
[Federal Register Volume 80, Number 57 (Wednesday, March 25, 2015)]
[Notices]
[Pages 15850-15857]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-06710]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74531; File No. SR-Phlx-2015-25]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
the Pricing Schedule's Preface and Sections I, II and IV

March 19, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on March 11, 2015, 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to modify the Phlx Pricing Schedule 
(``Pricing Schedule''). Specifically, the Exchange proposes to amend: 
(1) The Preface to the Pricing Schedule to include a reference to a 
Non-Customer; (2) amend the Customer \3\ Simple Order Fee for Removing 
Liquidity in Section I, entitled ``Rebates and Fees for Adding and 
Removing Liquidity in SPY'' as well as certain PIXL \4\ executions in 
options overlying SPY; \5\ (3) amend a Firm \6\ fee in Section II, 
entitled ``Multiply Listed Options Fees,'' \7\ as well as certain 
pricing applicable to Specialists \8\ and Market Makers; \9\ (4) amend 
PIXL pricing in Section IV, Part A entitled ``PIXL Pricing,'' and FLEX 
pricing in Section IV, Part B, entitled ``FLEX Transaction Fees'' of 
the Pricing Schedule.
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    \3\ 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 (``OCC'') which 
is not for the account of broker or dealer or for the account of a 
``professional'' (as that term is defined in Rule 1000(b)(14)).
    \4\ PIXL\SM\ is the Exchange's price improvement mechanism known 
as Price Improvement XL or PIXL. See Rule 1080(n).
    \5\ Options overlying Standard and Poor's Depositary Receipts/
SPDRs (``SPY'') are based on the SPDR exchange-traded fund, which is 
designed to track the performance of the S&P 500 Index.
    \6\ The term ``Firm'' applies to any transaction that is 
identified by a member or member organization for clearing in the 
Firm range at OCC.
    \7\ This includes options overlying equities, exchange traded 
funds (``ETFs''), exchange traded notes (``ETNs'') and indexes which 
are Multiply Listed.
    \8\ A Specialist is an Exchange member who is registered as an 
options specialist pursuant to Rule 1020(a).
    \9\ A ``Market Maker'' includes Registered Options Traders (Rule 
1014(b)(i) and (ii)), which includes Streaming Quote Traders (see 
Rule 1014(b)(ii)(A)) and Remote Streaming Quote Traders (see Rule 
1014(b)(ii)(B)). Directed Participants are also market makers.
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    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.

[[Page 15851]]

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 modify the Pricing Schedule to 
specifically amend the Preface, Section I, entitled ``Rebates and Fees 
for Adding and Removing Liquidity in SPY,'' Section II, entitled 
``Multiply Listed Options Fees,'' and Section IV, Part A, entitled 
``PIXL Pricing'' and Part B entitled ``FLEX Transaction Fees.'' The 
Exchange proposes various amendments to the Pricing Schedule as 
described below.
Preface
    The Exchange proposes to amend the Preface of the Pricing Schedule 
to add a defined term, ``Non-Customer.'' The Exchange proposes to state 
that a Non-Customer refers to transactions for the accounts of 
Specialists, Market Makers, Firms, Professionals,\10\ Broker-Dealers 
\11\ and JBOs.\12\ The Exchange believes that adding this reference to 
the Preface will assist members and member organizations to better 
understand references to the term ``Non-Customer'' in the Pricing 
Schedule when pricing is applied to market participants other than a 
Customer.
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    \10\ The term ``professional'' means any person or entity that 
(i) is not a broker or dealer in securities, and (ii) places more 
than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s). See Rule 
1000(b)(14).
    \11\ The term ``Broker-Dealer'' applies to any transaction which 
is not subject to any of the other transaction fees applicable 
within a particular category.
    \12\ The term ``Joint Back Office'' or ``JBO'' applies to any 
transaction that is identified by a member or member organization 
for clearing in the Firm range at OCC and is identified with an 
origin code as a JBO. A JBO will be priced the same as a Broker-
Dealer. A JBO participant is a member, member organization or non-
member organization that maintains a JBO arrangement with a clearing 
broker-dealer (``JBO Broker'') subject to the requirements of 
Regulation T Section 220.7 of the Federal Reserve System as further 
discussed at Exchange Rule 703.
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Section I Rebates and Fees for Adding and Removing Liquidity in SPY
    The Exchange is proposing to amend the Customer Simple Order Fees 
for Removing Liquidity in Section I applicable to transactions 
overlying SPY. The Exchange currently assesses Customers a $0.43 per 
contract Fee for Removing Liquidity in SPY Simple Orders and 
Specialists, Market Makers, Firms, Broker-Dealers and Professionals are 
assessed a $0.49 per contract Fee for Removing Liquidity in SPY Simple 
Orders. The Exchange is proposing to increase the Customer Fee for 
