Daily Rules, Proposed Rules, and Notices of the Federal Government
The text of the proposed rule change is available on the Exchange's Web site (
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.
The Exchange proposes to amend its Fees Schedule. The Exchange is changing fees for functionality related to its PULSe workstation. The fees herein will be effective on February 10, 2017.
By way of background, the PULSe workstation is a front-end order entry system designed for use with respect to orders that may be sent to the trading systems of the Exchange. Exchange Trading Permit Holders ("TPHs") may also make workstations available to their customers, which may include TPHs, non-broker dealer public customers and non-TPH broker dealers.
Financial Information eXchange ("FIX") language-based connectivity, upon request, provides customers (both TPH and non-TPH) of TPHs that are brokers and PULSe users ("PULSe brokers") with the ability to receive "drop-copy" order fill messages from their PULSe brokers. These fill messages allow customers to update positions, risk calculations and streamline back-office functions.
The Exchange is proposing reducing the monthly fee to be assessed on TPHs who are either receiving or sending drop copies via a PULSe workstation. Whether the drop copy sender or receiver is assessed the fee is dependent upon whether the customer receiving the drop copies is a TPH or non-TPH.
If a customer receiving drop copies is a TPH, that TPH customer (the receiving TPH) will now be charged a fee of $425 per month (down from $1000 per month), per PULSe broker from whom it receives drop copies via PULSe. For example, if TPH customer A receives drop copies from each of PULSe broker A, PULSe broker B, and PULSe broker C (all of which are TPHs), TPH A (the receiving TPH) will be charged a fee of $1275 per month for receiving drop copies via PULSe from PULSe brokers A, B and C (the sending TPHs).
If a customer receiving drop copies is a non-TPH, the PULSe broker (the sending TPH) who sends drop copies via PULSe to that customer will now be charged a fee of $400 per month (down from $500 per month). If that PULSe broker sends drop copies via PULSe to multiple non-TPH customers, the PULSe broker will be charged the fee for each customer. For example, if PULSe broker A sends drop copies via its PULSe workstation to each of non-TPH customer A, non-TPH customer B and non-TPH customer C, PULSe broker A (the sending TPH) will be charged a fee of $1200 per month for drop copies it sends via PULSe to non-TPH customers A, B and C (the receiving non-TPHs).
The Exchange is proposing to change the name of its fee relating to OATS Reports to "Equity Order Reports". The Equity Order Reports related to this fee are provided for PULSe users' own use. Electing to receive these reports does not currently and will not fulfill any PULSe users' OATS reporting obligations. The change will eliminate any potential confusion as to whether the Exchange itself or the PULSe system is able to fulfill any OATS reporting obligation for a PULSe user. Neither the content of the reports nor the manner in which they are received from PULSe is changing.
Lastly, the Exchange proposes to add a reference to Footnote 41 in the SPX Liquidity Provider Sliding Scale ("SPX LP Sliding Scale") table. Particularly, the Exchange notes that when it adopted the SPX LP Sliding Scale, it had appended a reference to Footnote 41 in the rate table for Underlying Symbol List A products under the Market-Maker fees section for SPX, SPXW and SPXPM (which references the SPX LP Sliding Scale), but had inadvertently not appended the Footnote to the new SPX LP Sliding Scale table itself. As such, the Exchange proposes to append Footnote 41 to the SPX Liquidity Provider Sliding Scale Table to clarify its applicability. The Exchange notes no substantive changes are being made by this change, rather the Exchange merely seeks to add further clarification and alleviate potential confusion.
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the "Act") and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
The Exchange believes that lowering the $1000 per month fee to $425 per month on a TPH receiving drop copies from PULSe is reasonable because the reduced fee will continue to allow the Exchange to monitor, develop and implement upgrade, maintain and customize PULSe to ensure the TPH customer receives timely and accurate drop copies while also reducing TPH customers' costs. The Exchange believes the fee is equitable and not unfairly discriminatory because the monthly fee is assessed to any TPH electing to receive drop copies from a PULSe broker. Use of the drop copy functionality by a TPH customer is voluntary.
The Exchange believes that lowering the $500 per month fee to $400 per month on a TPH sending drop copies from PULSe to a non-TPH customer is reasonable because the reduced fee will continue to allow the Exchange to monitor, develop and implement upgrades, maintain and customize PULSe to ensure a non-TPH customer receives timely and accurate drop copies while also reducing the sending TPH's costs. The Exchange believes the fee is equitable and not unfairly discriminatory because the monthly fee is assessed equally to any TPH sending drop copies to its non-TPH customers. The Exchange believes that assessing a TPH sending drop copies to a non-TPH a monthly fee of $400, as opposed to the $425 per month rate assessed to TPH customers receiving drop copies from PULSe, is reasonable, equitable, and not unfairly discriminatory. Specially, the lower rates are designed to encourage non-TPH market participants to interact with the Exchange, which will accordingly attract more volume and liquidity to the Exchange and benefit all Exchange participants through increased opportunities to trade. Use of the drop copy functionality by a non-TPH customer is voluntary.
The Exchange believes that changing the name of the "OATS reports" fee to "Equity Order Reports" alleviates potential confusion and maintains clarity in the Fees Schedule, which removes impediments to and perfects the mechanism of a free and open market and a national market system, and, in general, protects investors and the public interest.
The Exchange believes adding a reference to Footnote 41 in the SPX LP Sliding Scale table alleviates potential confusion and maintains clarity in the Fees Schedule, which removes impediments to and perfects the mechanism of a free and open market and a national market system, and, in general, protects investors and the public interest.
The Exchange does not believe that the proposed rule changes will impose any burdens on competition that are not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed PULSe-related fees relate to optional reports and/or functionality and are assessed equally on PULSe users or TPH electing to use the functionality and/or receive the reports. The Exchange does not believe that the proposed change will cause any unnecessary burden on intermarket competition because the proposed fees relate to use of an Exchange-provided order entry system. To the extent that any proposed change makes the Exchange a more attractive marketplace for market participants at other exchanges, such market participants are welcome to become Exchange market participants.
The Exchange neither solicited nor received comments on the proposed rule change.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
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 Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.