41466 Federal Register / Vol. 74, No. 157 / Monday, August 17, 2009 / Notices 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 59995 

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

Phlx–2009–32). 

4See Securities Exchange Act Release No. 60202 

(June 30, 2009), 74 FR 32675 (‘‘Notice’’). 

5A ‘‘distributor receives a feed or data file of data 

directly from NASDAQ OMX PHLX or indirectly 

through another entity and then distributes it either 

internally or externally. All distributors will be 

required to execute a NASDAQ OMX PHLX 

distributor agreement. 

6An Internal Distributor is an organization that 

subscribes to the Exchange for the use of TOPO, and 

is permitted by agreement with the Exchange to 

provide TOPO data to internal users (i.e., users 

within their own organization). An External 

Distributor is an organization that subscribes to the 

Exchange for the use of TOPO, and is permitted by 

agreement with the Exchange to provide TOPO data 

to both internal users and to external users (i.e., 

users outside of their own organization). 

7 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

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

9(a), as described in greater detail in the 

application. 

Applicants’ Condition 

Applicants agree that any order 

granting the requested relief will be 

subject to the following condition: 

Any temporary exemption granted 

pursuant to the application shall be 

without prejudice to, and shall not limit 

the Commission’s rights in any manner 

with respect to, any Commission 

investigation of, or administrative 

proceedings involving or against, 

Covered Persons, including, without 

limitation, the consideration by the 

Commission of a permanent exemption 

from section 9(a) of the Act requested 

pursuant to the application or the 

revocation or removal of any temporary 

exemptions granted under the Act in 

connection with the application. 

Temporary Order 

The Commission has considered the 

matter and finds that Applicants have 

made the necessary showing to justify 

granting a temporary exemption. 

Accordingly, 

It is hereby ordered, pursuant to 

section 9(c) of the Act, that GEAM and 

GEID and any other Covered Persons are 

granted a temporary exemption from the 

provisions of section 9(a), solely with 

respect to the Injunction, subject to the 

condition in the application, from 

August 11, 2009, until the Commission 

takes final action on their application 

for a permanent order. 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–19625 Filed 8–14–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold a Closed Meeting 

on Thursday, August 20, 2009 at 2 p.m. 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the Closed Meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) 

and 17 CFR 200.402(a)(3), (5), (7), 9(ii) 

and (10), permit consideration of the 

scheduled matters at the Closed 

Meeting. 

Chairman Schapiro, as duty officer, 

voted to consider the items listed for the 

Closed Meeting in a closed session. 

The subject matter of the Closed 

Meeting scheduled for Thursday, 

August 20, 2009 will be: 

Institution and settlement of injunctive 

actions; 

Institution and settlement of 

administrative proceedings; and 

Other matters relating to enforcement 

proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: The Office of the Secretary at 

(202) 551–5400. 

Dated: August 13, 2009. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–19798 Filed 8–13–09; 4:15 pm] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60459; File No. SR–Phlx– 

2009–54] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Order 

Approving a Proposed Rule Change To 

Establish Fees for the Top of Phlx 

Options Direct Data Feed Product 

August 7, 2009. 

I. Introduction 

On June 30, 2009, NASDAQ OMX 

PHLX, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b-4 thereunder,2 a proposed rule 

change to amend its fee schedule by 

establishing subscriber fees for a direct 

data product related to the trading of 

standardized options on the Exchange’s 

enhanced electronic trading platform for 

options, Phlx XL II.3 Notice of the 

proposed rule change was published for 

comment in the Federal Register on July 

8, 2009.4 The Commission received no 

comments on the proposal. This order 

approves the proposed rule change. 

II. Description of the Proposal 

In conjunction with the launch and 

rollout of its Phlx XL II system, the 

Exchange is developing Top of Phlx 

Options (‘‘TOPO’’), a direct data feed 

product that includes the Exchange’s 

best bid and offer price, with aggregate 

size, based on displayable order and 

quoting interest on the Phlx XL II 

system. The data contained in the TOPO 

data feed is identical to the data sent to 

the processor for the Options Price 

Regulatory Authority (‘‘OPRA’’), and the 

TOPO and OPRA data will leave the 

Phlx XL II System at the same time. 