Removing Liquidity in SPY Simple Orders from $0.43 to $0.44 per 
contract. Despite the increased fee, Customers will continue to be 
assessed a lower Fee for Removing Liquidity in SPY Simple Orders as 
compared to other market participants.
    The Exchange also proposes to amend PIXL fees in SPY in Section I 
of the Pricing Schedule. Today, when a PIXL Order is contra to other 
than the Initiating Order,\13\ the PIXL Order will be 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 contra 
parties to the PIXL Order, other than the Initiating Order, will be 
assessed a Fee for Removing Liquidity of $0.38 per contract or will 
receive the Rebate for Adding Liquidity.\14\ The Exchange is proposing 
to increase the amount that all other contra parties to the PIXL Order, 
other than the Initiating Order, will be assessed to remove liquidity 
from $0.38 to $0.42 per contract. These contra parties will continue to 
be entitled to receive the Rebate for Adding Liquidity, as is the case 
today. Despite, the increase [the Exchange] believes that its current 
SPY PIXL fees remain competitive.
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    \13\ A member may electronically submit for execution an order 
it represents as agent on behalf of a public customer, broker-
dealer, or any other entity (``PIXL Order'') against principal 
interest or against any other order (except as provided in Rule 
1080(n)(i)(E)) it represents as agent (``Initiating Order'') 
provided it submits the PIXL order for electronic execution into the 
PIXL Auction (``Auction'') pursuant to Rule 1080. See Exchange Rule 
1080(n). Non-Initiating Order interest could be a PIXL Auction 
Responder or a resting order or quote that was on the Phlx book 
prior to the auction.
    \14\ The Exchange offers Specialists and Maker Makers a $0.20 
per contract Simple Order Rebate for Adding Liquidity in SPY.
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    For clarity, the Exchange is also proposing to add the word ``Non-
Customer'' to the Pricing Schedule in Section I, when describing all 
other contra parties for purposes of the PIXL Order fees.
Section II--Multiply Listed Options
    The Exchange proposes to continue provide a reduction to the Firm 
Options Transaction fee in Penny Pilot Options \15\ and Non-Penny Pilot 
Options for electronic Simple Orders in Apple Inc. (``AAPL''), Bank of 
America Corporation (``BAC''), iShares MSCI Emerging Markets ETF 
(``EEM''), Facebook, Inc. (``FB''), iShares China Large-Cap ETF 
(``FXI''), iShares Russell 2000 ETF (``IWM''), PowerShares QQQ Trust 
(``QQQ''), Twitter, Inc. (``TWTR''), iPath S&P 500 VIX Short-Term 
Futures ETF (``VXX'') and Financial Select Sector SPDR Fund (``XLF''). 
The current fee of $0.27 per contract, which is discounted as compared 
to the Options Transaction Fee in Section II, will be increased to 
$0.34 per contract. This proposed fee is lower than the $0.48 per 
contract fee Firm electronic Penny Pilot Options Transaction Charge in 
Section II of the Pricing Schedule.\16\ Despite the increase in this 
fee, the Exchange believes that Firms will continue to be incentivized 
to transact volume in these aforementioned symbols as the fee continues 
to be discounted.
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    \15\ The Penny Pilot was established in January 2007 and was 
last extended to June 30, 2015. See Securities and Exchange Release 
No. 73688 (November 25, 2014), 79 FR 71484 (December 2, 2014) (SR-
Phlx-2014-77).
    \16\ See Section II of the Pricing Schedule. AAPL, BAC, EEM, FB, 
FXI, IWM, QQQ, TWTR, VXX and XLF are currently Penny Pilot Options 
(together ``certain Penny Options''). The $0.34 per contract pricing 
proposed herein is symbol specific and will continue to apply to 
these symbols whether or not they are deleted from or added from the 
Penny Pilot Options Program.
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    Currently, Specialists and Market Makers are subject to a ``Monthly 
Market Maker Cap'' of $500,000 for: (i) Electronic and floor Option 
Transaction Charges; and (ii) Qualified Contingent Cross or ``QCC'' 
Transaction Fees.\17\ The trading activity of separate Specialist and 
Market Maker member organizations are aggregated in calculating the 
Monthly Market Maker Cap if there is Common Ownership \18\ between the 
member organizations. All dividend, merger, short stock interest, 
reversal and conversion, jelly roll and box spread strategy executions 
\19\ are excluded from the Monthly Market Maker Cap. Today, Specialists 
or Market Makers that (i) are on the contra-side of an electronically-
delivered and executed Customer order, excluding responses to a PIXL 
auction; and (ii) have reached the Monthly Market Maker Cap are 
currently assessed fees per contract as follows: $0.05 per contract Fee 
for Adding Liquidity in Penny Pilot Options; $0.17 per contract Fee for 
Removing Liquidity in Penny Pilot Options; $0.17 per contract in Non-
Penny Pilot Options; and $0.17 per contract in a non-Complex electronic 
auction, including the Quote Exhaust auction and, for purposes of this 
fee, the opening process. A Complex electronic auction includes, but is 
not limited to, the Complex Order Live Auction

