Federal Register / Vol. 76, No. 5 / Friday, January 7, 2011 / Notices 1203 

14See Section 6(b)(5) of the Act, 15 U.S.C. 

78f(b)(5). 

15See Section 6(b)(4) of the Act, 15 U.S.C. 

78f(b)(4). 

16See e.g., Concept Release (discusses the various 

venues where trades are executed). 17 15 U.S.C. 78s(b)(3)(a)(ii). 18 17 CFR 200.30–3(a)(12). 

system which NASDAQ operates or 

controls, and it is designed to promote 

just and equitable principles of trade, to 

remove impediments to and perfect the 

mechanism of a free and open market, 

and, in general, to protect investors and 

the public interest. 

The Investor Support Program 

encourages members to add targeted 

liquidity that is executed in the 

NASDAQ Market Center. The rule 

change enhances the Investor Support 

Program by proposing minor changes 

regarding certain assumed Participation 

Rate values for firms that did not add 

liquidity in August 2010; the addition of 

liquidity through Indirect Order Flow; 

liquidity executed at or above $1; and a 

certification provision. The primary 

objective in making these enhancements 

to the Investor Support Program is to 

minimize the ability of members (firms), 

on a prospective basis, from gaining ISP 

fee credits while effectively adding little 

or no targeted liquidity to NASDAQ. 

The rule change proposals ‘‘are not 

designed to permit unfair 

discrimination’’ 14 but, rather, are 

intended to promote submission of 

liquidity-providing orders to NASDAQ, 

which would benefit all NASDAQ 

members and all investors. Likewise, 

the program is consistent with the Act’s 

requirement ‘‘for the equitable allocation 

of reasonable dues, fees, and other 

charges.’’ 15 As explained in the 

immediately preceding paragraphs, the 

proposals enhance the goal of the ISP. 

Members who choose to increase the 

volume of ISP-eligible liquidityproviding orders that they submit to 

NASDAQ would be benefitting all 

investors, and therefore an additional 

credit, as contemplated in the proposed 

enhanced program, is equitable. Finally, 

NASDAQ notes that the intense 

competition among several national 

securities exchanges and numerous OTC 

venues effectively guarantees that fees 

and credits for the execution of trades 

in NMS securities remain equitable and 

are not unfairly discriminatory.16

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NASDAQ does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor 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.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–NASDAQ–2010–154 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–NASDAQ–2010–154. 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– 

NASDAQ–2010–154 and should be 

submitted on or before January 28, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–90 Filed 1–6–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63631; File No. SR–CBOE– 

2010–117] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Order Router 

Subsidy 

January 3, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934, 15 

U.S.C. 78s(b)(1), notice is hereby given 

that on December 21, 2010, Chicago 

Board Options Exchange, Incorporated 

(‘‘CBOE’’ or the ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by CBOE. 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 

Chicago Board Options Exchange, 

Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) 

proposes to extend an existing program, 

under which it currently makes subsidy 


jdjones on DSK8KYBLC1PROD with NOTICES
1204 Federal Register / Vol. 76, No. 5 / Friday, January 7, 2011 / Notices 

1The current CBOE order router subsidy program 

is described in SR–CBOE–2007–34. See Securities 

Exchange Act Release No. 55629 (April 13, 2007), 

72 FR 19992 (April 20, 2007) (SR–CBOE–2007–34). 

Additionally, the description of the current program 

was clarified in SR–CBOE–2008–27. See Securities 

Exchange Act Release No. 57498 (March 14, 2008), 

73 FR 55 [sic] (March 20, 2008) (SR–CBOE–2008– 

27). 

2SR–CBOE–2007–34, pp. 3–4 [sic]. Two of the 

features that an order routing functionality must 

have in order to qualify for the program and that 

are relevant to the best execution obligations of 

users of the functionality are described below in 

footnote 6. 

3SR–CBOE–2007–34, p. 5 [sic]. 

