Federal Register / Vol. 74, No. 195 / Friday, October 9, 2009 / Notices 52283 

15A principal Order is an order for the principal 

account of an Eligible Market Maker and is not a 

P/A Order. See Exchange Rule 1088. 

16See Securities Exchange Act Release No. 59891 

(May 8, 2009), 74 FR 22990 (May 15, 2009) (SR– 

Phlx–2009–24). 

17Currently, the Exchange has a temporary 

linkage rule, Exchange Rule 1088, which provides 

that the Exchange will continue to accept P and P/ 

A Orders from options exchanges that continue to 

use such orders to address trade-throughs via the 

existing linkage for a temporary period. See 

Securities Exchange Act Release No. 60363 (July 22, 

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

61). See also Exchange Rule 1088. 

18 15 U.S.C. 78f(b). 

19 15 U.S.C. 78f(b)(4). 

20 15 U.S.C. 78s(b)(3)(A)(ii). 

21 17 CFR 240.19b–4(f)(2). 

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Orders (‘‘P Orders’’) 15 sent to the 

Exchange via Linkage pursuant to the 

Linkage Plan 16 will remain in effect 

until such time as all participant 

exchanges to the Linkage Plan no longer 

send Linkage P or P/A orders via the 

Linkage Plan. At such time the 

Exchange intends to file a proposed rule 

change with the Commission to request 

the discontinuation of that pilot as 

well.17

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its schedule of fees 

is consistent with Section 6(b) of the 

Act 18 in general, and furthers the 

objectives of Section 6(b)(4) of the Act 19

in particular, in that it is an equitable 

allocation of reasonable fees and other 

charges among Exchange members. In 

particular, the Exchange believes that 

the pilot program is no longer necessary 

because the specialists no longer utilize 

Linkage to route trades. 

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 that is not 

necessary or appropriate in furtherance 

of the purposes of the Exchange 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 proposed rule change is 

effective upon filing pursuant to Section 

19(b)(3)(A)(ii) of the Act 20 and Rule 

19b–4(f)(2) thereunder,21 because it 

establishes or changes a due, fee, or 

other charge applicable only to a 

member imposed by the Exchange. 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-2009–85 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–2009–85. 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, on official business days between 

the hours of 10 a.m. and 3 p.m. Copies 

of such filing will also 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 No. SR–Phlx–2009– 

85 and should be submitted on or before 

October 30, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–24352 Filed 10–8–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60784; File No. SR–Phlx– 

2009–69] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Prohibit 

Options Specialist Commission 

Charges 

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 October 

1, 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 adopt Rule 

1014, Commentary .10 to establish that 

options specialists on the Exchange are 

prohibited from charging commissions. 

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 

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52284 Federal Register / Vol. 74, No. 195 / Friday, October 9, 2009 / Notices 

3The term ‘‘specialist’’ is used interchangeably 

with ‘‘specialist unit.’’ 

4See Rule 1080. 

5See e.g., Rule 1080(m), which covers the 

Exchange’s routing of orders to other markets, 

which was previously done by specialists. 

6See Exchange By-Law Article XIV, Section 14– 

1(a) and Article XII, Section 12–6(b). 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78K–1(a)(1)(C). 

10 15 U.S.C. 78f(e)(1). 

11 15 U.S.C. 78f(e). 

12 15 U.S.C. 78f(e)(1). 

13See text preceding note 27 in Securities 

Exchange Act Release No. 55913 (June 15, 2007), 72 

FR 34323 (June 21, 2007) (SR–Amex–2007–13). 

14 15 U.S.C. 78s(b)(3)(A). 

15 17 CFR 240.19b–4(f)(6). 

16 17 CFR 240.19b–4(f)(6). 

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 eliminate arbitrary and 

potentially excessive costs for trading 

options on the Exchange. The Exchange 

believes that this prohibition should 

provide clarity to member organizations 

and options investors on this topic by 

stating the current position of the 

Exchange. Specifically, the Exchange 

proposes to adopt a rule prohibiting 

specialist commission charges. In effect, 

the rules prohibit the specialist 3 from 

charging a commission for any trade in 

which he participated, whether acting 

as agent or principal. In addition, the 

rules prohibit a specialist from charging 

a commission or fee for the handling, 

execution or processing of an order 

delivered through the Exchange’s 

automated trading system, Phlx XL II,4

whether the specialist is acting as 

principal or agent for the order. The 

agency responsibilities of a specialist 

have virtually been eliminated, as the 

Exchange’s trading systems have 

become increasingly automated, 

particularly with the completed roll-out 

of Phlx XL II, the Exchange’s new, 

enhanced options trading system.5

The Exchange’s By-Laws give broad 

authority for the Exchange to impose 

and regulate fees.6 Given market 

developments and changes in market 

structure, the Exchange believes that it 

is inappropriate for specialists to be 

charging commissions and fees; 

specialists occupy an important status 

in the Exchange’s options marketplace 

and the Exchange believes that it is not 

good market practice for specialists to 

charge commissions in connection with 

specialist functions. The Exchange feels 

that it is necessary to file this proposed 

rule change to eliminate any ambiguity 

with respect to its position on the topic. 

Adoption of this rule should not be 

interpreted to mean that any specialist 

fee or commission charged before the 

adoption was valid or permitted. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 7 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 8

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, 

because specialist commissions increase 

the cost of doing business on the 

Exchange, which, in turn, weakens the 

Exchange’s competitive position and 

potentially increase the cost of options 

trading for investors. For these same 

reasons, the Exchange also believes that 

the proposed rule change is consistent 

with Section 11(A)(a)(1)(C) of the Act,9

which states that it is in the public 

interest and appropriate for the 

protection of investors and the 

maintenance of fair and orderly markets 

to assure, among other things, 

economically efficient execution of 

securities transactions, and fair 

competition among brokers and dealers, 

among exchange markets, and between 

exchange markets and markets other 

than exchange markets. 