[[Page 15852]]

(``COLA'').\20\ Transactions which execute against an order for which 
the Exchange broadcast an order exposure alert are subject to this fee.
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    \17\ QCC Orders are defined in Exchange Rule 1080(o) and Floor 
QCC Orders are defined in 1064(e)).
    \18\ Common Ownership shall mean members or member organizations 
under 75% common ownership or control.
    \19\ See descriptions of these strategies in Section II of the 
Pricing Schedule.
    \20\ A Complex electronic auction includes, but is not limited 
to, the Complex Order Live Auction (``COLA'').
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    The Exchange proposes to increase the $0.17 per contract Fee for 
Removing Liquidity in Penny Pilot Options to $0.18 per contract; the 
$0.17 per contract in Non-Penny Pilot Options to $0.18 per contract; 
and the $0.17 per contract in a non-Complex electronic auction to $0.18 
per contract, provided a Specialist or Market Maker is on the contra-
side of an electronically-delivered and executed Customer order and has 
reached the Monthly Market Maker Cap. Despite these increases, the 
Exchange believes that Specialists and Market Makers will continue to 
be encouraged to transact orders on the market because the fees are 
still discounted.\21\
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    \21\ Specialists and Market Makers that do not meet the 
requirements specified herein are subject to the Options Transaction 
Charges in Section II of the Pricing Schedule.
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Section IV, Part A--PIXL Pricing
    PIXL pricing for Initiating Orders is located in subsection IV, 
Part A, entitled ``Other Transaction Fees'' of the Pricing Schedule. 
Today, the Initiating Order Fee is $0.07 per contract. If the member or 
member organization qualifies for the Tier 4 or 5 Customer Rebate in 
Section B of the Pricing Schedule, the member or member organization 
will be assessed $0.05 per contract for Simple PIXL Orders and $0.03 
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 discount in Section B of 
the Pricing Schedule will receive the PIXL Initiating Order discount. 
The Initiating Order Fee for Professional, Firm, Broker-Dealer, 
Specialist and Market Maker orders that are contra to a Customer PIXL 
Order is reduced to $0.00 if the Customer PIXL Order is greater than 
399 contracts. Today, for PIXL Order Executions in Section II, Multiply 
Listed Options, when a PIXL Order is contra to a PIXL Auction 
Responder, a Customer PIXL Order will be assessed $0.00 per contract, 
other market participants will be assessed $0.30 per contract in Penny 
Pilot Options or $0.38 per contract in Non-Penny Pilot Options. A 
Responder will be assessed $0.30 per contract in Penny Pilot Options or 
$0.38 per contract in Non-Penny Pilot Options, unless the Responder is 
a Customer, in which case the fee will be $0.00 per contract.
    The Exchange is proposing to amend fees when a PIXL Order is contra 
to a PIXL Auction Responder for Multiply Listed Options. A Customer 
PIXL Order will continue to be assessed $0.00 per contract and other 
market participants will continue to be assessed $0.30 per contract in 
Penny Pilot Options or $0.38 per contract in Non-Penny Pilot Options in 
Multiply Listed Options. The Exchange proposes to continue to assess a 
Responder that is a Specialist or Market Maker a $0.30 per contract fee 
in Penny Pilot Options and an increased $0.40 per contract (today this 
fee is $0.38 per contract) fee in Non-Penny Pilot Options. Other Non-
Customer Responders (Professionals, Firms and Broker-Dealers) will be 
assessed an increased fee in Penny Pilot Options of $0.48 per contract 
and an increased fee of $0.70 per contract in Non-Penny Pilot 
Options.\22\ A Responder that is a Customer will continue to be 
assessed $0.00 per contract in Penny and Non-Penny Pilot Options. 
Despite the increases in certain PIXL fees, the Exchange believes that 
its fee remain competitive.
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    \22\ Today, these market participants are assessed a $0.30 per 
contract Penny Pilot Option fee and a $0.38 per contract Non-Penny 
Pilot Option fee.
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    The Exchange is also proposing to capitalize certain terms for 
consistency within the text of the Pricing Schedule and utilize the 
term ``Non-Customer''.
Section IV, Part B--FLEX Transaction Fees
    The Exchange proposes to amend its FLEX Multiply Listed Options 
pricing in Section IV, Part B, entitled ``FLEX Transaction Fees'' of 
the Pricing Schedule. Customers will continue to be assessed no fee for 
transacting FLEX Options.\23\ Today, all other market participants, 
Professionals, Specialists, Market Makers, Broker-Dealers and Firms, or 
``Non-Customers,'' are assessed a fee of $0.15 per contract when 
transacting FLEX Options.\24\ The Exchange is proposing to increase 
this fee from $0.15 to $0.25 contract. The Exchange will continue to 
apply the Monthly Firm Fee Cap,\25\ Monthly Market Maker Cap, and the 
Options Surcharge in PHLX/KBW Bank Index (``BKX''), options on the one-
tenth value of the Nasdaq 100 Index traded under the symbol MNX 
(``MNX'') and options on the Nasdaq 100 Index traded under the symbol 
NDX (``NDX'') described in Section II.\26\ No other fees described in 
Section II apply to Section IV, B of the Pricing Schedule. The Exchange 
will continue to waive FLEX transaction fees for a Firm executing 
facilitation orders pursuant to Exchange Rule 1064 when such members 
are trading in their own proprietary account. The pricing in Section 
III, entitled ``Singly Listed Options'' will continue to apply to FLEX 
Singly Listed Options, as is the case today.\27\
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    \23\ FLEX options are only executed on the Exchange's trading 
floor and are not executed electronically on the Exchange.
    \24\ FLEX Option fees today are not in addition to Options 
Transaction Charges.
    \25\ Firms are subject to a maximum fee of $75,000 (``Monthly 
Firm Fee Cap''). Firm Floor Option Transaction Charges and QCC 
Transaction Fees, as defined in this section above, 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) are excluded 
from the Monthly Firm Fee Cap. Reversal and conversion strategy 
executions (as defined in Section II) are included in the Monthly 
Firm Fee Cap. QCC Transaction Fees are included in the calculation 
of the Monthly Firm Fee Cap. See Section II Pricing.
    \26\ Today, the Exchange pays an Options Surcharge in BKX of 
$0.10 per contract for all market participants, except Customers. 
Also, the Exchange pays an Options Surcharge in MNX and NDX of $0.20 
per contract for all market participants, except Customers. See 
Section II of the Pricing Schedule.
    \27\ Section III pricing includes options overlying currencies, 
equities, ETFs, ETNs treasury securities and indexes not listed on 
another exchange.
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2. Statutory Basis
    The Exchange believes that its proposal to amend the Pricing 
Schedule is consistent with Section 6(b) of the Act \28\ in general, 
and furthers the objectives of Section 6(b)(4) and (b)(5) of the Act 
\29\ 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 
market participants to whom the Exchange's fees and rebates are 
applicable.
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    \28\ 15 U.S.C. 78f(b).
    \29\ 15 U.S.C. 78f(b)(4), (5).
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Preface
    The Exchange's proposal to amend the Preface of the Pricing 
Schedule to add a defined term, ``Non-Customer'' is reasonable because 
it makes clear what is meant by the term ``Non-Customer,'' which refers 
to transactions for the accounts of Specialists, Market Makers, Firms, 
Professionals, Broker-Dealers and JBOs.
    The Exchange's proposal to amend the Preface of the Pricing 
Schedule to add a defined term, ``Non-Customer'' is equitable and not 
unfairly discriminatory because the addition of the term ``Non-
Customer'' to the Preface

[[Page 15853]]

