Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend Chapter XV, Section 2 entitled “BX Options Market—Fees and Rebates.” Specifically, the Exchange is proposing to amend Routing Fees. The text of the proposed rule change is available on the Exchange's Web site at
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 purpose of this filing is to amend the Routing Fees in Chapter XV, Section
Today, the Exchange assesses a Non-Customer a $0.95 per contract Routing Fee to any options exchange. The Customer
With respect to the fixed costs, the Exchange incurs a fee when it utilizes Nasdaq Options Services LLC (“NOS”),
The Exchange is proposing to assess market participants routing Customer orders to PHLX and NOM a $0.10 per contract Fixed Fee in addition to the actual transaction fee assessed. Today the Exchange assesses a $0.05 per contract Fixed Fee in addition to the actual transaction fee assessed with respect to Customer orders routed to PHLX and NOM. The Exchange would increase the Fixed Fee for Customer orders routed to PHLX and NOM from $0.05 to $0.10 per contract to recoup an additional portion of the costs incurred by the Exchange for routing these orders.
Similarly, the Exchange is proposing to amend the Customer Routing Fee assessed when routing to all other options exchanges, if the away market pays a rebate, from a $0.00 to a $0.10 per contract Fixed Fee, in order to recoup an additional portion of the costs incurred by the Exchange for routing these orders. The Exchange does not assess the actual transaction fee assessed by the away market, rather the Exchange only assesses the Fixed Fee, because the Exchange would continue to retain the rebate to offset the cost to route orders to these away markets. Today, the Exchange incurs certain costs when routing to away markets that pay rebates. The Exchange desires to recoup additional costs at this time.
BX believes that its proposal to amend its fees is consistent with Section 6(b) of the Act
BX believes that amending the Customer Routing Fee for orders routed to PHLX and NOM from a Fixed Fee of $0.05 to $0.10 per contract, in addition to the actual transaction fee, is reasonable because the Exchange desires to recoup an additional portion of the cost it incurs when routing Customer orders to PHLX and NOM. Today, the Exchange assesses orders routed to PHLX and NOM a lower Fixed Fee for routing Customer orders as compared to the Fixed Fee assessed to other options exchanges. The Exchange is proposing to increase the Fixed Fee to recoup additional costs that are incurred by the Exchange in connection with routing these orders on behalf of its members.
The Exchange believes that continuing to assess lower Fixed Fees to route Customer orders to PHLX and NOM, as compared to other options exchanges, is reasonable as the Exchange is able to leverage certain infrastructure to offer those markets lower fees as explained further below. Similarly, the Exchange believes that amending the Customer Routing Fee to other away markets, other than PHLX and NOM, in the instance the away market pays a rebate from a Fixed Fee of $0.00 to $0.10 per contract, in addition to the actual transaction fee, is reasonable because the Exchange desires to recoup an additional portion of the cost it incurs when routing orders to these away markets. The Fixed Fee for Customer orders is an approximation of the costs the Exchange will be charged for routing orders to away markets. As a general matter, the Exchange believes that the proposed fees for Customer orders routed to markets which pay a rebate would allow it to recoup and cover a portion of the costs of providing optional routing services for Customer orders because it better approximates the costs incurred by the Exchange for routing such orders. While each destination market's transaction charge varies and there is a cost incurred by the Exchange when routing orders to away markets, including OCC clearing costs, administrative and technical costs associated with operating NOS, membership fees at away markets, ORFs and technical costs associated with routing options, the Exchange believes that the proposed Routing Fees will enable it to recover the costs it incurs to route Customer orders to away markets.
The Exchange believes that amending the Customer Routing Fee for orders routed to PHLX and NOM from a Fixed Fee of $0.05 to $0.10 per contract, in addition to the actual transaction fee, is equitable and not unfairly discriminatory because the Exchange would assess the same Fixed Fee to all orders routed to PHLX and NOM in addition to the transaction fee assessed by that market. The Exchange would uniformly assess a $0.10 per contract Fixed Fee to orders routed to NASDAQ OMX exchanges because the Exchange is passing along the saving [sic] realized by leveraging NASDAQ OMX's infrastructure and scale to market participants when those orders are routed to PHLX or NOM and is providing those saving to all market participants. Furthermore, it is important to note that when orders are routed to an away market they are
The Exchange believes that amending the Customer Routing Fee to other away markets, other than PHLX and NOM, in the instance the away market pays a rebate from a Fixed Fee of $0.00 to $0.10 per contract is equitable and not unfairly discriminatory because the Exchange would assess a lower Routing Fee because the Exchange retains the rebate that is paid by that market. These proposals would apply uniformly to all market participants when routing to an away market that pays a rebate, other than PHLX and NOM. Market participants may submit orders to the Exchange as ineligible for routing or “DNR” to avoid Routing Fees.
BX 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 does not believe that the proposal creates a burden on intra-market competition because the Exchange is applying the same Routing Fees to all market participants in the same manner dependent on the routing venue, with the exception of Customers. The Exchange will continue to assess separate Customer Routing Fees. Customers will continue to receive the lowest fees as compared to non-Customers when routing orders, as is the case today. Other options exchanges also assess lower Routing Fees for customer orders as compared to non-customer orders.
The Exchange's proposal would allow the Exchange to continue to recoup its costs when routing Customer orders to PHLX or NOM as well as away markets that pay a rebate when such orders are designated as available for routing by the market participant. The Exchange continues to pass along savings realized by leveraging NASDAQ OMX's infrastructure and scale to market participants when Customer orders are routed to PHLX or NOM and is providing those savings to all market participants. Today, other options exchanges also assess fixed routing fees to recoup costs incurred by the exchange to route orders to away markets.
Market participants may submit orders to the Exchange as ineligible for routing or “DNR” to avoid Routing Fees.
No written comments were either solicited or received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) 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.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.