Federal Register / Vol. 77, No. 81 / Thursday, April 26, 2012 / Notices 24997 

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

2 17 CFR 240.19b–4. 

3See Securities and Exchange Act Release No. 

66754 (April 6, 2012) (SR–Phlx–2012–41) which 

filing is immediately effective and will become 

operative on April 27, 2012. 

4The Exchange recently amended its Pricing 

Schedule to adopt a ‘‘Firm/Broker-Dealer/Market 

Maker’’ Routing Fee category. See Securities and 

Exchange Act Release No. 66755 (April 6, 2012) 

(SR–Phlx–2012–42). The pricing change was filed 

for immediate effectiveness with an operative date 

of April 27, 2012. 

5BATS defines Penny options as those issues that 

are quoted pursuant to BATS Rule 21.5, 

Interpretation and Policy .01. 

6See SR–BATS–2012–015. 

consider the matters raised in each 

docket. 

2. Pursuant to 39 U.S.C. 505, Katalin 

K. Clendenin is appointed to serve as 

officer of the Commission (Public 

Representative) to represent the 

interests of the general public in these 

proceedings. 

3. Comments by interested persons in 

these proceedings are due no later than 

May 4, 2012. 

4. The Secretary shall arrange for 

publication of this order in the Federal 

Register. 

By the Commission. 

Shoshana M. Grove, 

Secretary. 

[FR Doc. 2012–10023 Filed 4–25–12; 8:45 am] 

BILLING CODE 7710–FW–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66838; File No. SR–Phlx– 

2012–50] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Routing Fees 

April 20, 2012. 

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 April 11, 

2012, 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 amend 

certain Routing Fees to recoup costs 

incurred by the Exchange in routing to 

BATS Exchange, Inc. (‘‘BATS’’). 

The Exchange intends for these 

amendments to be effective upon filing, 

except with respect to the amendments 

related to the Firm/Broker-Dealer/ 

Market Maker category, which Routing 

Fees will be operative on April 27, 2012 

when SR–Phlx–2012–41 becomes 

operative.3

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://nasdaqtrader.com/ 

micro.aspx?id=PHLXfilings, 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 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 recoup 

costs that the Exchange incurs for 

routing and executing certain orders in 

equity and index options to BATS. The 

Exchange’s Pricing Schedule at Section 

V currently includes the following 

Routing Fees for routing Customer, 

Professional, Firm, Broker-Dealer and 

Market Maker orders to away markets.4

Exchange Customer Professional 

Firm/brokerdealer/ 

market maker 

NYSE AMEX .............................................................................................................................. $0.11 $0.31 $0.55 

BATS .......................................................................................................................................... 0.55 0.55 0.55 

BOX ........................................................................................................................................... 0.11 0.11 0.55 

CBOE ......................................................................................................................................... 0.11 0.31 0.55 

CBOE orders greater than 99 contracts in RUT, RMN, NDX, MNX, ETFs, ETNs and 

HOLDRs ................................................................................................................................. 0.29 0.31 0.55 

C2 .............................................................................................................................................. 0.55 0.56 0.55 

ISE ............................................................................................................................................. 0.11 0.29 0.55 

ISE Select Symbols* .................................................................................................................. 0.31 0.39 0.55 

NYSE ARCA (Penny Pilot) ........................................................................................................ 0.55 0.55 0.55 

NYSE ARCA (Standard) ............................................................................................................ 0.11 0.11 0.55 

NOM ........................................................................................................................................... 0.54 0.54 0.55 

NOM (NDX and MNX) ............................................................................................................... 0.56 0.56 0.55 

* These fees are applicable to orders routed to ISE that are subject to Rebates and Fees for Adding and Removing Liquidity in Select Symbols. See ISE’s Schedule of Fees for the complete list of symbols that are subject to these fees. 

The Exchange is proposing to amend 

the current BATS Routing Fees by 

renaming those fees as ‘‘BATS Penny.’’ 5

The Exchange is not proposing to 

amend the current rate of $0.55 per 

contract for Customers, Professionals, 

Firms, Broker-Dealers, and Market 

Makers, but proposes to apply those fees 

solely to Penny options routed to BATS. 

The Exchange proposes to create new 

Routing Fees to BATS for non-Penny 

options. BATS recently adopted a $0.75 

per contract non-Penny fee for 

customers that remove liquidity from 

the BATS Options order book and a 

$0.80 per contract non-Penny fee for 

professionals, firms and market makers 

that remove liquidity from the BATS 

Options order book.6 The Exchange is 

proposing to adopt BATS non-Penny 

Routing Fees to account for the new 


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24998 Federal Register / Vol. 77, No. 81 / Thursday, April 26, 2012 / Notices 

7See Securities Exchange Act Release No. 59995 

(May 28, 2009), 74 FR 26750 (June 3, 2009) (SR– 

Phlx–2009–32). 