4See Securities Exchange Act Release No. 62432 

(July 1, 2010), 75 FR 131 [sic] (July 9, 2010) (SR– 

CBOE–2010–66). 

5SR–CBOE–2007–34, pp. 5–6 [sic]; SR–CBOE– 

2008–27, p 4. 

6CBOE’s functional requirements state that, in 

order to be eligible for the subsidy program, an 

order router must (1) cause the default destination 

for an order to be the U.S. options exchange with 

the best bid or offer, except CBOE must be the 

default destination exchange for the individually 

executed marketable orders if CBOE is at the 

national best bid or offer, but (2) give the user the 

ability to override the default destination for any 

order on a manual, order-by-order, basis. CBOE 

believes that these requirements enable any user of 

a participating order router to comply with its best 

execution obligations. 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(4). 

payments to CBOE Trading Permit 

Holders that provide certain order 

routing functionalities to other Trading 

Permit Holders and/or use such 

functionalities themselves, to brokerdealers that are not CBOE Trading 

Permit Holders. The text of the [sic] 

proposed rule change is available on the 

Exchange’s Web site (http:// 

www.cboe.org/legal), at the Exchange’s 

Office of the Secretary and at the 

Commission. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

CBOE 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. CBOE 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this filing is to permit 

CBOE to extend its program under 

which it enters into subsidy 

arrangements with persons that provide 

certain order routing functionalities to 

other persons and/or use such 

functionalities themselves. Under the 

program as currently in effect, CBOE 

establishes such arrangements only with 

Trading Permit Holders (each, a 

‘‘Participating TPH’’), and makes 

payments to subsidize their costs 

associated with providing order routing 

functionalities only to other CBOE 

TPHs, as well as with using such 

functionalities themselves.1

CBOE proposes to extend the program 

in two related respects. First, CBOE 

proposes to extend the program to 

enable CBOE to establish such subsidy 

arrangements with broker-dealers that 

are not CBOE TPHs (each, a 

‘‘Participating Non-CBOE TPH’’). (The 

term ‘‘Participant’’ as used in this filing 

refers to either a Participating NonCBOE TPH or a Participating CBOE 

TPH.) Second, CBOE proposes to extend 

the program to permit a Participant to 

receive subsidy payments for providing 

an order routing functionality to brokerdealers that are not CBOE TPHs. 

SR–CBOE–2007–34 includes a 

description of the features that an order 

routing functionality of a Participating 

CBOE TPH must have, and the 

performance requirements that the order 

routing functionality must satisfy, in 

order to qualify for the program.2 The 

order routing functionality of a 

Participating Non-CBOE TPH would be 

required to have the same features and 

satisfy the same requirements. 

CBOE’s subsidy program provides 

that a Participating CBOE TPH may 

elect to have CBOE perform certain 

marketing services and/or billing 

services on behalf of the Participating 

CBOE TPH.3 These elections would also 

be available to a Participating NonCBOE TPH. As with a Participating 

CBOE TPH, if a Participating Non-CBOE 

TPH elects to have CBOE perform 

marketing services on its behalf, the 

amount that CBOE would pay the 

Participant for orders routed through the 

Participant’s system and executed on 

CBOE would be reduced from $0.04 per 

contract to $0.03 per contract.4 Also as 

with a Participating CBOE TPH, if a 

Participating Non-CBOE TPH elects to 

have CBOE perform the service of 

billing CBOE TPHs with respect to the 

use of the Participant’s router, the 

Participant would pay CBOE a service 

fee of one percent of the fees collected 

by CBOE for that TPH. 

CBOE currently assigns an 

identification code to each Participating 

CBOE TPH for use on orders that are 

subject to the subsidy program. CBOE 

would assign such a code to each 

Participating Non-CBOE TPH. A 

Participating Non-CBOE TPH, or a party 

using a Participant’s order routing 

functionality that is not a CBOE TPH, 

would need to route its orders to CBOE 

through a CBOE TPH—that is, would 

need to ‘‘give up the name’’ of a CBOE 

TPH. The use of these identification 

codes would provide CBOE with the 

information that it would need to 

account for the subsidy payments due to 

Participating Non-CBOE TPHs as it does 

for the payments due to Participating 

CBOE TPHs. 