will provide consistency to the meaning of the term as utilized 
throughout the Pricing Schedule.
Section I--Rebates and Fees for Adding and Removing Liquidity in SPY
    The Exchange's proposal to amend the Customer SPY Simple Order Fees 
for Removing Liquidity in Section I of the Pricing Schedule to increase 
the fee from $0.43 to $0.44 per contract is reasonable because, despite 
the increase, the Exchange believes the fee will continue to encourage 
a greater number of market participants to remove Customer liquidity in 
SPY on Phlx because the proposed rate of $0.44 per contract is lower 
than transactions in SPY at some competitor or affiliated options 
exchanges.\30\ Customer orders bring valuable liquidity to the market 
which liquidity benefits other market participants.
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    \30\ See the NASDAQ Options Market LLC's (``NOM'') pricing at 
Chapter XV of NOM's Rulebook.
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    The Exchange's proposal to amend the Customer SPY Simple Order Fees 
for Removing Liquidity in Section I of the Pricing Schedule to increase 
the fee from $0.43 to $0.44 per contract is equitable and not unfairly 
discriminatory because Customers will continue to be assessed the 
lowest Fees for Removing Liquidity in SPY Simple Orders.\31\ Customer 
liquidity benefits all market participants by providing more trading 
opportunities, which attracts Specialists and Market Makers. An 
increase in the activity of these market participants in turn 
facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants.
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    \31\ Other market participants are assessed a $0.49 per contract 
Fees for Removing Liquidity in SPY Simple Orders.
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    The Exchange's proposal to amend PIXL fees in SPY to increase the 
amount that all other Non-Customer contra parties to the PIXL Order, 
other than the Initiating Order, will be assessed to remove liquidity 
from $0.38 to $0.42 per contract is reasonable because despite the 
increase in the fee, the Exchange believes this pricing will continue 
to incentivize market participants to transact a greater number of SPY 
options. The Exchange will continue to assess no fee when a PIXL Order 
is contra to other than an Initiating Order in SPY. Customers will 
continue to receive a rebate of $0.38 per contract when the PIXL Order 
is contra to other than the Initiating Order. The Exchange is 
increasing the Fee for Removing Liquidity for Non-Customer contra-
parties to the PIXL Order in SPY, other than the Initiating Order, to 
$0.42 per contract, which is still lower than the $0.49 per contract 
Fee for Removing Liquidity that is assessed for Simple Orders in 
SPY.\32\ SPY options are currently the most actively traded options 
class and therefore the Exchange believes that incentivizing Non-
Customers (Professionals, Firms, Broker-Dealers, Specialists and Market 
Makers) to remove liquidity in SPY options by offering a lower rate as 
compared to the $0.49 per contract Simple Order Fee for Removing 
Liquidity in SPY will benefit all market participants by providing 
incentives for price improvement, such as this reduction in the Fee for 
Removing Liquidity.
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    \32\ See Section I of the Pricing Schedule.
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    The Exchange's proposal to amend PIXL fees in SPY to increase the 
amount that all other contra parties to the PIXL Order, other than the 
Initiating Order, will be assessed to remove liquidity from $0.38 to 
$0.42 per contract is equitable and not unfairly discriminatory because 
the Exchange will be assessing the same Fees for Removing Liquidity for 
SPY PIXL options to all Non-Customer market participants provided they 
meet the aforementioned criteria. Customer liquidity benefits all 
market participants by providing more trading opportunities, which 
attracts Specialists and Market Makers. Creating incentives for Non-
Customer market participants to remove liquidity benefits all market 
participants through increased liquidity at the Exchange. A higher 
percentage of SPY Orders in PIXL leads to increased auctions and better 
opportunities for price improvement.
    The Exchange believes that it is reasonable, equitable and not 
unfairly discriminatory to add clarifying rule text to the Pricing 
Schedule with respect to identifying Non-Customers.
Section II--Multiply Listed Options
    The Exchange's proposal to increase the Firm electronic Simple 
Order fee in AAPL, BAC, EEM, FB, FXI, IWM, QQQ, TWTR, VXX and XLF from 
$0.27 to $0.34 per contract is reasonable because it will continue to 
incentivize Firms to send electronic Simple Orders in these symbols to 
the Exchange by offering a rate lower than at other options 
exchanges.\33\ Today Firms pay a discounted fee ($0.27 per contract 
compared to the Firm electronic Multiply Listed Options $0.48 per 
contract fee). Pricing by symbol is a common practice on many U.S. 
options exchanges as a means to incentive order flow to be sent to an 
exchange for execution.\34\
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    \33\ See the NASDAQ Options Market LLC's (``NOM'') pricing at 
Chapter XV of NOM's Rulebook. See also NYSE Arca, Inc. (``NYSE 
Arca'') Fees and Charges. The non-customer remove fee for Penny 
Pilot issues is $0.49 per contract.
    \34\ See International Securities Exchange LLC's (``ISE'') 
Schedule of Fees.
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    The Exchange's proposal to increase the Firm electronic Simple 
Order fee in AAPL, BAC, EEM, FB, FXI, IWM, QQQ, TWTR, VXX and XLF from 
$0.27 to $0.34 per contract is equitable and not unfairly 
discriminatory. The Exchange will continue to assess Firms higher fees 
as compared to Customers.\35\ Customer order flow enhances liquidity on 
the Exchange for the benefit of all market participants and benefits 
all market participants by providing more trading opportunities, which 
attracts Specialists and Market Makers. An increase in the activity of 
these market participants in turn facilitates tighter spreads, which 
may cause an additional corresponding increase in order flow from other 
market participants. Firms will continue to assessed higher Options 
Transaction Charges as compared to Specialists and Market Makers,\36\ 
because Specialists and Market Makers have obligations to the market 
and regulatory requirements, which normally do not apply to other 
market participants.\37\ They have obligations to make continuous 
markets, engage in a course of dealings reasonably calculated to 
contribute to the maintenance of a fair and orderly market, and not 
make bids or offers or enter into transactions that are inconsistent 
with a course of dealings.
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    \35\ Customers do not pay Options Transaction Charges in 
Multiply Listed Options. See Section II of the Pricing Schedule.
    \36\ Specialists and Market Makers are assessed an electronic 
Penny Pilot Options Transaction Charge of $0.22 per contract. See 
Section II of the Pricing Schedule.
    \37\ See Rule 1014 titled ``Obligations and Restrictions 
Applicable to Specialists and Registered Options Traders.''
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    Finally, as proposed, Firms will be assessed a $0.34 per contract 
electronic fee for electronic Simple Orders in these symbols, which is 
a lower fee as compared to Professionals and Broker-Dealers.\38\ The 
Exchange believes that the proposed fee differential between Firms and 
Professionals and Broker-Dealers is equitable and not unfairly 
discriminatory because it is similar to the pricing offered by another 
options exchange.\39\ Moreover, the proposed

