Federal Register / Vol. 75, No. 230 / Wednesday, December 1, 2010 / Notices 74757 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3A member may electronically submit for 

execution an order it represents as agent on behalf 

of a public customer, broker-dealer, or any other 

entity (‘‘PIXL Order’’) against principal interest or 

against any other order (except as provided in subparagraph (n)(i)(E) below) it represents as agent 

(‘‘Initiating Order’’) provided it submits the PIXL 

order for electronic execution into the PIXL Auction 

(‘‘Auction’’) pursuant to Rule 1080. See Exchange 

Rule 1080(n). 

4See footnote 3. 

5See Exchange Rule 1080(l), ‘‘* * * The term 

‘Directed Specialist, RSQT, or SQT’ means a 

specialist, RSQT, or SQT that receives a Directed 

Order.’’ A Directed Participant has a higher quoting 

requirement as compared with a specialist, SQT or 

RSQT who is not acting as a Directed Participant. 

See Exchange Rule 1014. 

6A Specialist is an Exchange member who is 

registered as an options specialist pursuant to Rule 

1020(a). 

7A Streaming Quote Trader is defined in 

Exchange Rule 1014(b)(ii)(A) as an ROT who has 

received permission from the Exchange to generate 

and submit option quotations electronically in 

options to which such SQT is assigned. 

8A Remote Streaming Quote Trader is defined 

Exchange Rule in 1014(b)(ii)(B) as an ROT that is 

a member or member organization with no physical 

trading floor presence who has received permission 

from the Exchange to generate and submit option 

quotations electronically in options to which such 

RSQT has been assigned. 

9The Fees and Rebates for Adding and Removing 

Liquidity in Select Symbols are listed in Section I 

of the Fee Schedule. 

10An equity option includes exchange-traded 

fund share (‘‘ETF’’), Holding Company Depositary 

Receipt (‘‘HOLDR’’), Russell 2000(R) Index (the ‘‘Full 

Value Russell Index’’ or ‘‘RUT’’), options on the onetenth value Russell 2000 Index (the ‘‘Reduced 

Continued 

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-2010–163. 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–Phlx2010–163 and should be submitted on 

or before December 22, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–30225 Filed 11–30–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63372; File No. SR–Phlx– 

2010–162] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NASDAQ 

OMX PHLX LLC Relating to Price 

Improvement (PIXL) Fees 

November 24, 2010. 

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 November 

18, 2010, NASDAQ OMX PHLX LLC 

(‘‘Phlx’’ or the ‘‘Exchange’’) 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 self-regulatory 

organization. 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 and 

supersede its pricing applicable to 

members utilizing the Exchange’s price 

improvement mechanism known as 

Price Improvement XL or (PIXL). 

While changes to the Fee Schedule 

pursuant to this proposal are effective 

upon filing, the Exchange has 

designated these changes to be operative 

for transactions settling on or after 

November 22, 2010. 

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 

self-regulatory organization 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 those 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend and supersede the 

current fees assessed for orders known 

as PIXL Orders 3 and Initiating Orders.4

The Exchange intends to place a cap on 

the maximum fee that would be 

assessed to market participants for 

utilizing the price improvement 

mechanism. The Exchange also 

proposes to amend the fee assessed for 

Initiating Orders. 

Currently, the Exchange assesses PIXL 

fees on Customers, Directed 

Participants,5 Specialists,6 Streaming 

Quote Traders (‘‘SQT’’),7 Remote 

Streaming Quote Traders (‘‘RSQT’’),8

Firms and Broker-Dealers. All options 

traded on the Exchange are eligible for 

PIXL. 

The Exchange assesses a fee of $0.05 

per contract when an Initiating Order 

executes against a PIXL Order in the 

symbols listed in Section I, the Fees and 

Rebates for Adding and Removing 

Liquidity in Select Symbols 9 (known as 

‘‘Select Symbols’’), and the symbols 

defined in Section II 10 (‘‘Section II 


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74758 Federal Register / Vol. 75, No. 230 / Wednesday, December 1, 2010 / Notices 

Value Russell Index’’ or ‘‘RMN’’), options on the 

Nasdaq 100 Index traded under the symbol NDX 

(‘‘NDX’’), options on the one-tenth value of the 

Nasdaq 100 Index traded under the symbol MNX 

(‘‘MNX’’) and the KBW Bank Index (‘‘BKX’’). 

11The symbols assessed fees according to Section 

III are BKX, FPX, HGX, OSX, SOX, UTY, and XAU 

(‘‘Sector Index Options’’) and U.S. Dollar-Settled 

Foreign Currency Options (‘‘WCOs’’). 

12This includes all Symbols that are not 

specifically Select Symbols as listed in Section I of 

the Fee Schedule. 