In coordination with the projected 

completion of the rollout of the Phlx XL 

II system, the Exchange proposes to 

charge monthly fees to distributors, 

beginning August 1, 2009, for use of 

TOPO.5 The monthly ‘‘Distributor Fee’’ 

charged will depend on whether the 

distributor is an ‘‘Internal Distributor’’ 

or an ‘‘External Distributor.’’ 6

Specifically, the Exchange proposed to 

charge Internal Distributors a monthly 

fee of $2,000 per organization and to 

charge External Distributors a monthly 

fee of $2,500 per organization. 

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.7 In particular, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of Section 6(b)(4) of the 

Act,8 which requires that the rules of a 

national securities exchange provide for 

the equitable allocation of reasonable 

dues, fees and other charges among 

members and issuers and other persons 

using its facilities, and Section 6(b)(5) of 

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Federal Register / Vol. 74, No. 157 / Monday, August 17, 2009 / Notices 41467 

9 15 U.S.C. 78f(b)(5). 

10 15 U.S.C. 78f(b)(8). 

11See Securities Exchange Act Release No. 59039 

(December 2, 2008), 73 FR 74770 (December 9, 

2008) (SR–NYSEArca–2006–21) (‘‘NYSE Arca 

Order’’). 

12 Id. at 74771. 

13 Id. at 74782. 

14 Id. at 74781. 

15 Id. at 74779. 

16See OPRA Plan, Sections V(a)–(c). 

17See NYSE Arca Order, supra, note 11, at 74779. 

18 Id. 

19 Id. 

20See generally Concept Release: Competitive 

Developments in the Options Markets, Securities 

Exchange Act Release No. 49175 (February 3, 2004), 

69 FR 6124 (February 9, 2004); see also Battalio, 

Robert, Hatch, Brian, and Jennings, Robert, Toward 

a National Market System for U.S. Exchange-listed 

Equity Options, The Journal of Finance 59 (933– 

961); De Fontnouvelle, Patrick, Fishe, Raymond P., 

and Harris, Jeffrey H., The Behavior of Bid-Ask 

Spreads and Volume in Options Markets During the 

Competition for Listings in 1999, The Journal of 

Finance 58 (2437–2463); and Mayhew, Stewart, 

Competition, Market Structure, and Bid-Ask 

Spreads in Stock Option Markets, The Journal of 

Finance 57 (931–958). 

21See, e.g., Securities Exchange Act Release Nos. 

55162 (January 24, 2007), 72 FR 4738 (February 1, 

2007) (SR–Amex–2006–106); 55073 (January 9, 

2007), 72 FR 4741 (February 1, 2007) (SR–BSE– 

2006–48); 55154 (January 23, 2007), 72 FR 4743 

(February 1, 2007) (SR–CBOE–2006–92); 55161 

(January 24, 2007), 72 FR 4754 (February 1, 2007) 

(SR–Phlx–2006–62); 55156 (January 23, 2007), 72 

FR 4759 (February 1, 2007) (SR–NYSEArca–2006– 

73); and 55153 (January 23, 2007), 72 FR 4553 

(January 31, 2007) (SR–Phlx–2006–74). 

22See Securities Exchange Act Release No. 59949 

(May 20, 2009), 74 FR 25593 (May 28, 2009) (SR– 

ISE–2007–97) (order approving a proposed rule 

change by ISE to establish fees for a depth of market 

data product). 

23 In its filing, Phlx states that ‘‘[a]s an illustration 

of the intensity of the competition for options order 

flow among the seven U.S. options exchanges, the 

ISE and * * * CBOE each enjoy close to thirty 

percent market share of volume, followed by Phlx 

at close to twenty percent market share, followed 

by four other exchanges with meaningful market 

share.’’ See Notice, supra, note 4, at 32676. 

24Phlx states in its filing that it ‘‘has a compelling 

need to attract order flow from market participants 

* * * in order to maintain its share of trading 

volume.’’ See Notice, supra, note 4, at 32676. 

