Federal Register / Vol. 74, No. 195 / Friday, October 9, 2009 / Notices 52279 

5 15 U.S.C. 78q–1. 

6 15 U.S.C. 78s(b)(3)(A)(ii). 

7 17 CFR 240.19b–4(f)(2). 

8 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3An SQT is an Exchange Registered Options 

Trader (‘‘ROT’’) who has received permission from 

the Exchange to generate and submit option 

quotations electronically in eligible options to 

which such SQT is assigned. An SQT may only 

submit such quotations while such SQT is 

physically present on the floor of the Exchange. See 

Continued 

programming and other costs associated 

with new product adoption. 

In addition, effective October 1, 2009, 

NSCC is adopting a reduction in fees 

that may be incurred by a member due 

to extraordinary events, such as mergers 

or mass reconciliations, that generate 

unusually high transaction volume for a 

limited duration. A member must 

arrange with NSCC in advance for the 

appropriate reduction in fees in such 

circumstances. With respect to 

transaction types for which the member 

has no history of prior usage, the credit 

will be 85% of the transaction fees 

chargeable for the transaction type. 

There will be an additional credit of 5% 

if the member continues use of the 

transaction type in its usual processing 

flows after the event. With respect to 

transaction types for which the member 

has a history of prior usage, the credit 

will be in an amount sufficient to 

produce an aggregate fee that is no more 

than 120% of the average amount 

charged to the member for such 

transactions in the prior three months. 

NSCC believes that the proposed rule 

change is consistent with the 

requirements of Section 17A of the Act 5

and the rules and regulations 

thereunder applicable to NSCC because 

the proposed rule change updates 

NSCC’s fee schedule and provides for 

equitable allocation of fees among its 

members. 

(B) Self-Regulatory Organization’s 

Statement on Burden on Competition 

NSCC does not believe that the 

proposed rule change will have any 

impact or impose any burden on 

competition. 

(C) Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments relating to the 

proposed rule change have not yet been 

solicited or received. NSCC will notify 

the Commission of any written 

comments received by NSCC. 

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 6 and Rule 19b– 

4(f)(2) 7 thereunder because the 

proposed rule change is establishing or 

changing a due, fee, or other charge 

applicable only to a member. At any 

time within sixty days of the filing of 

such rule change, the Commission may 

summarily abrogate 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 

• Electronic comments may be 

submitted by using the Commission’s 

Internet comment form (http:// 

www.sec.gov/rules/sro.shtml), or 

• Send an e-mail to 

rule-comment@sec.gov. Please include 

File No. SR–NSCC–2009–08 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–NSCC–2009–08. 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 inspection and copying in 

the Commission’s Public Reference 

Section, 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 filings also will be 

available for inspection and copying at 

the principal office of NSCC and on 

NSCC’s Web site at http:// 

www.dtcc.com/legal/rule_filings/nscc/ 

2009.php. 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–NSCC– 

2009–08 and should be submitted on or 

before October 30, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–24350 Filed 10–8–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60785; File No. SR–Phlx– 

2009–86] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Specialist and Registered Options 

Traders Allocation and Assignment 

Rules 

October 2, 2009. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on 

September 30, 2009, 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 

Phlx Rules 501 (Specialist 

Appointment), 505 (Allocation, 

Reallocation and Transfer of Issues), 506 

(Allocation Application), 507 

(Application for Approval as an SQT or 

RSQT and Assignment of Options), and 

513 (Voluntary Resignation of Options 

Privileges) to clarify and streamline the 

process for specialist allocations and 

Streaming Quote Trader (‘‘SQT’’) 3 and 

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52280 Federal Register / Vol. 74, No. 195 / Friday, October 9, 2009 / Notices 

Rule 1014(b)(ii)(A). See also Securities Exchange 

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

(June 3, 2009) (SR–Phlx–2009–32) (approval order 

regarding enhancements to opening, linkage and 

routing, quoting, and order management processes 

in the Exchange’s electronic options order entry, 

trading, and execution system PHLX XL II.). 

4An RSQT is 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 eligible options to which such 

RSQT has been assigned. An RSQT may only 

submit such quotations electronically from off the 

floor of the Exchange. See Exchange Rule 

1014(b)(ii)(B). 

