Federal Register / Vol. 76, No. 43 / Friday, March 4, 2011 / Notices 12169 

44 17 CFR 240.19b–4(f)(6)(iii). 

45For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule change’s impact on efficiency, 

competition, and capital formation. 15 U.S.C. 78c(f). 

46 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),44 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Commission hereby grants 

the request.45 Waiving the 30-day 

operative delay will allow the Exchange 

to implement the proposed amendments 

by February 28, 2011, which, as noted 

by the Exchange, is the compliance date 

for amendments to Regulation SHO 

under the Act. By waiving the operative 

delay, the Exchange will be able to 

comply with the amendments to 

Regulation SHO by February 28, 2011. 

Therefore, the Commission believes it is 

consistent with the protection of 

investors and the public interest to 

waive the 30-day operative delay and 

designates the proposal as operative 

upon filing. 

At any time within 60 days of the 

filing of such 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. 

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSE–2011–05 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–NYSE–2011–05. This file 

number should be included on the 

subject line if e-mail 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 20549–1090. Copies of 

the filing will also be available for 

inspection and copying at the NYSE’s 

principal office and on its Internet Web 

site at http://www.nyse.com. 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–NYSE–2011–05 and should 

be submitted on or before March 25, 

2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.46

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–4895 Filed 3–3–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63985; File No. SR–Phlx– 

2011–23] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NASDAQ 

OMX PHLX LLC Relating to Clarifying 

Changes to Rules 607 and 3202 

Concerning the Application and 

Collection of the Covered Sale Fee 

February 28, 2011. 

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 February 

16, 2011, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to make 

clarifying changes to Rules 607and 3202 

concerning the application and 

collection of the Covered Sale Fee. 

The text of the proposed rule change 

is available on the Exchange’s Website 

at http://www.nasdaqtrader.com/ 

micro.aspx?id=PHLXRulefilings, at the 

principal office of the Exchange, on the 

Commission’s Web site at http:// 

www.sec.gov, 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 purpose of the proposed rule 

change is to make clarifying changes to 

Rules 607 and 3202 concerning the 

application and collection of the 

Covered Sale Fee. In light of the varying 

means by which a Covered Sale Fee is 

incurred by members, as described 

below, the Exchange believes that a 

more detailed description of the 

circumstances that trigger the Covered 

Sale Fee is warranted. Accordingly, the 

new rule language proposed by the 

Exchange expressly discusses covered 

sales in both equity and option 

securities. In addition, the proposed 

new rule language includes a 

description of sell orders entered into 

the Exchange transaction execution 

systems that result in a covered sale on 

another exchange, expressly discussing 

the fee incurred by the Exchange and 


jlentini on DSKJ8SOYB1PROD with NOTICES
12170 Federal Register / Vol. 76, No. 43 / Friday, March 4, 2011 / Notices 

3See Exchange Rules 3000–3407. 

4 15 U.S.C. 78ee. 

5 17 CFR 240.31. 

6 17 CFR 240.31(a)(6). 

7The Exchange issues Regulatory Alerts to 

provide members with notice of Covered Sale Fee 

changes. See e.g., http://www.nasdaqtrader.com/ 

TraderNews.aspx?id=ERA2011–01. 

8See e.g., CBOE Fees Schedule (January 3, 2011), 

Item 6 ‘‘Sales Value Fee,’’ ISE Rule 212, NYSE Rule 

440H, and NYSE Amex Rule 393. 9Nasdaq Options Services LLC is the Exchange’s 

routing broker for option securities. See PHLX 

Options Rule 1080(m)(iii). 

10See e-mail from Arlinda Clark, Assistant 

General Counsel, Phlx, to Jennifer Dodd, Special 

Counsel, Office of Market Supervision, Division of 

Trading and Markets, Commission, dated February 

22, 2011 (requesting corrections to this sentence). 

11 17 CFR 240.31(a)(9). 

12 In addition to clearing transactions in options, 

the Options Clearing Corporation also clears 

security futures. See http:// 

www.optionsclearing.com. 

13 15 U.S.C. 78f(b)(4). 

14 15 U.S.C. 78f. 

15 15 U.S.C. 78f(b)(5). 

the application of the Covered Sale Fee 

in such circumstances. 

