Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Notices 615 

5See Securities Exchange Act Release No. 63034 

(October 4, 2010), 75 FR 62441 (October 8, 2010) 

(SR–Phlx–2010–124). 

6See Amendment No. 1 (adding the preceding 

two sentences). 

7See Securities Exchange Act Release No. 63145 

(October 21, 2010), 75 FR 66168 (October 21, 2010) 

(SR–Phlx–2010–143) (a proposal to amend the 

Active SQF Port Fee so that member organizations 

are not assessed a fee for use of SQF 5.0 active ports 

to the extent the member is paying for the same (or 

greater) number of SQF 6.0 active ports). 

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). 

11 17 CFR 240.19b–4(f)(2). 12 17 CFR 200.30–3(a)(12). 

Number of Active SQF Ports Cost per port 

per month 

0–4 ........................................ $350 

5–18 ...................................... 1,250 

19–40 .................................... 2,350 

40 and over .......................... 3,000 

The Exchange proposes to cap the 

Active SQF Port Fees at $40,000 per 

month through March 31, 2011 (‘‘Cap’’). 

On April 1, 2011, there will no longer 

be a Cap in effect for the Active SQF 

Port Fee. The purpose of the Cap is to 

ensure member organizations are not 

assessed fees in excess of the Active 

SQF Port fees, which fees would have 

been charged under the fixed rate of 

$500 per month per port, during the 

transition from SQF 5.0 to SQF 6.0.5

The Exchange believes that member 

organizations will utilize less SQF 6.0 

ports than SQF 5.0 ports and that all 

member organizations should have 

transitioned to SQF 6.0 by March 31, 

2011. The Exchange believes that the 

proposed tiered Active SQF Port Fees 

will create a more efficient use of 

Exchange resources by providing 

members an incentive to utilize the 

minimum number of ports necessary for 

their business. The Exchange believes 

that all members will benefit from a 

faster and more efficient system if ports 

are efficiently utilized by members.6

The Exchange will continue to 

account for the number of SQF 

interfaces in order that member 

organizations are not assessed port fees 

for use of the prior version of the 

interface (SQF 5.0) while transitioning 

to (and paying for) the new version 

(SQF 6.0).7

While changes to the Exchange’s Fee 

Schedule pursuant to this proposal are 

effective upon filing, the Exchange has 

designated this proposal to be operative 

on January 3, 2011. 

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 and other persons 

using its facilities. The Exchange 

believes that assessing fees at the 

aforementioned rates is equitable 

because the fee would be applied 

equally to all members. The Exchange 

also believes that the proposal is 

reasonable because through the 

transition period the Exchange is 

proposing a Cap to ensure members are 

not burdened by proposed tiered 

schedule of fees. 

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 

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–2010–181 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–2010–181. 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–Phlx– 

2010–181 and should be submitted on 

or before January 26, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–33267 Filed 1–4–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63617; File No. SR–BX– 

2010–092] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Modify Fees 

for the NASDAQ OMX BX Equities 

System 

December 29, 2010. 

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

Securities Exchange Act of 1934 


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616 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Notices 

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

2 17 CFR 240.19b–4. 

3See, e.g., Securities Exchange Act Release No. 

63160 (October 22, 2010), 75 FR 66817 (October 29, 

2010) (SR–CBOE–2010–093) (adopting fees 

identical to the fees proposed in this filing). 

4 15 U.S.C. 78f. 

5 15 U.S.C. 78f(b)(4). 

6See supra n.3. 7 15 U.S.C. 78s(b)(3)(a)(ii). 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

22, 2010, NASDAQ OMX BX, Inc. 

(‘‘BX’’) 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 BX. 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 

BX proposes to modify pricing for BX 

members using the NASDAQ OMX BX 

Equities System. BX will implement the 

proposed change on January 3, 2011. 

The text of the proposed rule change is 

available at http:// 

nasdaqomxbx.cchwallstreet.com, at 

BX’s principal office, 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, BX 

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. BX 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 

BX is proposing to modify its fees for 

trades that execute at prices at or above 

$1. BX has a pricing model under which 

members are charged for the execution 

of quotes/orders posted on the BX book 

(i.e., quotes/orders that provide 

liquidity), while members receive a 

rebate for orders that access liquidity. 

Since BX introduced this pricing model 

in 2009, several other exchanges have 

emulated it, including the EDGX 

Exchange, the BATS–Y Exchange, and 

the CBOE Stock Exchange (‘‘CBSX’’). 

Effective November 1, 2010, BX 

increased the rebate for accessing 

liquidity to $0.0002 per share executed 

and introduced a tiered pricing 

structure for the fee to add liquidity, 

under which members adding a daily 

average of more than 50 million shares 

of liquidity during a month are charged 

$0.00025 per share executed, while 

members adding a daily average of 50 

million or fewer shares during the 

month are charged $0.0004 per share 

executed. Effective January 3, 2011, BX 

will revert to non-tiered pricing 

structure, but will make significant 

changes to the levels of its rebate for 

accessing liquidity and its charge for 

liquidity provision. Specifically, for all 

market participants, the fee to add 

liquidity will be $0.0018 per share 

executed, and the rebate for accessing 

liquidity will be $0.0014 per share 

executed. The fee changes are reflective 

of the ongoing intense level of 

competition for order flow in the cash 

equities markets, and specifically among 

exchanges that provide rebates to 

market participants accessing liquidity.3

2. Statutory Basis 

BX believes that the proposed rule 

change is consistent with the provisions 

of Section 6 of the Act,4 in general, and 

with Section 6(b)(4) of the Act,5 in 

particular, 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 BX operates or 

controls. The impact of the price 

changes upon the net fees paid by a 

particular market participant will 

depend upon a number of variables, 

including the relative availability of 

liquidity on BX and other venues, and 

the prices of the market participant’s 

quotes and orders relative to the 

national best bid and offer (i.e., its 

propensity to add or remove liquidity). 