5See Securities Exchange Act Release No. 58179 

(July 17, 2008), 73 FR 42874 (July 23, 2008) (SR– 

Phlx–2008–31). See also Securities Exchange Act 

Release No. 58183 (July 17, 2008), 73 FR 42850 

(July 23, 2008) (SR–NASDAQ–2008–035). 

6Securities Exchange Act Release No. 59924 (May 

14, 2009), 74 FR 23759 (May 20, 2009) (SR–Phlx– 

2009–23)(approval order). The proposal is similar 

in nature to previous proposals that, among other 

things, sought to more closely align the rules of 

Phlx and other exchanges within NASDAQ OMX, 

such as of The NASDAQ Stock Market LLC 

(‘‘Nasdaq’’). See, for example, Securities Exchange 

Act Release Nos. 59794 (April 20, 2009), 74 FR 

18761 (April 24, 2009) (SR–Phlx–2009–17) 

(approval order regarding proposal to modify the 

process for nominating Phlx Governors); 60431 

(August 4, 2009), 74 FR 40265 (August 11, 2009) 

(SR–Phlx–2009–59) (notice of filing relating to bylaws, Regulatory Oversight Committee, and referee 

program); and 59923 (May 14, 2009), 74 FR 23902 

(May 21, 2009) (SR–NASDAQ–2009–046) (notice of 

filing and immediate effectiveness relating to 

criteria for securities that underlie options traded 

on NOM). 

7The Allocation and Assignment Rules also 

indicate, among other things, under what 

circumstances new allocations may not be made. 

See, for example, Supplementary Material .01 to 

Rule 506 (specialist may not apply for a new 

allocation for a period of six months after an option 

allocation was taken away from the specialist in a 

disciplinary proceeding or an involuntary 

reallocation proceeding). 

8The Exchange notes that specialist applications 

are submitted for various purposes that may 

include, for example, requests for approval as new 

(or returning) specialists or specialist units, initial 

approval to be a specialist in a particular option 

class, and approval to be a specialist in additional 

option classes. The proposed changes should allow 

the Exchange to have similar applications for use 

within the various types of applicant classes while 

affording the Exchange flexibility to modify the 

form and/or format of such applications and 

information requested therein. 

9The information specified in Rule 501 for 

applications to be a specialist unit includes the 

following: (1) The identity of the unit’s staff 

positions and who will occupy those positions; (2) 

the unit’s clearing arrangements; (3) the unit’s 

capital structure, including any lines of credit; and 

(4) the unit’s back up arrangements. 

10See Proposed Commentary .01 to Rule 505. 

11As an example, in establishing a minimum 

period the Exchange may, among other things, take 

into account the desirability of the continuity of a 

market in a particular class of options. 

12As an example, such exceptional circumstances 

may exist where, within the week after assignment, 

the entity whose assigned security the SQT or 

RSQT is quoting is acquired by another, thereby 

impacting the risk tolerance of the SQT or RSQT 

and resulting in a request by the SQT or RSQT to 

cease the assignment. 

13The Exchange conforms Rule 506 to similarly 

state that if a specialist seeks to withdraw from 

allocation in a security, it should so notify the 

Exchange at least one business day prior to the 

desired effective date of such withdrawal. 

Remote Streaming Quote Trader 

(‘‘RSQT’’) 4 assignments, and delete 

unnecessary or obsolete language. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.nasdaqtrader.com/ 

micro.aspx?id=PHLXRulefilings, 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 purpose of the proposed rule 

change is to amend Phlx Rules 501, 505, 

506, 507, and 513 to clarify and 

streamline the process for specialist 

allocations and Streaming Quote Trader 

and Remote Streaming Quote Trader 

assignments, and delete unnecessary or 

obsolete language. 

After the merger of The NASDAQ 

OMX Group, Inc. (‘‘NASDAQ OMX’’) 

and the Philadelphia Stock Exchange, 

Inc. (now NASDAQ OMX PHLX, Inc.),5

the Commission in May 2009 approved 

a Phlx filing that, among other things, 

eliminated the Options Allocation, 

Evaluation and Securities Committee 

(‘‘Allocation Committee’’) and 

transferred all relevant duties from the 

Allocation Committee to the Exchange 

staff.6 As a result, the Exchange 

administers Rules 500 through 599 (the 

‘‘Allocation and Assignment Rules’’). 