25See Notice, supra, note 4, at 32676. 

26 Id. 

the Act,9 which requires, among other 

things, that the rules of an exchange be 

designed to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest; and 

not be designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. The 

Commission also finds that the 

proposed rule change is consistent with 

Section 6(b)(8) of the Act 10 in that it 

does not impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

The Commission has reviewed the 

proposal using the approach set forth in 

the approval order for SR–NYSEArca– 

2006–21 for non-core market data fees.11

In the NYSE Arca Order, the 

Commission stated that ‘‘when possible, 

reliance on competitive forces is the 

most appropriate and effective means to 

assess whether the terms for the 

distribution of non-core data are 

equitable, fair and reasonable, and not 

unreasonably discriminatory.’’ 12 It 

noted that the ‘‘existence of significant 

competition provides a substantial basis 

for finding that the terms of an 

exchange’s fee proposal are equitable, 

fair, reasonable, and not unreasonably 

or unfairly discriminatory.’’ 13 If an 

exchange ‘‘was subject to significant 

competitive forces in setting the terms 

of a proposal,’’ the Commission will 

approve a proposal unless it determines 

that ‘‘there is a substantial 

countervailing basis to find that the 

terms nevertheless fail to meet an 

applicable requirement of the Exchange 

Act or the rules thereunder.’’ 14

As noted in the NYSE Arca Order, the 

standards in Section 6 of the Act do not 

differentiate between types of data and 

therefore apply to exchange proposals to 

distribute both core data and non-core 

data.15 All U.S. options exchanges are 

required pursuant to the Plan for 

Reporting of Consolidated Options Last 

Sale Reports and Quotation Information 

(‘‘OPRA Plan’’) to provide ‘‘core data’’— 

the best-priced quotations and 

comprehensive last sale reports—to 

OPRA, which data is then distributed to 

the public pursuant to the OPRA Plan.16

In contrast, individual exchanges and 

other market participants distribute 

non-core data voluntarily.17 The 

mandatory nature of the core data 

disclosure regime leaves little room for 

competitive forces to determine 

products and fees.18 Non-core data 

products and their fees are, by contrast, 

much more sensitive to competitive 

forces. The Commission therefore is able 

to rely on competitive forces in its 

determination of whether an exchange’s 

proposal to distribute non-core data 

meets the standards of Section 6.19

Because Phlx’s instant proposal 

relates to the distribution of non-core 

data, the Commission will apply the 

market-based approach set forth in the 

NYSE Arca Order. Pursuant to this 

approach, the first step is to determine 

whether Phlx was subject to significant 

competitive forces in setting the terms 

of its non-core market data proposal, 

including the level of any fees. As in the 

NYSE Arca Order, in determining 

whether Phlx was subject to significant 

competitive forces in setting the terms 

of its proposal, the Commission has 

analyzed Phlx’s compelling need to 

attract order flow from market 

participants, and the availability to 

market participants of alternatives to 

purchasing Phlx’s non-core market data. 

The Commission believes that the 

options industry currently is subject to 

significant competitive forces. It is 

generally accepted that the start of widespread multiple listing of options across 

exchanges in August 1999 greatly 

enhanced competition among the 

exchanges.20 The launch of three 

options exchanges since that time, 

numerous market structure innovations, 

and the start of the options penny 

pilot 21 have all further intensified 

intermarket competition for order 

flow.22

Phlx currently competes with six 

options exchanges for order flow.23

Attracting order flow is an essential part 

of Phlx’s competitive success.24 If Phlx 

cannot attract order flow to its market, 

it will not be able to execute 

transactions. If Phlx cannot execute 

transactions on its market, it will not 

generate transaction revenue. If Phlx 

cannot attract orders or execute 

transactions on its market, it will not 

have market data to distribute, for a fee 

or otherwise, and will not earn market 

data revenue and thus not be 

competitive with other exchanges that 

have this ability. In its filing, Phlx 

provided market share data for the 

seven options exchanges.25

These market share percentages 

strongly indicate that Phlx must 

compete vigorously for order flow to 

maintain its share of trading volume. 