13See Securities Exchange Act Release No. 63252 

(November 5, 2010), 75 FR 69486 (November 12, 

2010) (SR–Phlx–2010–150) (a rule change to add 

the KBW Bank Index (‘‘BKX’’) to the Equity Option 

Fees). 

14 15 U.S.C. 78f(b). 

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

16See Securities Exchange Act Release No. 62670 

(August 9, 2010), 75 FR 49546 (August 13, 2010) 

(SR–NYSEArca–2010–77). See also NYSE Arca’s 

Fee Schedule. NYSE Arca assesses no fee for firm 

facilitation-manual trades and a $0.25 per contract 

fee for all other firm and broker-dealer manual 

trades. 

17See Securities Exchange Act Release No. 50012 

(August 9, 2010), 75 FR 50012 (August 16, 2010) 

(SR–NYSEAmex–2010–81). See also NYSE Amex’s 

Fee Schedule. NYSE Amex assesses no fee for firm 

facilitation-manual trades and a $0.25 per contract 

fee for all other firm and broker-dealer manual 

trades. 

18The Exchange also assesses similar firm 

facilitation fees. See Exchange’s Fee Schedule. 

19See Securities and Exchange Act Release No. 

62632 (August 3, 2010), 75 FR 47869 (August 3, 

2010) (SR–BX–2010–049). 

20See the ISE schedule of fee as of August 2, 

2010. 

Symbols’’). The Exchange assesses the 

fees listed in Section II of the Fee 

Schedule for the PIXL Order when the 

PIXL Order trades against the Initiating 

Order in Section II Symbols and the 

Select Symbols. For example, a member 

or member organization is assessed 

$0.00 for Customer transactions. 

For the symbols assessed according to 

Section III 11 of the Fee Schedule, titled 

Sector Index Options Fees and U.S 

Dollar-Settled Foreign Currency 

(‘‘WCO’’) Options Fees, the transaction 

fees described in Section III apply to 

both the Initiating Order and the PIXL 

Order for all executions. 

Select Symbols: Section I 

With respect to executions in Select 

Symbols, where the PIXL Order is not 

trading against the Initiating Order, the 

PIXL Order is assessed the Fee for 

Removing Liquidity when that order is 

executed against a resting contra-side 

order or quote that was present upon 

initial receipt of the PIXL Order. The 

resting contra-side order or quote 

receives the Rebate for Adding 

Liquidity. Additionally, the PIXL Order 

receives the Rebate for Adding Liquidity 

when that order is executed against 

contra-side order(s) that respond to the 

PIXL auction broadcast message as well 

as when executed against contra-side 

quotes and unrelated orders on the 

PHLX book that arrived after the PIXL 

auction was initiated. The PIXL auction 

responders, contra-side order(s) and 

quote(s) is/are assessed the Fee for 

Removing Liquidity. 

For the symbols assessed according to 

Section III of the Fee Schedule, titled 

Sector Index Options Fees and U.S 

Dollar-Settled Foreign Currency 

(‘‘WCO’’) Options Fees, the transaction 

fees described in Section III apply to 

both the Initiating Order and the PIXL 

Order for all executions. 

Equity Options: Section II 

With respect to executions in Section 

II Equity Options,12 the PIXL Order is 

assessed the appropriate Equity Option 

Fee in Section II of the Fee Schedule. 

The contra-side order or quote is 

assessed the appropriate Equity Option 

Fee listed on the Fee Schedule as well. 

All other Equity Options Fees in Section 

II apply as appropriate, including but 

not limited to Payment for Order Flow. 

The Exchange is proposing to amend 

its PIXL fees to assess $0.07 per contract 

for each Initiating Order and to add 

language to the Fee Schedule to indicate 

that certain fees will be limited to a 

maximum of $0.32 per contract for PIXL 

Orders. Specifically, for options 

overlying the Select Symbols defined in 

Section I and Equity Options defined in 

Section II of the Fee Schedule, the 

maximum fee any participant will pay 

will be $0.32 per contract. The 

Exchange believes that these fees should 

encourage the initiation of price 

improvement auctions. 

The Exchange is also adding ‘‘BKX’’ to 

the text of Section IV of the Fee 

Schedule, as BKX was added to the 

equity options fees.13

While changes to the Fee Schedule 

pursuant to this proposal are effective 

upon filing, the Exchange has 

designated these changes to be operative 

for transactions settling on or after 

November 22, 2010. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 14

in general, and furthers the objectives of 

Section 6(b)(4) of the Act 15 in 

particular, in that it is an equitable 

allocation of reasonable fees and other 

charges among Exchange members. 

The Exchange is lowering prices to 

provide incentives for its members to 

seek price improvement for customer 

orders. Offering lower prices to 

members that initiate a price 

improvement opportunity is sound 

public policy and market structure. Any 

order that is assessed the lower fee will, 

by definition, have received the 

opportunity for an execution at a price 

superior to the market. The Exchange 

believes that the fee proposal is both 

equitable and reasonable for this and the 

reasons listed hereafter. 