The Allocation and Assignment Rules 

generally describe the process for: 

application for becoming and 

appointment of specialists; allocation of 

classes of options to specialist units and 

individual specialists; application for 

becoming and approval of SQTs and 

RQTs and assignment of options to 

them; and specialist, SQT, and RSQT 

performance evaluations.7

Rule 501 deals with the process of 

applying for approval as a specialist or 

specialist unit on the Exchange. The 

Exchange proposes changes to clarify 

that the Exchange may prescribe the 

form and/or format for the initial 

application and subsequent 

application(s). This proposed change 

should enhance the uniformity and 

quality of the application process.8 The 

information required on such 

applications is already established in 

the rule and is not changed.9 The 

exchange also clarifies in the rule that 

upon application by a member 

organization to become a specialist, the 

Exchange may, but is not required, to 

approve such organization as a 

specialist unit. 

Rule 505 deals with allocating, reallocating and transferring options 

classes on the Exchange. Currently, the 

rule states that a specialist unit that 

receives an allocation in an option must 

act as a specialist in it for at least one 

year. The Exchange is proposing a 

change indicating that, instead of an 

inflexible minimum one year time 

period, the Exchange may establish a 

minimum period that does not exceed 

one year (the ‘‘minimum specialist 

period’’). The length of the minimum 

specialist period, if one is chosen by the 

Exchange, will be indicated by the 

Exchange when it solicits applications 

for allocation of a security.10 The 

Exchange believes that this rule change 

would allow the Exchange to more 

closely tailor minimum specialist 

periods, to the benefit of specialists and 

specialist units as well as the 

Exchange.11

In a similar vein regarding minimum 

period, the Exchange proposes to codify 

in Rule 507 that upon initial assignment 

of an option to an SQT or RSQT, the 

SQT or RSQT may not withdraw from 

such assignment for ten or fewer 

business days after the effective date of 

assignment. The Exchange may, 

however, in exceptional circumstances 

approve withdrawal from an option 

assignment before such period of time.12

Where an SQT or RSQT seeks to 

withdraw from assignment in an option 

pursuant to Rule 507, the period of time 

that must pass between an SQT or RSQT 

notifying the Exchange of his or her 

desire to withdraw from assignment and 

the effective date of such withdrawal is 

reduced from three business days to one 

business day.13 Additionally, proposed 

Rule 507(b) states that, similarly to Rule 

501, the Exchange may prescribe the 

form and/or format of applications for 

assignment in an option and the 

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Federal Register / Vol. 74, No. 195 / Friday, October 9, 2009 / Notices 52281 

14Moreover, the information noted in the 

proposed rule (e.g. appropriate Exchange account 

number, requested start date for each option 

applied for, and name of member organization) is 

similar to information currently requested of 

applicants. 

15A root symbol is the options trading mnemonic 

used for each option as applied by The Options 

Clearing Corporation (‘‘OCC’’) to series overlying 

the same security (depending, without limitation, 

on the strike price of the series, the expiration of 

the series, the price of the underlying security, and/ 

or mergers and acquisitions relating to the 

underlying security). See Commentary .01 to Rule 

507. 

16The trend in allocations is, on the other hand, 

toward inclusivity of options emanating from 

mergers and acquisitions and spin-offs. See 

Securities Exchange Act Release No. 60455 (August 

6, 2009), 74 FR 40857(SR–Phlx–2009–62) (notice of 

filing and immediate effectiveness) (providing for 

automatic allocation of related options). 

17See Exchange Act Release No. 59995 (May 28, 

2009), 74 FR 26750 (June 3, 2009) (SR–Phlx–2009– 

32) (approval order regarding XL II). 

18Assignment by ‘‘root symbol’’ is not compatible 

with XL II system requirements. 

19 15 U.S.C. 78f(b). 

20 15 U.S.C. 78f(b)(5). 

