[Federal Register Volume 78, Number 136 (Tuesday, July 16, 2013)]
[Notices]
[Pages 42567-42572]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-16935]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69958; File No. SR-Phlx-2013-71]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Eliminate 
Section I Pricing for Select Symbols

July 10, 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 June 26, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to remove its Select Symbols,\3\ along with 
pricing in Section I of the Pricing Schedule entitled ``Rebates and 
Fees for Adding and Removing Liquidity in Select Symbols.''
---------------------------------------------------------------------------

    \3\ The Select Symbols are noted in Section I of the Pricing 
Schedule.
---------------------------------------------------------------------------

    While the changes proposed herein are effective upon filing, the 
Exchange has designated that the amendments be operative on July 1, 
2013.
    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 Exchange proposes to eliminate the current pricing in Section I 
of the Pricing Schedule which is applicable to Select Symbols. The 
Exchange would apply the pricing in Section II entitled ``Multiply 
Listed Options Fees'' \4\ to these Select Symbols in order to attract 
additional order flow to the Exchange.
---------------------------------------------------------------------------

    \4\ This includes options overlying currencies, equities, ETFs, 
ETNS and indexes not listed on another exchange.
---------------------------------------------------------------------------

Section I Select Symbols
    Today, the Exchange applies the pricing in Section I to the 
following Select Symbols: Bank of America Corporation (``BAC''), 
iShares MSCI Emerging Markets Index (``EEM''), SPDR Gold Shares 
(``GLD''), iShares Russell 2000 Index (``IWM''), Microsoft Corporation 
(``MSFT''), PowerShares QQQ (``QQQ''), and Financial Select Sector SPDR 
(``XLF''). Specifically, the Exchange applies the following Simple 
Order and Complex Order Pricing:

[[Page 42568]]



                                                                  Part A--Simple Order
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Customer         Specialist       Market maker          Firm          Broker-dealer     Professional
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rebate for Adding Liquidity.................               N/A             $0.20             $0.20               N/A               N/A               N/A
Fee for Adding Liquidity....................             $0.00              0.10              0.10             $0.45             $0.45             $0.45
Fee for Removing Liquidity..................              0.00              0.45              0.45              0.45              0.45              0.45
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                  Part B--Complex Order
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Customer         Specialist       Market maker          Firm          Broker-dealer     Professional
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fee for Adding Liquidity....................             $0.00             $0.10             $0.10             $0.10             $0.10             $0.10
Fee for Removing Liquidity..................              0.00              0.25              0.25              0.50              0.50              0.50
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The Exchange proposes to eliminate this Section I pricing and 
instead apply the pricing which currently applies to all other Multiply 
Listed Options in Section II of the Pricing Schedule: \5\
---------------------------------------------------------------------------

    \5\ SPY has its own pricing in Section C, which will be renamed 
as new Section I. See Section C of the Pricing Schedule.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Professional        Specialist and market       Broker-dealer               Firm
                                             ------------------------          maker         ------------------------------------------------
                  Customer                                           ------------------------                                                    Floor
                                                          Electronic     Floor    Electronic     Floor    Electronic     Floor    Electronic
--------------------------------------------------------------------------------------------------------------------------------------------------------
Options Transaction Charge (Penny Pilot)....       $0.00       $0.30       $0.25       $0.22       $0.25       $0.45       $0.25       $0.45       $0.25
Options Transaction Charge (non-Penny Pilot)        0.00        0.30        0.25        0.23        0.25        0.60        0.25        0.50        0.25
Options Surcharge in MNX and NDX............         N/A        0.15        0.15        0.15        0.15        0.15        0.15        0.15        0.15
Options Surcharge in BKX....................         N/A        0.10        0.10        0.10        0.10        0.10        0.10        0.10        0.10
Cabinet Options.............................        0.00         N/A        0.10         N/A        0.10         N/A        0.10         N/A        0.10
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The Select Symbols that are being eliminated in Section I are all 
Penny Pilot Options and would be subject to Section II Penny Pilot 
electronic Options Transaction Charges. With respect to Simple and 
Complex Orders, Customers \6\ would continue to not be assessed any 
fees in the Select Symbols with this proposal.
---------------------------------------------------------------------------

    \6\ 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)).
---------------------------------------------------------------------------