8This proposal refers to ‘‘PHLX XL’’ as the 

Exchange’s automated options trading system. In 

May 2009 the Exchange enhanced the system and 

adopted corresponding rules referring to the system 

as ‘‘Phlx XL II.’’ See Securities Exchange Act 

Release No. 59995 (May 28, 2009), 74 FR 26750 

(June 3, 2009) (SR–Phlx–2009–32). The Exchange 

intends to submit a separate technical proposed 

rule change that would change all references to the 

system from ‘‘Phlx XL II’’ to ‘‘PHLX XL’’ for 

branding purposes. 

9The Exchange is therefore adopting BATS nonPenny Routing Fees to account for the BATS fees 

of $0.75 per contract for customer orders and $0.80 

per contract for professional, firm and market maker 

orders, the $0.06 clearing cost and another $0.05 

per contract associated with administrative and 

technical costs associated with operating NOS. 

10The Exchange recently filed a rule change to 

expand the routing capabilities of certain options 

orders that are eligible for electronic routing to 

other market centers by PHLX XL. See Securities 

and Exchange Act Release No. 66754 (April 6, 2012) 

(SR–Phlx–2012–41). Specifically, Exchange Rule 

1080(m) was amended to permit Firm, BrokerDealer and Market Maker orders to be eligible for 

routing to other market centers when the Exchange 

cannot execute such orders at the National Best Bid 

or Offer. SR–Phlx–2012–[sic]. The rule change is 

immediately effective and will be operative on 

April 27, 2012. 

11 15 U.S.C. 78f(b). 

12 15 U.S.C. 78f(b)(4). 

13See note 5. 14See note 4. 

BATS fees for removing liquidity and 

other routing costs incurred by the 

Exchange when routing to BATS, as 

follows: 

Exchange Customer Professional 

Firm/brokerdealer/market 

maker 

BATS non-Penny ....................................................................................................................... $0.86 $0.91 $0.91 

In May 2009, the Exchange adopted 

Rule 1080(m)(iii)(A) to establish Nasdaq 

Options Services LLC (‘‘NOS’’), a 

member of the Exchange, as the 

Exchange’s exclusive order router.7 NOS 

is utilized by the Exchange’s fully 

automated options trading system, 

PHLX XL®,8 solely to route orders in 

options listed and open for trading on 

the PHLX XL system to destination 

markets. Each time NOS routes to away 

markets NOS is charged a $0.06 clearing 

fee and, in the case of certain exchanges, 

a transaction fee is also charged in 

certain symbols, which fees are passed 

through to the Exchange. The Exchange 

currently recoups clearing and 

transaction charges incurred by the 

Exchange as well as certain other costs 

incurred by the Exchange when routing 

to away markets, such as administrative 

and technical costs associated with 

operating NOS, membership fees at 

away markets, and technical costs 

associated with routing.9

The Exchange intends for these 

amendments to be effective upon filing, 

except with respect to the amendments 

related to the Firm/Broker-Dealer/ 

Market Maker category, which Routing 

Fees will be operative on April 27, 2012 

when SR–Phlx–2012–41 becomes 

operative.10

As with all fees, the Exchange may 

adjust these Routing Fees in response to 

competitive conditions by filing a new 

proposed rule change. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Pricing Schedule 

is consistent with Section 6(b) of the 

Act 11 in general, and furthers the 

objectives of Section 6(b)(4) of the Act 12

in particular, in that it is an equitable 

allocation of reasonable fees and other 

charges among Exchange members. 

The Exchange believes that the 

proposed amendment to the current 

BATS Routing Fees to rename those fees 

as ‘‘BATS Penny’’ and apply those fees 

to Penny options routed to BATS and 

adopt separate Routing Fees for nonPenny options routed to BATS is 

reasonable because the two separate 

categories take into account the different 

fees for removing liquidity assessed by 

BATS for non-Penny versus Penny 

options. The Exchange seeks to recoup 

costs incurred when routing orders to 

BATS on behalf of its members. 

The Exchange believes that the 

proposed amendment to the current 

BATS Routing Fees to rename those fees 

as ‘‘BATS Penny’’ and apply those fees 

to Penny options routed to BATS and 

adopt separate Routing Fees for nonPenny options routed to BATS is 

equitable and not unfairly 

discriminatory because the Exchange 

will uniformly apply the BATS Penny 

as well as BATS non-Penny Routing 

Fees to its members based on the type 

of options orders routed to BATS.13

The proposed BATS non-Penny 

Routing Fees are reasonable because 

they seek to recoup costs that are 

incurred by the Exchange when routing 

Customer, Professional, Firm, BrokerDealer and Market Maker orders to 

BATS on behalf of members. Each 

destination market’s transaction charge 

varies and there is a standard clearing 

charge for each transaction incurred by 

the Exchange along with other 

administrative and technical costs that 

are incurred by the Exchange. The 

Exchange believes that the proposed 

Routing Fees would enable the 

Exchange to recover the remove fees 

assessed by BATS for non-Penny 

options, plus clearing and other 

administrative and technical fees for the 

execution of such orders when routed to 

BATS. The Exchange also believes that 

the proposed BATS non-Penny Routing 

Fees are equitable and not unfairly 

discriminatory because they would be 

uniformly applied to all non-Penny 

orders that are routed to BATS. 