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

22 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. Phlx has satisfied this requirement. 

minimum information to be provided 

thereon.14

Rule 513 deals with voluntary 

resignations by specialist units from 

allocations of particular options. 

Currently, the rule states that barring 

any specialist performance or 

disciplinary issues, the option specialist 

unit that last traded an option must be 

given preference in any future allocation 

decision regarding the same option. The 

Exchange proposes to clarify that while 

a preference may be given by the 

Exchange, the preference will no longer 

be effective for a one year period in 

every instance. This should enable the 

Exchange to make better re-allocation 

determinations by taking into 

consideration not only past but also 

current and prospective factors. 

The Exchange also proposes to delete 

obsolete language regarding SQT and 

RSQT applicants requesting partial 

options assignments. Currently, Rule 

507 in Commentary .01 allows an SQT 

or RSQT applicant to request option 

assignment by ‘‘root symbol,’’ 15 such 

that an SQT or RSQT could effectively 

request not to be assigned in certain 

options within an options class, such as, 

for example, those emanating from 

mergers and acquisitions and spinoffs.16 In light of the recent 

enhancements and configurations to the 

Exchange’s electronic quoting and 

trading system, which is now known as 

Phlx XL II,17 requesting partial 

assignments is no longer a feasible 

alternative for SQTs and RSQTs and is 

therefore being deleted.18

The Exchange believes that the 

changes proposed to the Allocation and 

Assignment Rules as a whole streamline 

the rules and make their 

implementation more uniform and 

predictable to the benefit of the 

Exchange and market participants such 

as specialists, specialist units, SQTs and 

RSQTs on the Exchange. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 19 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 20

in particular, in that it is designed to 

promote just and equitable principles of 

trade, 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, by 

clarifying and streamlining the process 

for specialist allocations and SQT and 

RSQT assignments. The Exchange 

believes that its rule change proposal 

does not engender unfair discrimination 

among specialists, specialist units, SQTs 

and RSQTs in that it clarifies and 

streamlines (as well as codifies) 

allocation and assignment procedures 

that are equally applicable to all 

members and member organizations at 

the Exchange. 

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 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days after the date of 

the filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to 19(b)(3)(A) 

of the Act 21 and Rule 19b–4(f)(6) 22

thereunder. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

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–2009–86 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–2009–86. 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 inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 am and 3 pm. 

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–2009–86 and should 

mstockstill on DSKH9S0YB1PROD with NOTICES

52282 Federal Register / Vol. 74, No. 195 / Friday, October 9, 2009 / Notices 

23 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 Nos. 60405 

(July 20, 2009) (National Market System Plan 

Relating to Options Order Protection and Locked/ 

Crossed Markets). 

4See Securities Exchange Act Release No. 60363 

(July 22, 2009), 74 FR 37270 (July 28, 2009) (SR– 

Phlx–2009–61). Linkage was governed by the 

Options Linkage Authority under the conditions set 

forth under the Plan for the Purpose of Creating and 

Operating an Intermarket Option Linkage approved 

by the Commission. The registered U.S. options 

markets are linked together on a real-time basis 

through a network capable of transporting orders 

and messages to and from each market. 

5See footnote 4. 

6See footnote 4. 

7See footnote 4. 

8See footnote 4. 

9See Securities Exchange Act Release No. 60209 

(July 1, 2009), 74 FR 33006 (July 9, 2009) (SR–Phlx– 

2009–55). 

10The Exchange uses the terms ‘‘specialists’’ and 

‘‘specialists units’’ interchangeably herein. 

11See Exchange Rule 1080. 

12FBMS is designed to enable Floor Brokers and/ 

or their employees to enter, route and report 

transactions stemming from options orders received 

on the Exchange. FBMS also is designed to establish 

an electronic audit trails for options orders 

represented and executed by Floor Brokers on the 

Exchange, such that the audit trail provides an 

accurate, time-sequenced record of electronic and 

other orders, quotations and transactions on the 

Exchange, beginning with the receipt of an order by 

the Exchange, and further documenting the life of 

the order through the process of execution, partial 

execution, or cancellation of that order. See 

Exchange Rule 1080, Commentary .06. 