[[Page 15854]]

differential does not misalign pricing, in that Firms already benefit 
from certain pricing advantages that Professionals and Broker-Dealers 
do not also enjoy (for example, the Firm Monthly Fee Cap).\40\ The 
proposed fee reduction, which will apply to Firms, but not to 
Professionals and Broker-Dealers, is equitable and not unfairly 
discriminatory for the same reasons that the Firm Monthly Fee Cap which 
applies to Firms and not to Professionals and Broker-Dealers is 
equitable and not unfairly discriminatory. The fee reduction proposed 
herein, like the Monthly Firm Fee Cap, provides an incentive for Firms 
to transact order flow on the Exchange, which order flow brings 
increased liquidity to the Exchange for the benefit of all Exchange 
participants. To the extent the purpose of the proposed Firm fee 
reduction is achieved, all the Exchange's market participants, 
including Professionals and Broker-Dealers, should benefit from the 
improved market liquidity. Further, competitive forces are influencing 
the price reduction in these symbols for Firm orders.
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    \38\ Professionals and Broker-Dealers are assessed a $0.48 per 
contract electronic Penny Pilot Options Transaction Charge, except 
for electronic Complex Orders, which are assessed $0.35 per 
contract. See Section II of the Pricing Schedule.
    \39\ MIAX Options Exchange (``MIAX'') assesses non-member 
Broker-Dealers a $0.45 [sic] per contract standard options 
transaction fee and a Firm is assessed a $0.37 per contract standard 
options transaction fee. See MIAX's Fee Schedule.
    \40\ Firms are subject to a maximum fee of $75,000 (``Monthly 
Firm Fee Cap''). Firm Floor Option Transaction Charges and QCC 
Transaction Fees, 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 of the Pricing Schedule) are excluded from the Monthly 
Firm Fee Cap. Reversal and conversion, jelly roll and box spread 
strategy executions (as defined in Section II) are included in the 
Monthly Firm Fee Cap. QCC Transaction Fees are included in the 
calculation of the Monthly Firm Fee Cap. See Section II of the 
Pricing Schedule.
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    The Exchange desires to incentivize Firms that receive reduced 
rates at other options exchanges to select Phlx as a venue by offering 
competitive pricing to these market participants. Such competitive, 
differentiated pricing exists today on other options exchanges.\41\ The 
Chicago Board Options Exchange, Incorporated (``CBOE'') has a 
differential as between Clearing Trading Permit Holder Proprietary 
participants (the equivalent of Firm on Phlx) and other non-Customer, 
non-market maker participants of $0.10 per contract in electronic Penny 
Pilot Options and $0.25 [sic] per contract in Non-Penny Pilot 
Options.\42\ Further, CBOE assesses Broker-Dealers/Professionals/Non-
Trading Permit Holder Market Makers between $0.35-$0.44 per contract 
for SPX executions (a singly listed CBOE proprietary product) versus 
the Clearing Trading Permit Holder Proprietary (the equivalent of Firm 
on Phlx) who is assessed between $0.25-$0.01 per contract in SPX for a 
maximum differential of $0.43 per contract in a CBOE proprietary 
product.\43\ Phlx's differential as between a Firm on the one hand and 
other non-Customer, non-Specialist/Market Makers on the other is not as 
wide as CBOE's pricing and moreover a competitive offering given 
current pricing differentials on other options exchange such as the 
MIAX \44\ and CBOE.
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    \41\ CBOE assesses a reduced fee to Clearing Trading Permit 
Holder Proprietary (Clearing Trading Permit Holder Proprietary 
clears in the Firm range at The Options Clearing Corporation 
(``OCC'')) participants of $0.35 per contract for electronic Penny 
and Non-Penny Pilot options. CBOE assesses Broker-Dealers/
Professionals/Non-Trading Permit Holder Market Makers a $0.45 per 
contact fee for electronic Penny Pilot Options and a $0.65 per 
contract fee for electronic Non-Penny Pilot Options classes. See 
CBOE's Fee Schedule. Specifically, see note 11 for clearing 
explanation and also Regulatory Circular RG13-038.
    \42\ See CBOE's Fees Schedule.
    \43\ Id.
    \44\ See note 39 above.
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    The Exchange believes there is nothing impermissible about Phlx 
offering a discount solely to a Firm, this practice is consistent with 
the above examples and longstanding differentials between Firms, other 
Broker-Dealers and Professionals. The options exchanges have 
differentiated between: Retail customers and professional customers; 
broker/dealers clearing in the ``Firm'' range at OCC and broker/dealers 
registered as market makers and away market makers; early-adopting 
market makers; and many others. The Commission has also permitted price 
differentiation based on whether an order is processed manually versus 
electronically. The proposal is consistent with previously established 
pricing proposals accepted by the Commission.
    The Exchange believes that amending the fees assessed to 
Specialists and Market Makers that are on the contra-side of an 
electronically-delivered and executed Customer order, excluding 
responses to a PIXL auction, and have reached the Monthly Market Maker 
Cap is reasonable because the Exchange desires to continue to 
incentivize Specialists and Market Makers by offering a discount once 
these conditions are met. While the Exchange is increasing the 
transaction fees which Specialists and Market Makers must pay if they 
are on the contra-side of an electronically-delivered and executed 
Customer order, excluding responses to a PIXL auction and have reached 
the Monthly Market Maker Cap from $0.17 to $0.18 per contract for 
removing liquidity in Penny Pilot Options, Non-Penny Pilot Options and 
in non-Complex electronic auctions, including the Quote Exhaust auction 
and the opening process, the Exchange continues to offer these market 
participants the ability to obtain these lower fees as compared to 
other market participants.
    The Exchange believes that amending the fees assessed to 
Specialists and Market Makers that are on the contra-side of an 
electronically-delivered and executed Customer order, excluding 
responses to a PIXL auction; and have reached the Monthly Market Maker 
Cap is equitable and not unfairly discriminatory because Specialists 
and Market Makers serve an important role on the Exchange with regard 
to order interaction and they provide liquidity in the marketplace. 
Specialists and Market Makers have obligations to the market and 
regulatory requirements, which normally do not apply to other market 
participants.\45\ In addition, the proposed fees would apply only in 
certain circumstances where the Market Maker or Specialist is not 
otherwise subject to transaction fees, because the Monthly Market Maker 
Cap has been reached, and specifically on the contra-side of an 
electronically-delivered Customer order.
---------------------------------------------------------------------------