PHLX Rule 607 

The Exchange is proposing 

amendments to Rule 607 to make clear 

the circumstances that trigger 

application of the Covered Sale Fee, and 

to make other clarifying changes. 

Initially, the Exchange is proposing to 

enumerate all paragraphs in Rule 607 

for clarity. Furthermore, the Exchange 

proposes to amend paragraph two by 

removing the reference to Rule 185(g), 

the former equities platform rule 

regarding the Exchange’s Routing 

Facility; and insert Rule 1080(m)(iii), 

the current options platform rule 

regarding the Exchange’s Routing 

Facility. This amendment is predicated 

on the fact that upon the 

implementation of the Exchange’s 

current equities platform, NASDAQ 

OMX PSX, 3 only options transactions 

may be routed to other markets for 

executions. 

Rule 607 permits the Exchange to 

collect a fee from its members for sales 

of securities with respect to which the 

Exchange is obligated to pay a fee to the 

SEC pursuant to Section 31 of the Act 4

and Rule 31, thereunder.5 Each national 

securities exchange and association is 

required to calculate the aggregate dollar 

amount of ‘‘covered sales’’ occurring on 

the exchange or through a member of 

the national securities association and 

to pay fees based on those covered sales 

to the Commission (‘‘Section 31 fees’’). A 

covered sale is a ‘‘sale of a security, 

other than an exempt sale or a sale of 

a security future, occurring on a 

national securities exchange or by or 

through any member of a national 

securities association otherwise than on 

a national securities exchange.’’ 6

Pursuant to Rule 607 the Exchange 

assesses a member the Covered Sale Fee 

for an executed sell order entered into 

the Exchange’s transaction execution 

systems that results in a covered sale. 

The Covered Sale Fee defrays the cost 

of the Section 31 fee triggered by the 

covered sale. In this regard, the Covered 

Sale Fee assessed a member is equal to 

the Section 31 fee assessed by the 

Commission for the covered sale. 

Further, the Exchange adjusts the 

Covered Sale Fee in lock step with 

changes to the Section 31 fee made by 

the Commission.7 Assessing a sales fee 

is common practice among the national 

securities exchanges and associations.8

As noted above, the Covered Sale Fee 

defrays the cost of the Section 31 fee. 

The Covered Sale Fee is triggered by the 

fulfillment of a members [sic] sell order 

in equity or options securities entered 

into the Exchange transaction execution 

systems that results in a covered sale. If 

the member’s sell order is fulfilled on 

the Exchange’s equity or options trading 

markets, the Exchange incurs a Section 

31 fee obligation. Sell orders in options 

securities entered into the Exchange 

transaction execution system that are 

routed to another market for execution, 

however, does [sic] not result in a 

covered sale on the Exchange. Execution 

of such routed orders is facilitated by 

the Exchange’s routing broker,9 which 

acts as the selling member for a routed 

order on the away market on behalf of 

the Exchange member. Such routed sell 

orders result in a covered sale on the 

away market, which incurs a Section 31 

fee obligation. Like the Exchange, the 

away market assesses a sales fee on the 

member that entered the sell order, in 

this case Nasdaq Options Services 

LLC,10 to defray the cost of the Section 

31 fee obligation. In turn, the Exchange 

assesses its member, the original selling 

party, a Covered Sale Fee pursuant to 

Rule 607 to defray the cost of the 

Section 31 fee passed on by the away 

exchange pursuant to its sales fee. As 

such, the Exchange’s Covered Sale Fee 

offsets the sales fee it is assessed by the 

away market, the result of which is to 

place the parties involved in the 

transaction in the same position as if the 

covered sale had occurred on the 

Exchange. 

Additionally, the Exchange is 

updating its rules to indicate that the 

Covered Sale fee is collected by 

‘‘designated clearing agency,’’ which is 

defined by rule promulgated under the 

Act as a ‘‘clearing agency registered 

under section 17A of the Act * * * that 

clears and settles covered sales or 

covered round turn transactions.’’ 11 The 

Exchange employs the National Security 

Clearing Corporation to collect the 

Covered Sale Fee from members arising 

from their covered sales in equity 

securities. Covered Sale Fees arising 

from options covered sales, however, 

are collected from members by the 

Options Clearing Corporation, another 

designated clearing agency that clears 

option securities.12 The Exchange 

believes such amendment will more 

accurately reflect all parts the Exchange 

employs to collect the Covered Sale Fee 

from its members. 