    A Professional \7\ that currently pays a $0.45 per contract Simple 
Order Fee for Adding and Removing Liquidity, a $0.10 per contract 
Complex Order Fee for Adding Liquidity and a $0.50 per contract Complex 
Order Fee for Removing Liquidity would now be assessed a $0.30 per 
contract electronic Options Transaction Charge in Penny Pilot Options.
---------------------------------------------------------------------------

    \7\ 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).
---------------------------------------------------------------------------

    A Specialist \8\ and Market Maker \9\ that today receives a Simple 
Order Rebate for Adding Liquidity of $0.20 per contract and pays a 
Simple and Complex Order Fee for Adding Liquidity of $0.10 per 
contract, a $0.45 per contract Simple Order Fee for Removing Liquidity 
and a Complex Order Fee for Removing Liquidity of $0.25 per 
contract,\10\ would now be assessed a $0.22 per contract electronic 
Options Transaction Charge in Penny Pilot Options. There are no rebates 
paid in Section II for Simple Orders.
---------------------------------------------------------------------------

    \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.
    \10\ Today, Complex Order Fees for Removing Liquidity, 
applicable to Specialists and Market Makers, are decreased by $0.02 
per contract when the Specialist or Market Maker transacts against a 
Customer Order directed to that Specialist or Market Maker for 
execution.
---------------------------------------------------------------------------

    A Firm \11\ that currently pays a $0.45 per contract Simple Order 
Fee for Adding and Removing Liquidity, a $0.10 per contract Complex 
Order Fee for Adding Liquidity and a $0.50 per contract Complex Order 
Fee for Removing Liquidity would be now assessed a $0.45 per contract 
electronic Options Transaction Charge in Penny Pilot Options. In 
addition, Firm electronic Options Transaction Charges in Penny Pilot 
Options (and Non-Penny Pilot Options) are reduced to $0.17 per contract 
for a given month provided that a Firm has volume greater than 500,000 
electronically-delivered contracts in a month.
---------------------------------------------------------------------------

    \11\ The term ``Firm'' applies to any transaction that is 
identified by a member or member organization for clearing in the 
Firm range at OCC.

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

[[Page 42569]]

    Finally, a Broker-Dealer \12\ that currently pays a $0.45 per 
contract Simple Order Fee for Adding and Removing Liquidity, a $0.10 
per contract Complex Order Fee for Adding Liquidity and a $0.50 per 
contract Complex Order Fee for Removing Liquidity would now be assessed 
a $0.45 per contract electronic Options Transaction Charge in Penny 
Pilot Options.\13\
---------------------------------------------------------------------------

    \12\ The term ``Broker-Dealer'' applies to any transaction which 
is not subject to any of the other transaction fees applicable 
within a particular category.
    \13\ All market participants, other than Customers, would 
continue to be assessed a $0.15 per contract Options Surcharge on 
options on the one-tenth value of the Nasdaq 100 Index traded under 
the symbol ``MNX'' and options on the Nasdaq 100 Index traded under 
the symbol ``NDX'' and a $0.10 per contract surcharge on options on 
PHLX/KBW Bank Index (``BKX''). Today, all Select Symbols transacted 
on the Exchange's trading floor are assessed the fees in Section II 
with respect to floor transactions.
---------------------------------------------------------------------------

    With this proposal, the Monthly Market Maker Cap \14\ on 
transaction fees that is currently applicable to Market Makers and 
Specialists transacting Multiply Listed Options is applicable to 
electronic transactions in the Section II symbols, except for QCC \15\ 
Transaction Fees. The Monthly Market Maker Cap would now apply to the 
Select Symbols as part of Section II. As is the case today, the Monthly 
Firm Fee Cap \16\ will continue to apply to the Select Symbols as part 
of Section II. Today, Payment for Order Flow (``PFOF'') \17\ fees are 
collected on transactions in the Select Symbols, except when a 
Specialist or Market Maker is also assessed the Simple Order Fee for 
Removing Liquidity, in which case the PFOF fees will not apply. Section 
II symbols are subject to PFOF fees on electronic orders and, with this 
proposal, these Select Symbols.
---------------------------------------------------------------------------