The proposed fees are consistent with 

the price differentials that exist today at 

most option exchanges. For example, 

the highest transaction fee differential 

proposed by the Exchange is the same 

transaction fee differential that currently 

exists between broker-dealers that that 

manually facilitate their customer order 

flow (known as firm facilitation) and the 

transaction fees charged to other brokerdealers by the both NYSE Arca, Inc. 

(‘‘NYSE Arca’’) 16 and NYSE Amex LLC 

(‘‘NYSE Amex’’).17 18 [sic]

Additionally, the fees and rebates 

assessed by the Exchange are similar, 

and in some cases less than, the fees and 

rebates assessed by the Boston Options 

Exchange Group, LLC (‘‘BOX’’) 19 and the 

International Securities Exchange 

(‘‘ISE’’) 20 for orders executed in a price 

improvement mechanism. For example 

a BOX participant could be assessed 

total fees of $0.35 per contract as the 

price improvement period (‘‘PIP’’) 

initiator and receive a rebate for their 

customer PIP order of $0.25 per contract 

(in this example the net fee charged the 

BOX participant would be $0.10), 

whereas the PIP responder could be 

assessed a fee of $0.50 per contract. This 

is a differential of $0.40 per contract 

between two BOX participants for 

participating in the PIP auction, which 

is equal to or less than the differentials 

that exist in the Exchange’s proposal. 

With respect to ISE, the Exchange pays 

a rebate for certain PIXL executions, 

which is similar to the $0.15 rebate ISE 

pays for its price improvement 

mechanism. 

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 


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Federal Register / Vol. 75, No. 230 / Wednesday, December 1, 2010 / Notices 74759 

21 15 U.S.C. 78s(b)(3)(A)(ii). 

22The text of the proposed rule change is 

available on the Commission’s Web site at http:// 

www.sec.gov/rules/sro.shtml. 

23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The current FINRA rulebook consists of: (1) 

FINRA Rules; (2) NASD Rules; and (3) rules 

incorporated from NYSE (‘‘Incorporated NYSE 

Rules’’) (together, the NASD Rules and Incorporated 

NYSE Rules are referred to as the ‘‘Transitional 

Rulebook’’). While the NASD Rules generally apply 

to all FINRA members, the Incorporated NYSE 

Rules apply only to those members of FINRA that 

are also members of the NYSE (‘‘Dual Members’’). 

The FINRA Rules apply to all FINRA members, 

unless such rules have a more limited application 

by their terms. For more information about the 

rulebook consolidation process, see Information 

Notice, March 12, 2008 (Rulebook Consolidation 

Process). 

19(b)(3)(A)(ii) of the Act.21 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–2010–162 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–2010–162. 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,22 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– 

2010–162 and should be submitted on 

or before December 22, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–30227 Filed 11–30–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63375; File No. SR–FINRA– 

2010–061] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change To Adopt Rules 

Governing Guarantees, Carrying 

Agreements, Security Counts and 

Supervision of General Ledger 

Accounts in the Consolidated FINRA 

Rulebook 

November 24, 2010. 

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

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘SEA’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on November 

12, 2010, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) (f/k/a 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’)) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II below, which Items have been 

prepared by FINRA. 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 

FINRA is proposing to adopt FINRA 

Rules 4150 (Guarantees by, or Flow 

Through Benefits for, Members), 4311 

(Carrying Agreements), 4522 (Periodic 

Security Counts, Verifications and 

Comparisons) and 4523 (Assignment of 

Responsibility for General Ledger 

Accounts and Identification of Suspense 

Accounts) in the consolidated FINRA 

rulebook and to delete NASD Rule 3230, 

Incorporated NYSE Rules 322, 382, 

440.10 and 440.20 and Incorporated 

NYSE Rule Interpretations 382/01 

through 382/05, 409(a)/01 and 440.20/ 

01. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA 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. FINRA 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 

As part of the process of developing 

a new consolidated rulebook 

(‘‘Consolidated FINRA Rulebook’’),3

FINRA is proposing to adopt new, 

consolidated rules governing 

guarantees, carrying agreements, 

security counts and supervision of 

general ledger accounts for purposes of 

the Consolidated FINRA Rulebook. 

FINRA proposes to adopt FINRA Rules 

4150 (Guarantees by, or Flow Through 

Benefits for, Members), 4311 (Carrying 

Agreements), 4522 (Periodic Security 

Counts, Verifications and Comparisons) 

and 4523 (Assignment of Responsibility 

for General Ledger Accounts and 

Identification of Suspense Accounts) in 

the Consolidated FINRA Rulebook and 

to delete NASD Rule 3230, NYSE Rules 


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