    \45\ See note 37.
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Section IV, Part A--PIXL Pricing
    The Exchange believes it is reasonable, equitable and not unfairly 
discriminatory to amend the PIXL Fees in Section IV, Part A, when 
responding to a PIXL auction for the below reasons.
    First, with respect to Penny Pilot Options, Specialists and Market 
Makers Responders will continue to be assessed a $0.30 per contract fee 
in Penny Pilot Options. The Exchange is proposing to increase the fee 
from $0.30 to $0.48 per contract for other Non-Customers (Firms, 
Professionals and Broker-Dealers) transacting Penny Pilot Options. The 
differential as between Specialists and Market Makers and other Non-
Customers is reasonable because Specialists and Market Makers are 
assessed a $0.30 per contract Responder fee for Penny Pilot Options 
electronic transactions plus the Payment for Order Flow \46\ for a 
total of fee of $0.55 per contract for responding to auctions involving 
a Customer. PFOF fees are not paid by other market participants. In 
addition, Specialists and Market Makers comprise the majority of PIXL 
Responders on Phlx. Other Non-Customer Responders (Firms, Professionals 
and Broker-Dealers) will

[[Page 15855]]

now be assessed an increased fee of $0.48 per contract rate in Penny 
Pilot Options (today they pay a $0.38 per contract fee) when contra to 
a PIXL Order. The Exchange believes that market participants will 
continue to be encouraged to respond to PIXL auctions, despite the 
increased fees, because the Exchange's Penny Pilot Options fees for 
Responders remain competitive. The proposed Non-Customer fees are lower 
than fees assessed to Non-Customers by other options exchanges.\47\
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    \46\ The Payment for Order Flow (``PFOF'') Program assesses fees 
to Specialists and Market Makers resulting from Customer orders. 
Specialists and Market Makers pat [sic] a $0.25 per contract PFOF 
for Customer Penny Pilot Options orders.
    \47\ See NYSE MKT Inc. (``NYSE Amex'') Fees and Charges. 
Specifically, the RFR Response Penny Pilot Option Fee (Non-Customer) 
is $0.55 per contract for the CUBE auction. CUBE is NYSE Amex's 
electronic price improvement auction for options. This mechanism is 
similar to the PIXL auction. MIAX assesses a Responder to the Prime 
Auction a per contract Penny Pilot fee of $0.45 per contract to all 
market participants (including priority customer). PRIME is MIAX's 
electronic price improvement auction for options. This mechanism is 
similar to the PIXL auction.
---------------------------------------------------------------------------

    The proposed increase of $0.18 per contract (current $0.30 fee, 
which is proposed to be increased to $0.48 per contract) for the Penny 
Pilot Option fee to respond to a PIXL auction for Firms, Professionals 
and Broker-Dealers is equitable and not unfairly discriminatory because 
all Firms, Professionals and Broker-Dealers are treated in a uniform 
manner. These participants will all be subject to this fee of $0.48 per 
contract. Customers will continue to be assessed no fee, as is the case 
today and Specialists and Market Makers will receive lower prices 
because they have obligations to the market and regulatory 
requirements, which normally do not apply to other market participants 
in the continuous market, and as such the Exchange continues to believe 
these market participants (Specialists and Market Makers) should 
receive certain discounts in auctions.\48\
---------------------------------------------------------------------------

    \48\ See note 37.
---------------------------------------------------------------------------

    Second, with respect to Non-Penny Pilot Options fees, while 
Specialists and Market Makers Responders will be assessed an increased 
fee of $0.40 per contract in Non-Penny Pilot Options (today the fee is 
$0.38 per contract), this $0.40 per contract fee will continue to be 
lower as compared to the proposed Non-Penny Pilot Options fee of $0.70 
per contract for other Non-Customer market participants (Firms, 
Professionals and Broker-Dealers). The differential as between 
Specialist and Market Makers and other Non-Customers is reasonable 
because Specialists and Market Makers are assessed the $0.40 per 
contract Responder fee for electronic Non-Penny Pilot Options 
transactions plus the PFOF \49\ for a total fee of $1.10 for responding 
to auctions involving a Customer order. PFOF fees are not paid by other 
market participants. In addition, Specialists and Market Makers 
comprise the majority of PIXL Responders on Phlx. Other Non-Customer 
Responders (Firms, Professionals and Broker-Dealers) will now be 
assessed an increased fee of $0.70 per contract fee in Non-Penny Pilot 
Options (today they pay $0.38 per contract fee) when contra to a PIXL 
Order. These are the same fees that these market participants 
(Professionals, Firms and Broker-Dealers) are assessed today for 
transacting electronic orders in Multiply Listed Non-Penny Pilot 
Options.\50\ In addition, other options exchanges have much higher fees 
for auctions.\51\
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    \49\ Specialists and Market Makers pay PFOF of $0.70 per 
contract for Non-Penny Pilot Options electronic Customer orders. See 
Section II of the Pricing Schedule.
    \50\ See Section II in the Pricing Schedule.
    \51\ See NYSE MKT Inc. (``NYSE Amex'') Fees and Charges. 
Specifically, the RFR Response Non-Penny Pilot Option Fee (Non-
Customer) is $0.90 per contract for the CUBE auction. CUBE is NYSE 
Amex's electronic price improvement auction for options. This 
mechanism is similar to the PIXL auction. MIAX assesses a Responder 
to the Prime Auction a per contract Non-Penny Pilot fee of $0.90 per 
contract to all market participants (including priority customer). 
PRIME is MIAX's electronic price improvement auction for options. 
This mechanism is similar to the PIXL auction.
---------------------------------------------------------------------------

    The proposed increase of $0.32 per contract (current $0.38 fee, 
which is proposed to be $0.70 per contract) for the Non-Penny Pilot 
Option fee to respond to a PIXL auction for Firms, Professionals and 
Broker-Dealers is equitable and not unfairly discriminatory because all 
Firms, Professionals and Broker-Dealers are treated in a uniform 
manner. These market participants will all be subject to this fee of 
$0.70 per contract. Customers will continue to be assessed no fee, as 
is the case today and Specialists and Market Makers have obligations to 
the market and regulatory requirements, which normally do not apply to 
other market participants in the continuous market and as such the 
Exchange continues to believe these market participants (Specialists 
and Market Makers) should receive certain discounts in auctions.\52\ 
The proposed increased fee from $0.38 to $0.40 per contract for 
Specialists and Market Makers in Non-Penny Pilot Options when 
responding to a PIXL auction is equitable and not unfairly 
discriminatory because as noted these market participants have 
obligations to the marketplace.\53\
---------------------------------------------------------------------------

