Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Notices 80869 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 61984 

(April 26, 2010), 75 FR 23313 (May 3, 2010) (SR– 

Phlx–2010–60). 

4The Exchange defines a ‘‘professional’’ as any 

person or entity that (i) is not a broker or dealer in 

securities, and (ii) places more than 390 orders in 

listed options per day on average during a calendar 

month for its own beneficial account(s). 

5See footnote 3. The Exchange’s filing eliminates 

the $.20 per contract transaction promotional 

pricing after December 30, 2010, and instead 

assesses members the applicable sector index 

options transaction charges, by market participant, 

starting on December 31, 2010. For example, for 

transactions in QNET sector index options, a 

customer would no longer be assessed the $.20 per 

contract on trade date December 31, 2010, but 

instead would be assessed the option transaction 

charge, which is currently $.44 per contract. 

6See Securities Exchange Act Release No. 63406 

(December 1, 2010), 75 FR 76511 (December 8, 

2010) (SR–Phlx–2010–165). 

7See footnote 6. 

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

9 15 U.S.C. 78f(b)(4). 

10 15 U.S.C. 78s(b)(3)(A)(ii). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63562; File No. SR–Phlx– 

2010–177] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NASDAQ 

OMX PHLX, Inc. Relating to Options 

Overlying QNET 

December 16, 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 December 

15, 2010, NASDAQ OMX PHLX, Inc. 

(‘‘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 the 

Exchange’s Fee Schedule for Sector 

Index Options to expand the 

promotional pricing period for options 

overlying the NASDAQ Internet Index 

(‘‘QNET’’). 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange previously filed a rule 

change to add additional transaction 

fees to Category III of its Fee Schedule, 

titled Sector Index Options, for options 

overlying QNET from trade date April 

30, 2010 through trade date December 

30, 2010.3 The purpose of the 

promotional pricing is to assess a fixed 

rate across all market participants for a 

specified period of time to incentivize 

members to trade QNET. 

The Exchange currently assesses a 

$.20 per contract transaction fee for 

options overlying QNET for the 

following market participants: 

Customers, registered options traders 

(on-floor), specialists, professionals,4

firms and broker-dealers. Pursuant to 

the rule change, on December 31, 2010, 

the Exchange will assess the options 

transaction charges for sector index 

options as designated by category of 

market participant on the Fee 

Schedule.5

The Exchange is proposing to expand 

the promotional pricing to trade date 

December 31, 2010. This proposal 

would eliminate the $.20 per contract 

transaction promotional pricing after 

December 31, 2010, and would instead 

cause members to be assessed the 

applicable sector index options 

transaction charges, by market 

participant, starting on January 3, 2011 

(the next trade date). For example, for 

transactions in QNET sector index 

options, a customer would no longer be 

assessed $.20 per contract on trade date 

January 3, 2011, but instead would be 

assessed the option transaction charge, 

which is currently $.44 per contract. 

The Exchange recently filed a 

proposal to amend its calculation of 

transaction fees for billing purposes 

from settlement date to trade date 

billing.6 In that filing, the Exchange 

amended the billing cycle so that a 

member who receives an invoice for the 

month of December 2010 will be 

assessed fees from November 30, 2010 

(trade date) through December 31, 2010 

(trade date) instead of through 

December 30, 2010 (trade date).7 The 

Exchange is proposing to amend the 

QNET promotional pricing to allow 

members to obtain the promotional 

pricing through the end of the December 

billing period. The Exchange also 

proposes amending the Fee Schedule to 

reflect this amendment of the date for 

the QNET promotional period. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 8

in general, and furthers the objectives of 

Section 6(b)(4) of the Act 9 in particular, 

in that it is an equitable allocation of 

reasonable fees and other charges among 

Exchange members. The Exchange 

believes that expanding the promotional 

pricing for sector index option fees for 

QNET is equitable because all market 

participants would be able to obtain the 

promotional pricing for the extra day. 

The Exchange further believes that 

offering the $.20 per contract fee for a 

specified promotional period and 

thereafter assessing the standard sector 

index option transaction fees is also 

equitable because it is intended to 

encourage trading in QNET. 

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 10 and 

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80870 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Notices 

11 17 CFR 240.19b–4(f)(2). 

12 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See, Article 20 for rules relating to the operation 

of the CHX Matching System. 

5See, Securities Exchange Act Rel. No. 54550 

(Sept. 29, 2006), 71 FR 59563 (October 10, 2006) 

(SR–CHX–2006–05) at Section II.C. (Institutional 

Broker), note 65 and accompanying text. 

6For example, an Institutional Broker 

Representative (‘‘IBR’’) may receive an order 

instruction from a customer over the telephone or 

some electronic means of communication (e.g., 

e-mail or instant message). The IBR is then 

responsible for entering the terms of the order into 

an electronic database (for the purpose of 

facilitating automated surveillance of such activity. 

See, Article 11, Rule 3) and seeking execution 

thereof. 

7See, Securities Exchange Act Rel. No. 54550 

(Sept. 29, 2006), 71 FR 59563 (October 10, 2006) 

(SR–CHX–2006–05). 

paragraph (f)(2) of Rule 19b–4 11

thereunder. 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–Phlx–2010–177 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–2010–177. 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. 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–Phlx– 

2010–177 and should be submitted on 

or before January 13, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–32222 Filed 12–22–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63564; File No. SR–CHX– 

2010–25] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing and Order Granting 

Accelerated Approval of a Proposed 

Rule Change To Eliminate the 

Validated Cross Trade Entry 

Functionality 

December 16, 2010. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on December 

10, 2010, the Chicago Stock Exchange, 

Inc. (the ‘‘Exchange’’ or ‘‘CHX’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II 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 and is 

approving the proposed rule change on 

an accelerated basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The CHX proposes to amend its rules 

to eliminate the Validated Cross Trade 

Entry Functionality for Exchangeregistered Institutional Brokers. The text 

of this proposed rule change is available 

on the Exchange’s Web site at (http:// 

www.chx.com) and in 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 

CHX included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received regarding the 

proposal. The text of these statements 

may be examined at the places specified 

in Item IV below. The CHX 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 Exchange proposes to amend its 

rules relating to the submission and 

execution of certain cross orders by 

CHX-registered Institutional Brokers 

(‘‘Institutional Brokers’’) by eliminating 

the ability of an Institutional Broker to 

execute trades on the Exchange’s trading 

facilities outside of the Exchange’s 

Matching System.4 Institutional Brokers 

represent a voluntary registration 

category of Exchange Participants and 

the provisions of Article 17 of the 

Exchange’s Rules apply specifically to 

them. Institutional Brokers are deemed 

to be trading on the facilities of the 

Exchange.5 Institutional Brokers are the 

successors to the previous Floor Broker 

category and they largely handle orders 

from their customers on a manual 

basis.6

With the adoption and 

implementation of Regulation NMS 

(‘‘Reg NMS’’), the Exchange transitioned 

from its traditional floor-based, auction 

trading archetype to its current 

electronic trading model.7 In order to 

facilitate the handling and execution of 

orders by Institutional Brokers, Article 

17 has provided a means by which 

Institutional Brokers could attempt to 

manually execute and report 

transactions outside the CHX Matching 

System while complying with the tradethrough prohibitions of Reg NMS and 

the order priority rules of the 

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