This compelling need to attract order 

flow imposes significant pressure on 

Phlx to act reasonably in setting its fees 

for Phlx market data, particularly given 

that the market participants that will 

pay such fees often will be the same 

market participants from whom Phlx 

must attract order flow. These market 

participants include broker-dealers that 

control the handling of a large volume 

of customer and proprietary order flow. 

Given the portability of order flow from 

one exchange to another, any exchange 

that sought to charge unreasonably high 

data fees would risk alienating many of 

the same customers on whose orders it 

depends for competitive survival.26

Phlx currently trades options on 

seven proprietary index products that 

are not traded on any other exchange. 

Phlx represents that these seven options 

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41468 Federal Register / Vol. 74, No. 157 / Monday, August 17, 2009 / Notices 

27 Id. 

28See NYSE Arca Order, supra note 11, at 74784. 

29 Id. at 74783. 

30 Id. 

31 Id. Information on transactions executed on 

Phlx is available through OPRA. 

32 In its filing, Phlx states that ‘‘ISE and CBOE are 

potential competitors because each exchange enjoys 

greater market share and thus the ability to offer a 

top-of-book product that would compete favorably 

with TOPO.’’ See Notice, supra, note 4, at 32677. 

Phlx also notes that although the TOPO data feed 

is separate from the core data feed made available 

by OPRA, all of the information made available in 

TOPO is included in the core data feed. Phlx states 

that the OPRA data is widely distributed and 

relatively inexpensive, thus constraining Phlx’s 

ability to price TOPO. See Notice, supra, note 4, at 

32677. 

33Conversely, External Distributors can 

reasonably be expected to distribute the TOPO data 

to a higher number of subscribers because they do 

not have the same limitation. Accordingly, the 

Exchange will charge a higher fee to External 

Distributors than to Internal Distributors. See id. 

34 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. 60195 

(June 30, 2009), 74 FR 32678 (‘‘Notice’’). 

4See NYSE Arca Equities Rule 8.600. 

5The Trust is registered under the Investment 

Company Act of 1940 (‘‘1940 Act’’). On June 9, 

2009, the Trust filed with the Commission a 

registration statement on Form N–1A (File Nos. 

333–157876 and 811–22110) (‘‘Registration 

Statement’’). 

6The Exchange represents that neither the 

Advisor nor the Sub-Advisor is affiliated with a 

broker-dealer. See Commentary .07 to NYSE Arca 

Equities Rule 8.600. 

7 17 CFR 240.10A–3. 

8Underlying ETPs include Investment Company 

Units (NYSE Arca Equities Rule 5.2(j)(3)); IndexLinked Securities (NYSE Arca Equities Rule 

5.2(j)(6)); Portfolio Depositary Receipts (NYSE Arca 

Equities Rule 8.100); Trust Issued Receipts (NYSE 

Arca Equities Rule 8.200); Commodity-Based Trust 

Shares (NYSE Arca Equities Rule 8.201); Currency 

Trust Shares (NYSE Arca Equities Rule 8.202); 

Commodity Index Trust Shares (NYSE Arca 

Equities Rule 8.203); Trust Units (NYSE Arca 

Equities Rule 8.500); and Managed Fund Shares 

(NYSE Arca Equities Rule 8.600). 

currently represent less than 0.04% of 

Phlx’s total contract volume.27 The 

Commission believes that, given the 

small percentage of Phlx’s total contract 

volume represented by these seven 

products, the inclusion of data on these 

products in Phlx’s TOPO product will 

not confer market power on Phlx to 

compel market participants to purchase 

the entire Phlx data feed. The 

Commission therefore believes that the 

inclusion of top-of-book data for these 

products in Phlx’s TOPO product does 

not undermine the finding that Phlx was 

subject to significant competitive forces 

in setting the terms of its proposal. 