PHLX Rule 3202 

The Exchange also proposes to amend 

its equity rules to clarify application 

and collection of the Covered Sale Fee. 

PHLX Rule 3202 sets forth that certain 

rules of the Exchange are applicable to 

market participants trading on the 

Exchange’s equity trading platform. 

PHLX Rule 607 is cross referenced 

within Rule 3202, however Rule 3202 

only references the first paragraph of 

Rule 607. For clarification, Rule 3202 

will be amended to indicate that Rule 

607 will be referenced in its entirety. 

Such amendment serves to describe the 

full process for collection of the Covered 

Sale Fee regarding equity transactions. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b)(4) of the Act 13 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 the Exchange operates or 

controls, and it does not unfairly 

discriminate between customers, 

issuers, brokers or dealers. The 

proposed clarifying language does not 

change the application and assessment 

of the Covered Sale Fee under the rule, 

but rather provides greater detail on the 

transactions that trigger the fee. The 

Exchange applies Rule 607 uniformly to 

all members’ sell orders entered into the 

Exchange’s transaction execution 

systems resulting in covered sales. 

The Exchange also believes the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,14

in general and with Section 6(b)(5) of 

the Act,15 in particular, which requires 

that the rules of an exchange be 

designed to prevent fraudulent and 

manipulative acts and practices, 

promote just and equitable principles of 

trade, foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 43 / Friday, March 4, 2011 / Notices 12171 

16 15 U.S.C. 78s(b)(3)(A). 

17 17 CFR 240.19b–4(f)(2). 18 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest. The Exchange believes that the 

proposed rule change is consistent with 

these requirements because the 

proposed amended rule text provides 

members with more detail regarding the 

circumstances under which the 

Exchange assesses a Covered Sale Fee. 

As such, the proposed changes will help 

avoid member confusion and foster 

better understanding of the application 

of the rule. Accordingly, the Exchange 

believes the proposed rule change will 

promote just and equitable principles of 

trade, remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and protect investors and the 

public interest. 

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. 

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 

Because the foregoing proposed rule 

change establishes or changes a due, fee 

or other charge applicable only to a 

member, it has become effective 

pursuant to Section 19(b)(3)(A) of the 

Act 16 and Rule 19b–4(f)(2) 

thereunder.17

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. 

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–Phlx–2011–23 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–2011–23. This file 

number should be included on the 

subject line if e-mail 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 

a.m. and 3 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– 

2011–23 and should be submitted on or 

before March 25, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–4903 Filed 3–3–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63984; File No. SR– 

NASDAQ–2011–027] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Make 

Clarifying Changes to Rule 7002 

Concerning the Application and 

Collection of the Sales Fee 

February 28, 2011. 

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 February 

16, 2011, The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by NASDAQ. The Commission 

is publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

NASDAQ is proposing to make 

clarifying changes to Rule 7002 

concerning the application and 

collection of the Sales Fee. 

The text of the proposed rule change 

is below. Proposed new language is 

italicized; proposed deletions are in 

brackets. 

7002. Sales Fee 

A Sales Fee is assessed by Nasdaq to 

each member for sales of securities 

through Nasdaq transaction execution 

systems in the following circumstances: 

(a) When a sale in equity securities 

occurs with respect to which Nasdaq is 

obligated to pay a fee to the SEC under 

Section 31 of the Act; 

(b) When a sale in option securities 

occurs with respect to which Nasdaq is 

obligated to pay a fee to the SEC under 

Section 31 of the Act; 

(c) When a sell order in equity 

securities is routed for execution at a 

market other than Nasdaq, resulting in 

a covered sale on that market and an 

obligation of the routing facility of 

Nasdaq to pay the related sales fee of 

that market; 

(d) When a sell order in option 

securities is routed for execution at a 

market other than the Nasdaq Options 

Market, resulting in a covered sale on 

that market and an obligation of the 


jlentini on DSKJ8SOYB1PROD with NOTICES