    \14\ Specialists and Market Makers are subject to a ``Monthly 
Market Maker Cap'' of $550,000 for: (i) Electronic and floor Option 
Transaction Charges; (ii) Qualified Contingent Cross (``QCC'') 
Transaction Fees (as defined in Exchange Rule 1080(o) and Floor QCC 
Orders, as defined in 1064(e)); and (iii) fees related to an order 
or quote that is contra to a PIXL Order or specifically responding 
to a PIXL auction. The trading activity of separate Specialist and 
Market Maker member organizations is aggregated in calculating the 
Monthly Market Maker Cap if there is Common Ownership between the 
member organizations. All dividend, merger, short stock interest and 
reversal and conversion strategy executions (as defined in Section 
II) are excluded from the Monthly Market Maker Cap.
    \15\ A QCC Order is comprised of an order to buy or sell at 
least 1000 contracts that is identified as being part of a qualified 
contingent trade, as that term is defined in Rule 1080(o)(3), 
coupled with a contra-side order to buy or sell an equal number of 
contracts. The QCC Order must be executed at a price at or between 
the National Best Bid and Offer (NBBO) and be rejected if a Customer 
order is resting on the Exchange book at the same price. A QCC Order 
shall only be submitted electronically from off the floor to the 
PHLX XL II System. See Rule 1080(o). See also Securities Exchange 
Act Release No. 64249 (April 7, 2011), 76 FR 20773 (April 13, 2011) 
(SR-Phlx-2011-47) (a rule change to establish a QCC Order to 
facilitate the execution of stock/option Qualified Contingent Trades 
(QCT) that satisfy the requirements of the trade through exemption 
in connection with Rule 611(d) of the Regulation NMS).
    \16\ 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) 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.
    \17\ The PFOF program started on July 1, 2005 as a pilot and 
after a series of orders extending the pilot became effective on 
April 29, 2012. See Securities Exchange Act Release No. 52114 (July 
22, 2005), 70 FR 44138 (August 1, 2005) (SR-Phlx-2005-44); 57851 
(May 22, 2008), 73 FR 31177 (May 20, 2008) (SR-Phlx-2008-38); 55891 
(June 11, 2007), 72 FR 333271 (June 15, 2007) (SR-Phlx-2007-39); 
53754 (May 3, 2006), 71 FR 27301 (May 10, 2006) (SR-Phlx-2006-25); 
53078 (January 9, 2006), 71 FR 2289 (January 13, 2006) (SR-Phlx-
2005-88); 52568 (October 6, 2005), 70 FR 60120 (October 14, 2005) 
(SR-Phlx-2005-58); and 59841 (April 29, 2009), 74 FR 21035 (May 6, 
2009) (SR-Phlx-2009-38).
---------------------------------------------------------------------------

    Currently, the Cancellation Fee \18\ for each cancelled 
electronically delivered Professional AON order applies to the Select 
Symbols. The Cancellation Fee does not apply for each cancelled 
electronically delivered Customer order in Select Symbols. With this 
proposal, the application of the Cancellation Fees to the Select 
Symbols would remain the same.
---------------------------------------------------------------------------

    \18\ A Cancellation Fee of $1.10 per order is assessed for each 
cancelled electronically delivered All-or-None (AON) order submitted 
by a Professional in excess of the number of AON orders submitted by 
a Professional executed on the Exchange by a member organization in 
a given month. All AON orders submitted by a Professional from the 
same member organization that are executed in the same series on the 
same side of the market at the same price within a 300 second period 
will be aggregated and counted as one executed AON option order 
submitted by a Professional. A Cancellation Fee is not assessed in a 
month in which fewer than 500 electronically delivered AON orders 
submitted by a Professional are cancelled. A Cancellation Fee will 
not apply to pre-market cancellations or Complex Orders that are 
submitted electronically. A Cancellation Fee is assessed on AON 
orders submitted by a Professional.
---------------------------------------------------------------------------