In addition, the Exchange believes 

that the proposal is consistent with 

Section 6(e)(1) of the Act,10 because it 

is not designed to permit unfair 

discrimination between customers, 

issuers, brokers and dealers, or to 

impose any schedule or fix rates of 

commissions, allowances, discounts, or 

other fees to be charged by its members. 

Section 6(e) of the Act 11 was adopted by 

Congress in 1975 to statutorily prohibit 

the fixed minimum commission rate 

system. The fixed minimum 

commission rate system allowed 

exchanges to set minimum commission 

rates that their members had to charge 

their customers, but allowed members 

to charge more. The Exchange’s 

proposal, by contrast, does not establish 

a minimum commission rate, but 

instead prohibits the Exchange’s 

specialists from charging a commission 

for handling an order, as part of their 

responsibilities as a specialist. 

Accordingly, the Exchange does not 

believe that this proposed rule 

constitutes fixing commissions, 

allowances, discounts, or other fees for 

purposes of Section 6(e)(1) of the Act.12

Indeed, the Commission has previously 

noted that limits on fees that specialists 

may charge apply only to members who 

choose to be specialists, and that, by 

limiting fees, an exchange is merely 

imposing a condition, which is 

consistent with the Act, on a member’s 

appointment as a specialist.13

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 

Pursuant to Section 19(b)(3)(A) of the 

Act 14 and Rule 19b–4(f)(6) 15

thereunder, the Exchange has 

designated this proposal as one that 

effects a change that: (i) Does not 

significantly affect the protection of 

investors or the public interest; (ii) does 

not impose any significant burden on 

competition; and (iii) by its terms, does 

not become operative for 30 days after 

the date of the filing, or such shorter 

time as the Commission may designate 

if consistent with the protection of 

investors and the public interest. 

Rule 19b–4(f)(6) requires a selfregulatory 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. The Exchange has satisfied 

this requirement. Furthermore, a 

proposed rule change filed pursuant to 

Rule 19b–4(f)(6) under the Act 16

normally does not become operative for 

30 days after the date of its filing. 

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. 

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Federal Register / Vol. 74, No. 195 / Friday, October 9, 2009 / Notices 52285 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5 15 U.S.C. 78ee. 6 17 CFR 240.31. 

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–2009–69 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–2009–69. 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–2009–69 and should 

be submitted on or before October 30, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–24355 Filed 10–8–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60766; File No. SR– 

NYSEArca–2009–86] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Activity 

Assessment Fees 

October 1, 2009. 

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

Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that, 

on September 28, 2009, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ 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 Exchange. NYSE 

Arca filed the proposed rule change as 

a ‘‘non-controversial’’ proposal pursuant 

to Section 19(b)(3)(A) of the Act 3 and 

Rule 19b–4(f)(6) thereunder,4 which 

renders the proposal effective upon 

filing with the Commission. 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 

NYSE Arca proposes to, among other 

changes, (1) amend NYSE Arca Equities 

Rule 2.17(a) to provide for an Activity 

Assessment Fee to be paid by ETP 

Holders in connection with the 

Exchange’s required payments to the 

Commission under Section 31 of the 

Exchange Act; 5 (2) add Commentary .01 

to NYSE Arca Equities Rule 2.17 to 

allow ETP Holders to voluntarily submit 

to the Exchange, on or before December 

31, 2009, funds that may have been 

previously accumulated by them to 

satisfy their, and subsequently NYSE 

Arca’s, obligation to remit Section 31- 

related fees; and (3) amend NYSE Arca 

Options Rule 2.18(a) to provide for an 

Activity Assessment Fee to be paid by 

OTP Firms and Holders in connection 

with the required payments to the 

Commission under Section 31 of the 

Exchange Act. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.nyse.com, at the 

Exchange’s principal office and at the 

Public Reference Room of the 

Commission. 

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 

Pursuant to Section 31 of the 

Exchange Act and Rule 31 thereunder,6

national securities exchanges and 

associations (collectively, ‘‘SROs’’) are 

required to pay a transaction fee to the 

SEC that is designed to recover the costs 

related to the government’s supervision 

and regulation of the securities markets 

and securities professionals. To offset 

this obligation, the ETP Holders (under 

NYSE Arca Equities Rule 2.17) and OTP 

Firms and OTP Holders (under NYSE 

Arca Options Rule 2.18) are assessed 

charges in connection with satisfaction 

of the Exchange’s payment obligations 

under Section 31. The Exchange 

calculates such fees by multiplying the 

aggregate dollar amount of ‘‘covered 

sales’’ (as defined in Section 31 of the 

Exchange Act) effected on the Exchange 

during the appropriate period by the 

Section 31(b) fee rate in effect during 

that period. Clearing members may in 

turn seek to charge a fee to their 

customers or correspondent firms. Any 

allocation of the fee between the 

clearing member and its correspondent 

firm or customer is the responsibility of 

the clearing member. 

NYSE Arca Equities Rule 2.17 and 

NYSE Arca Options Rule 2.18 relate to 

payment by ETP Holders (pursuant to 

NYSE Arca Equities Rule 2.17) and by 

mstockstill on DSKH9S0YB1PROD with NOTICES