With respect to the Firm/BrokerDealer/Market Maker category, the 

Exchange recently adopted those fees 

and proposed to assess a fixed Routing 

Fee of $0.55 per contract applicable to 

all away markets.14 The Exchange noted 

in that rule change that pricing on the 

various options exchanges varies 

significantly from exchange to exchange 

for non-Customer orders. Accordingly, 

the Exchange proposed a $0.55 per 

contract side Routing Fee in order to 

capture the majority of the transaction 

and clearing fees for Firm, Broker-Dealer 

and Market Maker orders, while making 

the Exchange’s Routing Fees easier to 

calculate and predict for members 

whose proprietary orders are routed 

away. In addition, fixed Routing Fees 

are easier to comprehend by the 

members whose orders are routed away. 

Further, predicting, calculating and 

charging back ‘‘pass-through’’ fees is an 

unduly burdensome, expensive and 

complicated task for members whose 

orders are routed away. The Exchange 

noted that fixed Routing Fees for Firm, 

Broker-Dealer and Market Maker orders 

should ease the burden, expense and 

complexity of this task. Furthermore, 

fixed fees are easier to manage and 

maintain for the Exchange, ensuring 

accurate billing and accounting. The 

Exchange believes its proposal to 

increase the BATS non-Penny Customer 

Routing Fee from $0.55 per contract to 

$0.86 per contract and the Professional, 

Firm, Broker-Dealer and Market Maker 

Routing Fees from $0.55 per contract to 

$0.91 per contract is reasonable because 

the fees proposed by BATS are not 

within the range of fees assessed by 

other exchanges since the recent 


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Federal Register / Vol. 77, No. 81 / Thursday, April 26, 2012 / Notices 24999 

15See note 9. 

16The Exchange’s proposed non-Penny BATS 

Routing Fees are calculated similarly for all 

participants by adding the fee to remove liquidity 

assessed by BATS for the particular market 

participant plus a fee of $.11 per contract which 

represents clearing and other costs noted herein. 

17 15 U.S.C. 78s(b)(3)(A)(ii). 18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

increase in the BATS fee to removing 

liquidity from $0.44 per contract to 

$0.75 per contract for customer nonPenny options and from $0.44 per 

contract to $0.80 for professionals, firms 

and market makers. The Exchange 

believes it is reasonable to recoup the 

BATS remove fees plus the clearing and 

other costs to recoup Routing Fees.15

The Exchange believes that the increase 

to the Firm/Broker-Dealer/Market Maker 

non-Penny BATS Routing Fees are 

equitable and not unfairly 

discriminatory because, as previously 

mentioned, those fees would be 

similarly calculated for Customers, 

Professionals, Firms, Broker-Dealers and 

Market Makers.16 Additionally, the nonPenny BATS Routing Fees would be 

uniformly assessed for all non-Penny 

orders routed to BATS. 

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 

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 email to rulecomments@sec.gov. Please include File 

No. SR–Phlx–2012–50 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 No. 

SR–Phlx–2012–50. This file number 

should be included on the subject line 

if email 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 No. SR–Phlx–2012– 

50 and should be submitted on or before 

May 17, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2012–10025 Filed 4–25–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66841; File No. SR–OCC– 

2012–06] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing and Order Granting 

Accelerated Approval of Proposed 

Rule Change Relating to Revised DCO 

Rules 

April 20, 2012. 

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 April 10, 

2012, The Options Clearing Corporation 

(‘‘OCC’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

the proposed rule change described in 

Items I and II below, which items have 

been prepared primarily by OCC. The 

Commission is publishing this Notice 

and Order to solicit comments on the 

proposed rule change from interested 

persons and to approve the proposed 

rule change on an accelerated basis. 

I. Self-Regulatory Organization’s 

Statement of Terms of Substance of the 

Proposed Rule Change 

The proposed rule change would 

ensure compliance with final 

regulations of the Commodity Futures 

Trading Commission (‘‘CFTC’’) 

applicable to derivatives clearing 

organizations (‘‘DCOs’’) that become 

effective on May 7, 2012. 

II. Self-Regulatory Organization’s 

Statement of Purpose of, and Statutory 

Basis for, the Proposed Rule Change 

In its filing with the Commission, 

OCC included statements concerning 

the purpose 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 III below. OCC 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 Purpose of, and Statutory 

Basis for, the Proposed Rule Change 

The purposes of the proposed changes 

to OCC’s By-Laws and Rules are (a) to 

ensure compliance with certain 

regulations recently promulgated by the 

CFTC that become effective on May 7, 

2012, and (b) to put in place a minor 

rule violation plan (‘‘MRV Plan’’), 

within the meaning of Exchange Act 


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