    As noted above, transactions in the Select Symbols originating on 
the Exchange floor are subject to the Multiply Listed Options Fees in 
Section II. However, today if one side of the transaction originates on 
the Exchange floor and any other side of the trade was the result of an 
electronically submitted order or a quote, then Section I fees apply to 
the transactions which originated on the Exchange floor and contracts 
that are executed electronically on all sides of the transaction. With 
this proposal, Section II pricing would apply to these transactions.
    Today, a non-Complex electronic auction includes the Quote Exhaust 
auction and, for purposes of these fees, the opening process. A Complex 
electronic auction includes, but is not limited to, the Complex Order 
Live Auction (``COLA''). Customer executions that occur as part of a 
Complex electronic auction are assessed $0.00 per contract. Customer 
executions that occur as part of a non-Complex electronic auction are 
assessed $0.00 per contract. Professional, Firm, Broker-Dealer, 
Specialist and Market Maker executions that occur as part of a Complex 
electronic auction are assessed the Fees for Removing Liquidity in 
Section I, Part B. Professional, Firm, Broker-Dealer, Specialist and 
Market Maker executions that occur as part of a non-Complex electronic 
auction are assessed the Fees for Removing Liquidity in Section I, Part 
A. However, during an opening auction a Specialist or Market Maker is 
assessed the Simple Order Fee for Adding Liquidity in Section I if 
contra to a Customer order. With this proposal, the Exchange would 
assess the Options Transaction Charges in Section II with respect to 
non-Complex electronic auctions, Complex electronic auctions and the 
opening process. With this proposal, the QCC Transaction fees and 
rebates, defined in Section II, are and will continue to be applicable 
to the Select Symbols as part of Section II.
    The Exchange also proposes to remove the current reference to 
Section I in the Preface and instead renumber current Section C 
entitled ``Rebates and Fees for Adding Liquidity in SPY'' as new 
Section I. The Exchange proposes to remove references to the Select 
Symbols in the Customer Rebate Program along with Categories C \19\ and 
D \20\ of the Customer Rebate Program,

[[Page 42570]]

which relate to Simple and Complex Orders in Select Symbols. These 
Categories will no longer be relevant with this proposal. All Multiply 
Listed Options in Section II would qualify for either the Category A 
\21\ or B \22\ rebates. The Exchange also proposes to amend Sections II 
and IV \23\ to remove references to Select Symbols and also pricing in 
PIXL \24\ concerning transactions in Select Symbols, as that pricing is 
no longer relevant.
---------------------------------------------------------------------------

    \19\ Category C Rebates are paid to members executing 
electronically-delivered Customer Complex Orders in Select Symbols 
in Section I symbols. Rebates are paid on Customer PIXL Complex 
Orders in Section I symbols that execute against non-Initiating 
Order interest, except in the case of Customer PIXL Complex Orders 
that are greater than 999 contracts. All Customer PIXL Complex 
Orders that are greater than 999 contracts are paid a rebate 
regardless of the contra-party to the transaction.
    \20\ Category D Rebates are paid to members executing 
electronically-delivered Customer Simple Orders in Select Symbols in 
Section I. Rebates are paid on PIXL Orders in Section I symbols that 
execute against non-Initiating Order interest. Rebates are paid on 
Customer PIXL Orders in Section I symbols that execute against non-
Initiating Order interest, except in the case of Customer PIXL Order 
that are greater than 999 contracts. All Customer PIXL Orders that 
are greater than 999 contracts are paid a rebate regardless of the 
contra-party to the transaction.
    \21\ Category A Rebates are paid to members executing 
electronically-delivered Customer Simple Orders in Penny Pilot 
Options and Customer Simple Orders in Non-Penny Pilot Options in 
Section II symbols. Rebates are paid on Customer PIXL Orders in 
Section II symbols that execute against non-Initiating Order 
interest, except in the case of Customer PIXL Orders that are 
greater than 999 contracts. All Customer PIXL Orders that are 
greater than 999 contracts will be paid a rebate regardless of the 
contra-party to the transaction.
    \22\ Category B Rebates are paid to members executing 
electronically-delivered Customer Complex Orders in Penny Pilot 
Options and Non-Penny Pilot Options in Section II symbols. Rebates 
are paid on Customer PIXL Complex Orders in Section II symbols that 
execute against non-Initiating Order interest, except in the case of 
Customer PIXL Complex Orders that are greater than 999 contracts. 
All Customer PIXL Complex Orders that are greater than 999 contracts 
will be paid a rebate regardless of the contra-party to the 
transaction.
    \23\ Today, the Exchange assesses PIXL Pricing based on whether 
the symbol is a Select Symbol in Section I or a Multiply Listed 
Options symbol subject to Section II pricing. See Section IV of the 
Pricing Schedule.
    \24\ PIXL is the Exchange's price improvement mechanism known as 
Price Improvement XL or (PIXL\SM\). See Rule 1080(n).
---------------------------------------------------------------------------