13A P/A Order is an order for the principal 

account of a specialist (or equivalent entity on 

another participant exchange that is authorized to 

represent Public Customer orders), reflecting the 

terms of a related unexecuted Public Customer 

order for which the specialist is acting as agent. See 

Exchange Rule 1088, a temporary linkage rule. 

14See Securities Exchange Act Release Nos. 

58234 (July 25, 2008), 73 FR 45263 (August 4, 2008) 

(SR–Phlx–2008–55); 56101 (July 19, 2007), 72 FR 

40920 (July 25, 2007) (SR–Phlx–2009–50 [sic]); 

54257 (August 1, 2006), 71 FR 45089 (August 8, 

2006) (SR–Phlx–2006–46); 53761 (May 5, 2006), 71 

FR 27768 (May 12, 2006) (SR–Phlx–2006–20). 

be submitted on or before October 30, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–24356 Filed 10–8–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60771; File No. SR–Phlx– 

2009–85] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to the 

Discontinuation of the Specialist Fee 

Credit Pilot Program 

October 2, 2009. 

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 

September 24, 2009, NASDAQ OMX 

PHLX, Inc. (‘‘Phlx’’ or ‘‘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 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 

discontinue its current pilot program 

relating to specialist fee credits for 

linkage orders. 

While changes to the Exchange’s fee 

schedule pursuant to this proposal are 

effective upon filing, the Exchange has 

designated this proposal to be effective 

on September 28, 2009. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http:// 

nasdaqomxphlx.cchwallstreet.com/ 

NASDAQOMXPHLX/Filings/, 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 purpose of the proposed rule 

change is to discontinue the current 

pilot program related to a specialist fee 

credit for linkage is because the pilot is 

no longer necessary. On June 17, 2008, 

the Exchange filed an executed copy of 

the Options Order Protection and 

Locked/Crossed Market Plan (‘‘Plan’’), 

joining all other approved options 

markets in adopting the Plan.3 The Plan 

requires each options exchange to adopt 

rules implementing various 

requirements specified in the Plan.4 The 

Plan replaces the Plan for the Purpose 

of Creating and Operating an 

Intermarket Option Linkage (‘‘Linkage 

Plan’’).5 That Plan requires its 

participant exchanges to operate a 

stand-alone system or ‘‘Linkage’’ for 

sending order-flow between exchanges 

to limit trade-throughs.6 The Options 

Clearing Corporation (‘‘OCC’’) operates 

the Linkage system (the ‘‘System’’).7 The 

Exchange adopted various new rules in 

connection with the Plan to avoid tradethroughs and locked markets, among 

other things.8 The Exchange currently 

offers private routing as opposed to 

utilizing the Linkage Plan for routing. In 

light of this change, the Exchange 

proposes to terminate the specialist 

option transaction charge credit pilot 

program for trades executed via 

Intermarket Options Linkage 

(‘‘Linkage’’) as the credit will no longer 

be necessary since the specialists will 

no longer utilize Linkage to route trades. 

The current pilot, which is set to 

expire on July 31, 2010,9 relates to: (1) 

An option transaction charge credit of 

$0.21 per contract for Exchange 

specialist units 10 that incur options 

transaction charges when a customer 

order is delivered electronically via 

Phlx XL 11 or via the Exchange’s Options 

Floor Broker Management Systems 

(‘‘FBMS’’) 12 and then is executed via 

the Linkage as a Principal Acting as 

Agent Order (‘‘P/A Order’’) 13; and (2) 

the Floor Broker Linkage P/A fee and 

Options Specialist Unit Credit, which 

charges floor brokers an amount equal to 

the transaction fee(s) assessed on 

options specialist units by another 

exchange in connection with customer 

orders that are delivered to the limit 

book via FBMS and executed via 

Linkage as P/A Orders. The Exchange 

provides to options specialists units a 

credit in an amount equal to the 

transaction fee(s) assessed on them by 

another exchange in connection with 

executing customer orders that are 

delivered to the limit order book via 

FBMS and executed via Linkage as P/A 

Orders. The current pilot program has 

been in effect for several years.14

The pilot program which relates to 

transaction fees applicable to the 

execution of P/A Orders and Principal 

mstockstill on DSKH9S0YB1PROD with NOTICES