CBOE stated in SR–CBOE–2007–34, 

and affirmed in SR–CBOE–2008–27, 

that nothing about the subsidy program 

would relieve any CBOE TPH that is 

using an order routing functionality 

whose provider is participating in the 

program from complying with its best 

execution obligations.5 This would 

continue to be true with respect to all 

users both CBOE TPH broker-dealers 

and non-CBOE TPH broker-dealers of 

order routing functionalities whose 

providers participate in the program. 

Specifically, just as with any customer 

order and any other routing 

functionality, any user whether or not a 

CBOE TPH of an order routing 

functionality whose provider is 

participating in the program would have 

an obligation to consider the 

opportunities for price improvement at 

various markets and whether routing a 

customer order through an order router 

having the features specified by CBOE 

would allow for access to such 

opportunities if readily available.6

Moreover, any user whether or not a 

CBOE TPH of an order router 

functionality whose provider is 

participating in the program would need 

to conduct best execution evaluations 

on a regular basis, at a minimum 

quarterly, that include its use of any 

router whose provider is participating in 

the program. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b) of the Securities Exchange Act of 

1934 (‘‘Act’’),7 in general, and furthers 

the objectives of Section 6(b)(4) 8 of the 

Act in particular, in that it is designed 

to provide for the equitable allocation of 

reasonable dues, fees, and other charges 

among its members and other persons 

using its facilities. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE does not believe that the 

proposed rule change will impose any 

burden on competition that is not 


jdjones on DSK8KYBLC1PROD with NOTICES
Federal Register / Vol. 76, No. 5 / Friday, January 7, 2011 / Notices 1205 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5A Member is any registered broker or dealer that 

has been admitted to membership in the Exchange. 

6As defined on the Exchange’s fee schedule, the 

term ‘‘Customer’’ applies to any transaction 

identified by a member for clearing in the Customer 

range at the OCC. 

necessary or appropriate in furtherance 

of 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 solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 9 of the Act and 

subparagraph (f)(2) of Rule 19b–4 10

thereunder, because it establishes a due, 

fee, or other charge imposed by CBOE 

on any person in that the subsidy 

arrangement relates to fees charged by 

certain order routing system providers 

for use of their routing systems. 

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. 

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–CBOE–2010–117 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–CBOE–2010–117. 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 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–CBOE– 

2010–117 and should be submitted on 

or before January 28, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–92 Filed 1–6–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63632; File No. SR–BATS– 

2010–038] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to Fees for Use 

of BATS Exchange, Inc. 

January 3, 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 December 

21, 2010, BATS Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BATS’’) 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 the Exchange. The 

Exchange has designated the proposed 

rule change as one establishing or 

changing a member due, fee, or other 

charge imposed by the Exchange under 

Section 19(b)(3)(A)(ii) of the Act 3 and 

Rule 19b–4(f)(2) thereunder,4 which 

renders the proposed rule change 

effective upon filing with the 

Commission. 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 modify its 

fee schedule applicable to Members 5 of 

the Exchange pursuant to BATS Rules 

15.1(a) and (c). While changes to the fee 

schedule pursuant to this proposal will 

be effective upon filing, the changes will 

become operative on January 3, 2011. 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.batstrading.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 parts 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 modify the 

‘‘Options Pricing’’ section of its fee 

schedule to: (i) Modify its pricing for 

Customer 6 orders by decreasing the fee 

for removing liquidity from the 

Exchange and increasing the rebate for 

adding liquidity to the Exchange; (ii) 

add a rebate specifically for orders that 

set either the national best bid (the 

‘‘NBB’’) or the national best offer (the 

‘‘NBO’’) where the Member meets certain 


jdjones on DSK8KYBLC1PROD with NOTICES