    The Exchange believes that the proposed pricing will enable the 
Exchange to remain competitive.
Monthly Market Maker Cap
    The Exchange also proposes to increase the $0.16 per contract fee 
that today is assessed to Specialists and Market Makers that are on the 
contra-side of an electronically-delivered and executed Customer order; 
and have reached the Monthly Market Maker Cap to $0.17 per contract. 
The Exchange is amending this fee to capture the cost to the Exchange 
of paying a Category B Customer Rebate.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Pricing 
Schedule is consistent with Section 6(b) of the Act \25\ in general, 
and furthers the objectives of Section 6(b)(4) of the Act \26\ in 
particular, in that it provides for an equitable allocation of 
reasonable fees and other charges among Exchange members and other 
persons using its facilities.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78f(b).
    \26\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

Section I Select Symbols
    The Exchange believes that it is reasonable to remove BAC, EEM, 
GLD, IWM, MSFT, QQQ, and XLF from the list of Select Symbols, eliminate 
the pricing in Section I and apply the pricing for Multiply Listed 
Options in Section II to the Select Symbols in order to attract 
additional order flow to the Exchange as result of the new pricing.
    The Exchange believes that it is equitable and not unfairly 
discriminatory to eliminate the list of Select Symbols and Section I 
pricing because the Exchange would uniformly apply Section II pricing 
to all Multiply Listed Options, with the exception of SPY,\27\ to all 
market participants.
---------------------------------------------------------------------------

    \27\ SPY has its own pricing in Section C, which will be renamed 
as new Section I. See Section C of the Pricing Schedule.
---------------------------------------------------------------------------

    Customers would not be assessed Section II Options Transaction 
Charges, including transaction fees related to electronic and non-
electronic Complex auctions. Today, Customers are not assessed 
transaction fees in Section I. With this proposal, a Customer would pay 
a Cancellation Fee for cancelled orders. In addition, with this 
proposal, the Exchange would pay Customers that qualify for the 
Customer Rebate Program the Category A rebates instead of the Category 
D rebates they may qualify for today with respect to the Select 
Symbols. The ability to qualify for Category A rebates would result in 
increased rebates for Customers.\28\
---------------------------------------------------------------------------

    \28\ Simple Order Category A rebates range between $0.12 and 
$0.15 per contract and Category D rebates are $0.08 per contract, 
where applicable. Complex Order Category C rebates are $0.17 per 
contract. With this proposal, Customers transacting Select Symbols 
could qualify for Category B rebates, which are also $0.17 per 
contract where applicable.
---------------------------------------------------------------------------

    A Professional would incur lower fees except for adding liquidity 
in Complex Order where the fee today is $0.10 per contract. Section II 
fees do not distinguish between adding and removing liquidity; the 
Select Symbols would be subject to the electronic Options Transaction 
Charges for Penny Pilot Options regardless of whether the market 
participant was adding or removing liquidity. The Exchange believes 
that it is equitable and not unfairly discriminatory to assess 
Professionals the same Options Transaction Charges for Select Symbols 
that are assessed today for all other Multiply Listed Options symbols, 
except SPY options.
    Specialist and Market Maker fees would increase except with respect 
to removing liquidity, however Specialists and Market Makers would now 
be able to cap their fees because the Monthly Market Maker Cap is 
applicable to Section II symbols. Specialists and Market Makers would 
no longer be entitled to the $0.20 per contract Simple Order Rebate for 
Adding Liquidity. Specialists and Market Makers would also incur 
increased costs during the opening auction. Specialists and Market 
Makers would now be subject to PFOF fees for Simple Orders that remove 
liquidity. The Exchange believes that it is equitable and not unfairly 
discriminatory to assess the Section II Options Transaction Charges to 
Specialists and Market Makers because while certain fees will increase 
and the Exchange would no longer pay Simple Order rebates, Specialists 
and Market Makers will be able to cap fees. Also, Specialists and 
Market Makers will be assessed the same Options Transaction Charges for 
the Select Symbols that are assessed today for all other Multiply 
Listed Options symbols, except SPY options. In addition, PFOF fees will 
apply to Select Symbols similar to the manner in which they apply today 
to Section II symbols.
    Firms would pay the same or lower fees with respect to removing 
liquidity, except where they have volume greater than 500,000 
electronically-delivered contracts in a month, than the fee would be 
reduced.\29\ A Firm would pay more to add liquidity in Complex Orders. 
Firms would continue to have the opportunity to cap their fees with the 
Monthly Firm Fee Cap which is applicable to Section II symbols as it 
was applicable to Section I Select Symbols. The Exchange believes that 
it is equitable and not unfairly discriminatory to assess Section II 
fees to Firms because they will continue to have the ability to cap 
fees and also have the ability to pay a reduced Options Transaction 
Charge when executing a certain amount of volume. Also, Firms will be 
assessed the same Options Transaction Charges for the Select Symbols 
that are assessed today for all other Multiply Listed Options symbols, 
except SPY options.
---------------------------------------------------------------------------