    \52\ See note 37.
    \53\ Id.
---------------------------------------------------------------------------

    The Exchange believes that widening the differential as between the 
Initiating Order Fee and the Specialist or Market Maker contra party to 
the PIXL Order ($0.07 (presuming no discount) vs. $0.40 per contract 
for Non-Penny Pilot Options) as compared to the cost to transact a PIXL 
Order today for a Specialist or Market Maker ($0.07 vs. $0.38 per 
contract) is equitable and not unfairly discriminatory for the reasons 
below. Similarly, the Exchange believes that widening the differential 
as between the Initiating Order Fee and the Professional, Firm or 
Broker-Dealer contra party to the PIXL Order ($0.07 (presuming no 
discount) vs. $0.48 per contract for Penny Pilot Options and $0.70 per 
contract for Non-Penny Pilot Options) as compared to the cost to 
transact a PIXL Order today for a Specialist or Market Maker ($0.07 per 
contract vs. $0.38 per contract) [sic] is equitable and not unfairly 
discriminatory for the reasons below.
    Today, MIAX assesses a Responder to the Prime Auction a per 
contract Penny Pilot fee of $0.45 per contract to all market 
participants (including priority customer) and a Non-Penny Pilot fee of 
$0.90 per contract to all market participants (including priority 
customer). PRIME is MIAX's electronic price improvement auction for 
options.\54\ This mechanism is similar to the PIXL auction. The 
differential for transactions on MIAX today is $0.05 for a Prime Order 
(similar to the Phlx Initiating Order) versus $0.45/$0.90 per contract 
for Penny/Non-Penny Pilot Options. MIAX's differential is equal to or 
substantially greater than Phlx's proposed differential in PIXL.
---------------------------------------------------------------------------

    \54\ See Securities Exchange Act Release No. 72943 (August 28, 
2014), 79 FR 52785 (September 4, 2014) (SR-MIAX-2014-45).
---------------------------------------------------------------------------

    While the proposed fees would increase the differential between 
Non-Customer market participants that initiated the PIXL auction and 
Non-Customer market participants responding to the PIXL auction, the 
Exchange believes that despite the fee differential market participants 
will continue to be encouraged to transact a greater number of PIXL 
Orders because the fees are competitive with or similar to those 
offered at competing options exchanges. The Exchange believes that it 
is reasonable, equitable and not unfairly discriminatory to add 
clarifying rule text to the Pricing Schedule with respect to 
identifying Non-Customers.
Section IV, Part B--FLEX Transaction Fees
    The Exchange's proposal to increase the FLEX Transaction Fees for 
Multiply

[[Page 15856]]

Listed Options for Professionals, Specialists, Market Makers, Broker-
Dealers and Firms from $0.15 to $0.25 per contract is reasonable 
because the proposed per contract fee would be the same as other fees 
assessed to Non-Customers, except Specialists and Market Makers, for 
transaction executed on the trading floor.\55\ FLEX Options are 
transacted on the Exchange's trading floor and the process is not 
automated. Exchange staff processes requests for FLEX Orders and the 
costs associated with the Exchange's trading floor have risen over the 
years. The Exchange believes that this increase will assist the 
Exchange in offsetting costs while keeping such costs competitive with 
other markets. Customers will continue to not be assessed a Flex 
Transaction Fee for transactions in Multiply Listed Options.
---------------------------------------------------------------------------

    \55\ Specialists and Market Makers are assessed $0.30 per 
contract for transactions executed on the trading floor, except in 
FLEX Options. Professionals, Broker-Dealers and Firms pay $0.25 per 
contract floor Options Transaction Charges. See Section II of the 
Pricing Schedule.
---------------------------------------------------------------------------

    The Exchange's proposal to increase the FLEX Transaction Fees for 
Multiply Listed Options for Professionals, Specialists, Market Makers, 
Broker-Dealers and Firms from $0.15 to $0.25 per contract is equitable 
and not unfairly discriminatory because the Exchange is assessing the 
same fees for FLEX transactions in Multiply Listed Options to all 
market participants, except Customers. Customers traditionally are not 
assessed transaction fees because Customer orders bring valuable 
liquidity to the market. The Exchange believes that the cost to 
transact FLEX Options remains competitive with costs at other options 
Exchanges.\56\
---------------------------------------------------------------------------

    \56\ See CBOE's Fees Schedule.
---------------------------------------------------------------------------