In addition to the need to attract order 

flow, the availability of alternatives to 

TOPO product significantly affect the 

terms on which Phlx can distribute this 

market data.28 In setting the fees for its 

TOPO product, Phlx must consider the 

extent to which market participants 

would choose one or more alternatives 

instead of purchasing its data.29 The 

most basic source of information 

concerning the top-of-book generally 

available at an exchange is the complete 

record of an exchange’s transactions that 

is provided in the core data feeds.30 In 

this respect, the core data feeds that 

include an exchange’s own transaction 

information are a significant alternative 

to the exchange’s market data product.31

Further, other options exchanges can 

produce their own top-of-book products, 

and thus are sources of potential 

competition for Phlx.32

The Commission believes that there 

are a number of alternative sources of 

information that impose significant 

competitive pressures on Phlx in setting 

the terms for distributing its TOPO 

product. The Commission believes that 

the availability of those alternatives, as 

well as Phlx’s compelling need to attract 

order flow, imposed significant 

competitive pressure on Phlx to act 

equitably, fairly, and reasonably in 

setting the terms of its proposal. 

Because Phlx was subject to 

significant competitive forces in setting 

the terms of the proposal, the 

Commission will approve the proposal 

in the absence of a substantial 

countervailing basis to find that the 

terms of the proposal fail to meet the 

applicable requirements of the Act or 

the rules thereunder. The Commission 

did not receive any comments on the 

proposal. Further, an analysis of the 

proposal does not provide such a basis. 

The Commission notes that the 

proposed fees for TOPO are lower for 

Internal Distributors than for External 

Distributors. Because Internal 

Distributors are by definition more 

limited in the scope of their distribution 

of TOPO data than External Distributors, 

it is reasonable to expect that Internal 

Distributors will provide TOPO data to 

a smaller number of internal 

subscribers.33 The fees therefore do not 

unreasonably discriminate among types 

of subscribers, such as by favoring 

participants in the Phlx market or 

penalizing participants in other markets. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act, that the 

proposed rule change (SR–Phlx–2009– 

54), be and hereby is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.34

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–19569 Filed 8–14–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60460; File No. SR– 

NYSEArca–2009–55] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Granting Approval of 

a Proposed Rule Change To List and 

Trade Shares of the Dent Tactical ETF 

August 7, 2009. 

On June 18, 2009, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or ‘‘Exchange’’), through 

its wholly owned subsidiary, NYSE 

Arca Equities, Inc. (‘‘NYSE Arca 

Equities’’), filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 

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

proposed rule change to list and trade 

shares (‘‘Shares’’) of the Dent Tactical 

ETF (‘‘Fund’’) under NYSE Arca 

Equities Rule 8.600. The proposed rule 

change was published in the Federal 

Register on July 8, 2009.3 The 

Commission received no comments on 

the proposal. This order grants approval 

of the proposed rule change. 

I. Description of the Proposal 

The Exchange proposes to list and 

trade the Shares of the Fund under 

NYSE Arca Equities Rule 8.600, which 

governs the listing of Managed Fund 

Shares.4 The Shares will be offered by 

AdvisorShares Trust (‘‘Trust’’), a 

statutory trust organized under the laws 

of the State of Delaware and registered 

with the Commission as an open-end 

management investment company.5 The 

investment advisor to the Fund is 

AdvisorShares Investments, LLC 

(‘‘Advisor’’), and the day-to-day 

portfolio management of the Fund is 

provided by the sub-advisor to the 

Fund, HS Dent Investment Management, 

LLC (‘‘Sub-Advisor’’).6 The Exchange 

represents that the Shares will conform 

to the initial and continued listing 

criteria under NYSE Arca Equities Rule 

8.600 and that the Fund will be in 

compliance with Rule 10A–3 under the 

Act,7 as provided by NYSE Arca 

Equities Rule 5.3. 

The Fund is a ‘‘fund of funds,’’ which 

means that the Fund seeks to invest 

primarily in other exchange-traded 

funds that are registered under the 1940 

Act and certain other exchange-traded 

products that are not registered as 

investment companies under the 1940 

Act (collectively, ‘‘Underlying ETPs’’).8

The Fund seeks to achieve its 

investment objective of long-term 

growth of capital by identifying, through 

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