    \29\ Firm electronic Options Transaction Charges in Penny Pilot 
and non-Penny Pilot Options will be reduced to $0.17 per contract 
for a given month provided that a Firm has volume greater than 
500,000 electronically-delivered contracts in a month.
---------------------------------------------------------------------------

    Broker-Dealers would pay the same or lower fees with respect to 
removing liquidity. A Broker-Dealer would pay more to add liquidity in 
Complex Orders. The Exchange believes that it is equitable and not 
unfairly discriminatory to assess Section II fees to Broker Dealers 
because they will be

[[Page 42571]]

assessed the same Options Transaction Charges for the Select Symbols 
that are assessed today for all other Multiply Listed Options symbols, 
except SPY options.
Monthly Market Maker Cap
    The Exchange's proposal to increase the $0.16 per contract fee that 
today is assessed to Specialists and Market Makers that are on the 
contra-side of an electronically-delivered and executed Customer order 
and have reached the Monthly Market Maker Cap to $0.17 per contract is 
reasonable because today the Exchange pays a Customer rebate of $0.17 
for Customer Complex Orders pursuant to Section B of the Pricing 
Schedule. The Exchange is amending this fee to capture the $0.17 per 
contract cost to the Exchange of paying an increased Category B 
Customer Rebate for transactions in Complex Orders. This amendment will 
allow the Exchange to continue to pay certain qualifying Complex Order 
Customer rebates pursuant to the Customer Rebate Program in Section B. 
This fee is only paid once the Monthly Market Maker Cap is exceeded and 
Specialists or Market Makers are not otherwise incurring fees and the 
Specialist or Market Maker is contra to a Customer order.
    The Exchange's proposal to increase the $0.16 per contract fee that 
today is assessed to Specialists and Market Makers that are on the 
contra-side of an electronically-delivered and executed Customer order 
and have reached the Monthly Market Maker Cap to $0.17 per contract is 
equitable and not unfairly discriminatory because all Specialists and 
Market Makers would be uniformly assessed the fee as long as they have 
reached the cap and are contra to an electronically-delivered Customer 
order.

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 its 
proposal to eliminate the Section I pricing applicable to Select 
Symbols and instead assess BAC, EEM, GLD, IWM, MSFT, QQQ, and XLF the 
fees in Section II and subject these Select Symbols to other Section II 
pricing does not impose any undue burden on competition. In most cases, 
market participants will be subject to the same or better pricing. 
There will be no pricing differentials among market participants for 
adding versus removing liquidity. All of these Select Symbols are Penny 
Pilot Options and therefore would be subject a single electronic 
Options Transaction Charge applicable to Penny Pilot Options. The floor 
transaction fees remain unaffected because today Section II pricing 
applies to Select Symbols. Other than options on SPY, which are subject 
to different pricing, all Multiply Listed Options symbols would be 
subject to the pricing in Section II with this proposal.
    With respect to increasing the $0.16 per contract fee that today is 
assessed to Specialists and Market Makers that are on the contra-side 
of an electronically-delivered and executed Customer order and have 
reached the Monthly Market Maker Cap to $0.17 per contract the Exchange 
believes that this proposed amendment will also not impose an undue 
burden on competition. The Exchange will uniformly assess this fee to 
Specialists and Market Makers in limited circumstances.
    The Exchange operates in a highly competitive market, comprised of 
eleven 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 described in the above 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.\30\ 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.
---------------------------------------------------------------------------

    \30\ 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 protected]. Please include 
File Number SR-Phlx-2013-71 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-2013-71. 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-2013-71 and should be 
submitted on or before August 6, 2013.


[[Page 42572]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
---------------------------------------------------------------------------

    \31\ 17 CFR 200.30-3(a)(12).

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-16935 Filed 7-15-13; 8:45 am]
BILLING CODE 8011-01-P