    The Exchange believes that utilizing the new term ``Non-Customer'' 
in the FLEX pricing as opposed to Professionals Specialists, Market 
Makers, Broker-Dealers and Firms is reasonable, equitable and not 
unfairly discriminatory because it adds greater 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's proposal to add 
the term ``Non-Customer'' to the Preface of the Pricing Schedule does 
not impose an undue burden on competition.
    The Exchange's proposal to increase the Simple Order Customer Fee 
for Removing Liquidity in SPY does not misalign the fees related to 
Customer as compared to Non-Customer orders. Today, Customers have 
lower fees because Customer liquidity benefits all market participants 
by providing more trading opportunities, which attracts Specialists and 
Market Makers. An increase in the activity of these market participants 
in turn facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants.
    The Exchange's proposal to amend the SPY PIXL fees to increase the 
fees applicable to Non-Customers that are contra to a PIXL Order, other 
than the Initiating Order, when removing liquidity does not impose any 
undue burden on competition as all market participants, except 
Customers will be assessed the same increased fee. Customer orders 
bring valuable liquidity to the market.
    The Exchange's proposal to increase the Firm electronic Simple 
Order fee from $0.27 to $0.34 per contract in AAPL, BAC, EEM, FB, FXI, 
IWM, QQQ, TWTR, VXX and XLF will not impose an unnecessary or 
inappropriate burden on competition because the proposed $0.34 per 
contract fee assessed to Firms, which is lower than fees assessed 
Professionals and Broker-Dealers, is similar to rates offered by other 
options exchanges.\57\ Firms will continue to pay higher Options 
Transaction Charges as compared to Customers, who bring liquidity to 
the market, and Specialists and Market Makers, who have 
obligations.\58\ Finally, as proposed, Firms will be assessed a $0.34 
per contract electronic fee for electronic Simple Orders in these 
symbols, which is a lower fee as compared to Professionals and Broker-
Dealers.\59\ The Exchange believes that the proposed fee differential 
between Firms and Professionals and Broker-Dealers is equitable and not 
unfairly discriminatory because it is similar to the pricing offered by 
another options exchange.\60\ Moreover, the proposed differential does 
not misalign pricing with respect to Professionals and Broker-Dealers 
because Firms already benefit from certain pricing advantages that 
Professionals and Broker-Dealers do not also enjoy (for example, the 
Firm Monthly Fee Cap).\61\ The proposed fee reduction, which will apply 
to Firms, but not to Professionals and Broker-Dealers, does not impose 
an undue burden on competition because the fee reduction provides an 
incentive for Firms to transact order flow on the Exchange, which order 
flow brings increased liquidity to the Exchange for the benefit of all 
Exchange participants. To the extent the purpose of the proposed Firm 
fee reduction is achieved, all the Exchange's market participants, 
including Professionals and Broker-Dealers, should benefit from the 
improved market liquidity. Further, competitive forces are influencing 
the price reduction in these symbols for Firm orders.
---------------------------------------------------------------------------

    \57\ See the NASDAQ Options Market LLC's (``NOM'') pricing at 
Chapter XV of NOM's Rulebook.
    \58\ See note 37.
    \59\ Professionals and Broker-Dealers are assessed a $0.48 per 
contract electronic Penny Pilot Options Transaction Charge, except 
for electronic Complex Orders, which are assessed $0.35 per 
contract. See Section II of the Pricing Schedule.
    \60\ See note 39.
    \61\ See Section II of the Pricing Schedule.
---------------------------------------------------------------------------

    The Exchange's proposal for Specialists and Market Makers to pay 
certain reduced fees after they have satisfied the obligations related 
to the Monthly Market Maker Cap, in all Penny Pilot Options, provided 
they have added liquidity, if they are on the contra-side of an 
electronically-delivered and executed Customer order, excluding 
responses to a PIXL auction does not provide an undue burden on 
competition. As noted above Specialists and Market Makers have 
burdensome quoting obligations to the market that do not apply to 
Customers, Professionals, Firms and Broker-Dealers.\62\ Specialists and 
Market Makers serve an important role on the Exchange with regard to 
order interaction and they provide liquidity in the marketplace. The 
proposed differentiation as between Specialists and Market Makers as 
compared to other market participants recognizes the differing 
contributions made to the trading environment on the Exchange by these 
market participants. For these reasons noted above, the Exchange does 
not believe that offering Specialists and Market Makers the opportunity 
to cap fees in certain symbols imposes an undue burden on competition.
---------------------------------------------------------------------------

    \62\ See note 37.
---------------------------------------------------------------------------

    The Exchange's proposal to increase PIXL Auction Responder fees for 
Specialists and Market Makers from $0.38 to $0.40 per contract in Non-
Penny Pilot Options and for Professionals, Firms and Broker-Dealers 
from $0.30 to $0.48 per contract in Penny Pilot Options and from $0.38 
to $0.70 per contract in Non-Penny Pilot Options does not create an 
undue burden on competition because all Professionals, Broker-Dealers 
and Firms are being treated in a uniform manner and the proposed rates 
are lower than the fees assessed at MIAX and NYSE

[[Page 15857]]

Amex when responding to a price improvement auction.\63\ With respect 
to Specialists and Market Makers, these market participants are 
assessed PFOF when contra to an electronically-delivered Customer 
order, while other market participants are not assessed such fees.\64\ 
The Exchange does not believe the pricing changes will provide a 
competitive advantage for Specialists and Market Makers as compared to 
other Non-Customer market participants (i.e., Professionals, Broker-
Dealers and Firms), with respect to intra-market competition. 
Specialists and Markets would continue to be assessed lower rates as 
compared to these market participants. Further, with respect to inter-
market competition, the Exchange believes that the proposed change will 
enhance the competiveness of the Exchange relative to other exchanges 
that offer their own electronic crossing mechanism. Other market 
participants will pay the same Options Transaction Charges as they pay 
today for all other Multiply Listed Options transactions that are not 
transacted within the PIXL auction.
---------------------------------------------------------------------------

    \63\ See notes 47 and 51.
    \64\ See Section II of the Pricing Schedule.
---------------------------------------------------------------------------

    The Exchange's proposal to increase the FLEX Transaction Fees for 
Multiply Listed Options for Professionals, Specialists, Market Makers, 
Broker-Dealers and Firms from $0.15 to $0.25 per contract does not 
create an undue burden on competition because the Exchange is assessing 
the same fees for FLEX transactions in Multiply Listed Options on all 
market participants, except Customers. Customers traditionally are not 
assessed transaction fees because Customer orders bring valuable 
liquidity to the market.
    The Exchange operates in a highly competitive market, comprised of 
twelve exchanges, in which market participants can easily and readily 
direct order flow to competing venues if they deem fee levels at a 
particular venue to be excessive or rebates to be inadequate. 
Accordingly, the fees that are assessed and the rebates paid by the 
Exchange, as described in the proposal, are influenced by these robust 
market forces and therefore must remain competitive with fees charged 
and rebates paid by other venues and therefore must continue to be 
reasonable and equitably allocated to those members that opt to direct 
orders to the Exchange rather than competing venues.

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.\65\ 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.
---------------------------------------------------------------------------

    \65\ 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 rule-comments@sec.gov. Please include 
File Number SR-Phlx-2015-25 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2015-25. 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 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-Phlx-2015-25, and should be 
submitted on or before April 15, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\66\
---------------------------------------------------------------------------

    \66\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-06710 Filed 3-24-15; 8:45 am]
 BILLING CODE 8011-01-P