Although the change increases the fee 

for orders that provide liquidity, it 

provides an offsetting increase in the 

rebate for orders accessing liquidity. As 

a result of the change, BX’s fees and 

rebates for stocks priced above $1 will 

match those that have been in effect on 

a competing venue for several months.6

BX notes that it operates in a highly 

competitive market in which market 

participants can readily direct order 

flow to competing venues if they deem 

fee levels at a particular venue to be 

excessive. Accordingly, if particular 

market participants object to the 

proposed fee changes, they can avoid 

paying the fees by directing orders to 

other venues. BX believes that its fees 

continue to be reasonable and equitably 

allocated to members on the basis of 

whether they opt to direct orders to BX. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

BX 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. 

Because the market for order execution 

and routing is extremely competitive, 

members may readily direct orders to 

BX’s competitors if they believe that 

competitors offer more favorable 

pricing. The change is a direct 

competitive response to fee changes 

implemented at one of BX’s 

competitors. 

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.7 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–BX–2010–092 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Notices 617 

8 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 58845 

(October 24, 2008), 73 FR 64379 (October 29, 2008) 

(SR–NYSE–2008–46); See also Securities Exchange 

Act Release Nos. 60756 (October 1, 2009), 74 FR 

51628 (October 7, 2009) (SR–NYSE–2009–100) 

(extending Pilot to November 30, 2009); 61031 

(November 19, 2009), 74 FR 62368 (November 27, 

2009) (SR–NYSE–2009–113) (extending Pilot to 

March 30, 2010); 61724 (March 17, 2010), 75 FR 

14221 (March 24, 2010) (SR–NYSE–2010–25) 

(extending Pilot to September 30, 2010); and 62819 

(September 1, 2010), 75 FR 54937 (September 9, 

2010) (SR–NYSE–2010–61) (extending Pilot to 

January 31, 2011). 

4See SR–NYSE Amex–2010–122. 

5The information contained herein is a summary 

of the NMM Pilot. See supra note 1 [sic] for a fuller 

description. 

6See NYSE Rule 103. 

7See NYSE Rule 104. 

8See NYSE Rule 60; see also NYSE Rules 104 and 

1000. 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–BX–2010–092. 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 will 

also be available for inspection and 

copying at the principal office of the 

self-regulatory organization. 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–BX–2010–092 and should 

be submitted on or before January 26, 

2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–33257 Filed 1–4–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63618; File No. SR–NYSE– 

2010–85] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Extending the 

Operation of Its New Market Model 

Pilot Until the Earlier of Securities and 

Exchange Commission Approval To 

Make Such Pilot Permanent or August 

1, 2011 

December 29, 2010. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) and Rule 19b–4 thereunder,2

notice is hereby given that on December 

17, 2010, New York Stock Exchange 

LLC (‘‘NYSE’’ or the ‘‘Exchange’’) 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend the 

operation of its New Market Model 

Pilot, currently scheduled to expire on 

January 31, 2011, until the earlier of 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) approval to 

make such pilot permanent or August 1, 

2011. The text of the proposed rule 

change is available at the Exchange, the 

Commission’s Public Reference Room, 

and http://www.nyse.com. 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to extend the 

operation of its New Market Model Pilot 

(‘‘NMM Pilot’’),3 currently scheduled to 

expire on January 31, 2011, until the 

earlier of Securities and Exchange 

Commission approval to make such 

pilot permanent or August 1, 2011. 

The Exchange notes that parallel 

changes are proposed to be made to the 

rules of the NYSE Amex LLC.4

Background 5

In October 2008, the NYSE 

implemented significant changes to its 

market rules, execution technology and 

the rights and obligations of its market 

participants all of which were designed 

to improve execution quality on the 

Exchange. These changes are all 

elements of the Exchange’s enhanced 

market model. Certain of the enhanced 

market model changes were 

implemented through a pilot program. 

As part of the NMM Pilot, NYSE 

eliminated the function of specialists on 

the Exchange creating a new category of 

market participant, the Designated 

Market Maker or DMM.6 The DMMs, 

like specialists, have affirmative 

obligations to make an orderly market, 

including continuous quoting 

requirements and obligations to re-enter 

the market when reaching across to 

execute against trading interest. Unlike 

specialists, DMMs have a minimum 

quoting requirement7 in their assigned 

securities and no longer have a negative 

obligation. DMMs are also no longer 

agents for public customer orders.8

In addition, the Exchange 

implemented a system change that 

allowed DMMs to create a schedule of 

additional non-displayed liquidity at 

various price points where the DMM is 


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