contract charge for a Primary Improvement Order for a
Public Customer and, effective August 1, 2010, for all non-PIP
transactions, a $0.10 charge per executed contract.\8\
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\7\ Applicable charges and credits described in Section 7 of the
BOX Fee Schedule also apply to Public Customer Orders.
\8\ The above fees are in addition to any applicable charges and
credits described in Section 7 of the BOX Fee Schedule.
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Fees and Charges to SPY, QQQQ, and IWM
Currently, the standard fee for transactions in the Exchange Traded
Fund Shares (``ETFs'') Standard & Poor's Depositary Receipts[reg]
(``SPY''), Powershares[reg] QQQ Trust Series 1 (``QQQQ'') and iShares
Russell 2000[reg]
[[Page 47870]]
Index Fund (``IWM'') are set at $0.10 per contract for Broker Dealers
and at $0.05 per contract for BOX Market Makers. In addition, the
credits and fees of Section 7 of the BOX Fee Schedule currently apply
equally for these three classes at $0.05 for both the fees and credits.
The Exchange proposes to remove the different fees for transactions in
SPY, QQQQ, and IWM throughout the BOX Fee Schedule so that transactions
in these three classes will no longer be treated separately from other
classes.
Transactions in the PIP
Currently, the standard fee for transactions within the PIP,
including transactions in SPY, QQQQ and IWM, is set at $0.20 per
contract, both for Broker Dealers and for BOX Market Makers. The
Exchange proposes to amend Sections 2 and 3 to raise the standard
transaction fee for PIP executions from $0.20 to $0.25 both for Broker
Dealers and for BOX Market Makers.
Fees and Credits in Section 7
Currently, the existing credits and fees within Section 7 for
transactions in the PIP are $0.15. These credits and fees apply equally
to all account types, whether Public Customer, Broker Dealer or Market
Maker and are in addition to any applicable trading fees, as described
in Sections 1 through 3 of the BOX Fee Schedule. The Exchange proposes
to increase the existing credits and fees within Section 7 for
transactions in the PIP, from $0.15 to $0.25.
Currently, the volume discount for the fees charged to Initiating
Participants only applies to executions in PIP auctions initiated by
the particular Initiating Participant which occur at a price at least
better than the NBBO and after a threshold average daily volume
(``ADV'') of 50,000 contracts per month is reached. Any PIP executions
of the Initiating Participant above this threshold receive a $0.05
discount. The Exchange proposes to replace the volume discount with a
per contract execution fee based upon a tiered fee schedule to apply to
executions in PIP auctions initiated by the particular Initiating
Participant.\9\ Each Initiating Participant's ADV for executions in PIP
auctions will be calculated. All PIP executions by the Initiating
Participant for that month will be charged the same per contract fee
according to the respective PIP auction ADV pursuant to the following
table:
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\9\ This tiered fee schedule shall apply to the standard
transaction fee for PIP trades charged to Public Customers pursuant
to Section 1(b), Broker-Dealers pursuant to Section 2(a) or Market
Makers pursuant to Section 3(a) of the Fee Schedule. For example, a
Broker-Dealer Primary Improvement Order submitted by an Initiating
Participant who has reached the highest ADV tier of over 150,001
contracts executed in PIP auctions for the month will be charged a
$0.10 standard transaction fee plus a provide liquidity fee of
$0.25, for a total fee of $0.35 on his Primary Improvement Order.
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Average daily volume for initiating participant Fee per contract
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ADV of 150,001 contracts and greater................. $0.10
ADV of 100,001 contracts to 150,000 contracts........ 0.12
ADV of 50,001 contracts to 100,000 contracts......... 0.15
ADV of 20,001 contracts to 50,000 contracts.......... 0.17
ADV of 0 contracts to 20,000 contracts............... 0.25
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This proposed tiered fee schedule is designed to incent BOX
Participants to submit their Public Customer Orders into the PIP for
the possibility of price improvement. As a BOX Participant's monthly
PIP initiated trading volume increases, the per-contract fee that an
Initiating Participant is charged for such executions is decreased.
2. Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\10\ in general, and Section
6(b)(5) of the Act,\11\ in particular, as well as Section 6(b) of the
Act,\12\ in general, and Section 6(b)(4) of the Act,\13\ in particular,
in that it provides for the equitable allocation of reasonable dues,
fees, and other charges among its members and issuers and other persons
using its facilities. In particular, the proposed change will allow the
fees charged on BOX to remain competitive with other exchanges as well
as apply such fees in a manner which is equitable based upon the
particular account type, e.g. Public Customer, Market Maker or Broker
Dealer, for which such transactions are executed. The obligations of
Public Customers, Market Makers on BOX and Brokers Dealers that execute
transactions on BOX are different. For example, BOX Market Makers must
maintain active two-sided markets in options classes to which they are
assigned and also have certain restrictions regarding trading activity
in classes outside of their assignment, both of which do not apply to
Public Customers or Broker Dealers on BOX.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received comments on the
proposed rule change.
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 Exchange Act \14\ and Rule 19b-4(f)(2)
thereunder,\15\ because it establishes or changes a due, fee, or other
charge applicable only to a member.
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\14\ 15 U.S.C. 78s(b)(3)(A)(ii).
\15\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may abrogate the rule change if it
appears to the Commission that the action is necessary or appropriate
in the public interest, for the protection of investors, or would
otherwise further the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
[[Page 47871]]
Electronic Comment
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-BX-2010-049 on the subject line.
Paper Comment
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-BX-2010-049. This file
number should be included on the subject line if e-mail 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, located at 100 F
Street, NE., Washington, DC 20549, on official business days between
the hours of 10 a.m. and 3 p.m. Copies of such filing also will be
available for inspection and copying at the principal office of the
Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-BX-
2010-049 and should be submitted on or before August 30, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19607 Filed 8-6-10; 8:45 am]
BILLING CODE 8010-01-P