Daily Rules, Proposed Rules, and Notices of the Federal Government
OCC proposes to reduce the per contract clearing fee for routing trades executed in accordance with the Options Order Protection and Locked/Crossed Market Plan ("Plan") to $.01 per contract.
In its filing with the Commission, OCC 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. OCC has prepared summaries, set forth in sections (A), (B) and (C) below, of the most significant aspects of such statements.
The purpose of this proposed rule change is to amend OCC's Schedule of Fees to set the per contract clearing fee for routing trades executed in accordance with the Plan at $.01 per contract. (Such fee is identified as a "Linkage Fee" on OCC's Schedule of Fees).
OCC calculates clearing fees for valid trades using its fee schedule, which takes into consideration the type of trade, size of the trade, and any new product discounts that may be applicable. In 2009, OCC's participant exchanges created the Plan, which was designed to promote fair markets by ensuring that public customer orders receive the best price available across participating exchanges. If an exchange receiving a customer option order is not at the National Best Bid/Offer ("NBBO"), the exchange will use a private routing broker to send the order to an exchange at the NBBO. Once the order is filled at the away exchange, the routing broker assumes the other side of the trade at the NBBO and fills the original customer order at the originating exchange. The routing broker in this situation essentially has executed a "scratch trade"
Conversely, trades originated by market makers or specialists are eligible for a reduction in fees if they deemed "scratch trades" ("Market Maker/Specialist Scratch Trades"). OCC considers Market Maker/Specialist Scratch Trades to be the same day purchase and sale of identical option contracts in the same quantity and price by a market maker on the same exchange or across exchanges. Such trades are subject to a reduced clearing fee of $.01 per contract in recognition of a market maker's obligation to continuously maintain a fair and orderly market.
In response to a request from its participant exchanges, OCC determined that the same $.01 per contract Market Maker/Specialist Scratch Trade fee should apply to Routed Broker Scratch Trades since the two trades are both "scratch trades" that facilitate fair and orderly markets. OCC proposes to
The changes to OCC's billing system that are necessary to implement the proposed revision to the Schedule of Fees would be installed in 2013. Prior to such installation date, OCC would manually calculate the difference between the clearing fees determined by its billing system for clearly identifiable routing trades versus those provided for in the Schedule of Fees and credit the excess of such fees on a quarterly basis to the clearing member that acts as or otherwise represents the routing broker.
The proposed rule change is consistent with Section 17A of the Securities Exchange Act of 1934, as amended (the "Act"), because it reduces the clearing fee applied to Routed Broker Scratch Trades so that it is equivalent to the rate applied to Market Maker/Specialist Scratch Trades. As a result, the proposed change charges the same fee rate for analogous trades, thereby providing for the equitable application of fees. The proposed rule change is not inconsistent with any rules of OCC, including any other rules proposed to be amended.
OCC does not believe that the proposed rule change would impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
Written comments on the proposed rule change were not and are not intended to be solicited with respect to the proposed rule change and none have been received.
The foregoing rule change has become effective upon filing pursuant to Section 19(b)(3)(A)(ii)
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:
* Use the Commission's Internet comment form (
* Send an email to
* Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
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-OCC-2012-18 and should be submitted on or before November 6, 2012.