8934 Federal Register / Vol. 77, No. 31 / Wednesday, February 15, 2012 / Notices 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Select Symbols are defined as options overlying 

the following symbols: AA, AAPL, ABX, AMD, 

AMR, AMZN, AXP, BAC, C, CAT, CIEN, CSCO, 

DELL, DIA, EBAY, EK, F, FAS, FAZ, FXI, GDX, GE, 

GLD, GLW, GS, HAL, IBM, INTC, IWM, JPM, LVS, 

MGM, MSFT, MU, NEM, NOK, NVDA, ORCL, PFE, 

PG, POT, QCOM, QQQ, RIG, RIMM, RMBS, SBUX, 

SDS, SIRI, SLV, SLW, SNDK, SPY, T, TBT, TZA, 

UAL, UNG, USO, UUP, V, VALE, VXX, VZ, WYNN, 

X, XLF, XOM, XOP and YHOO (‘‘Select Symbols’’). 

These symbols are Multiply-Listed. 

4The Rebates and Fees for Adding and Removing 

Liquidity in Select Symbols apply only to electronic 

orders. 

5A Directed Participant is a Specialist, SQT, or 

RSQT that executes a Customer order that is 

directed to them by an Order Flow Provider and is 

executed electronically on PHLX XL II. 

6A Specialist is an Exchange member who is 

registered as an options specialist pursuant to Rule 

1020(a). 

7A Registered Options Trader (‘‘ROT’’) includes 

a Streaming Quote Trader (‘‘SQT’’), a Remote 

Streaming Quote Trader (‘‘RSQT’’) and a Non-SQT 

ROT, which by definition is neither a SQT or a 

RSQT. A ROT is defined in Exchange Rule 1014(b) 

as a regular member of the Exchange located on the 

trading floor who has received permission from the 

Exchange to trade in options for his own account. 

See Exchange Rule 1014(b)(i) and (ii). 

8An SQT is defined in Exchange Rule 

1014(b)(ii)(A) as an ROT who has received 

permission from the Exchange to generate and 

submit option quotations electronically in options 

to which such SQT is assigned. 

9An RSQT is defined Exchange Rule in 

1014(b)(ii)(B) as 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 options to which such RSQT has 

been assigned. An RSQT may only submit such 

quotations electronically from off the floor of the 

Exchange. 

10The Exchange defines a ‘‘professional’’ as any 

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

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

listed options per day on average during a calendar 

month for its own beneficial account(s) (hereinafter 

‘‘Professional’’). 

All submissions should refer to File 

Number SR–Phlx–2012–13. This file 

number should be included on the 

subject line if email 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–2012–13 and should 

be submitted on or before March 7, 

2012. 

For the Commission, by the Division 

of Trading and Markets, pursuant to 

delegated authority.15

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–3469 Filed 2–14–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66367; File No. SR–Phlx– 

2012–15] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Amending the 

Rebates and Fees for Adding and 

Removing Liquidity in Select Symbols 

February 9, 2012. 

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 January 

30, 2012, NASDAQ OMX PHLX LLC 

(‘‘Phlx’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II, 

and III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Rebates and Fees for Adding and 

Removing Liquidity in Select Symbols 

in Section I, Part A of the Exchange’s 

Fee Schedule. 

While changes to the Fee Schedule 

pursuant to this proposal are effective 

upon filing, the Exchange has 

designated these changes to be operative 

on February 1, 2012. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://nasdaqtrader.com/ 

micro.aspx?id=PHLXfilings, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend Section I of the Fee 

Schedule, entitled ‘‘Rebates and Fees for 

Adding and Removing Liquidity in 

Select Symbols,’’ at Part A, entitled 

‘‘Single contra-side orders,’’ to amend 

the Customer Fee for Removing 

Liquidity to increase the fee in order to 

recoup additional costs associated with 

paying rebates to attract additional order 

flow. 

Currently, Section I of the Fee 

Schedule, which applies to certain 

select symbols,3 is comprised of a Part 

A, Single contra-side order fees, and a 

Part B, Complex Order fees.4 There are 

currently several categories of market 

participants: Customers, Directed 

Participants,5 Specialists,6 Registered 

Options Traders,7 SQTs,8 RSQTs,9

Broker-Dealers, Firms and 

Professionals.10 Currently, the Exchange 

assesses the following Single contra-side 

Fees for Removing Liquidity: 


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Federal Register / Vol. 77, No. 31 / Wednesday, February 15, 2012 / Notices 8935 

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

12 15 U.S.C. 78f(b)(4). 

13A ‘‘market maker’’ includes Specialists (see 

Rule 1020) and ROTs (Rule 1014(b)(i) and (ii), 

which includes SQTs (see Rule 1014(b)(ii)(A)) and 

RSQTs (see Rule 1014(b)(ii)(B)). Directed 

Participants are also market makers. See note 5. 

14See Exchange Rule 1014 titled ‘‘Obligations 

and Restrictions Applicable to Specialists and 

Registered Options Traders.’’ 

15See Exchange Rule 1014 titled ‘‘Obligations 

and Restrictions Applicable to Specialists and 

Registered Options Traders.’’ 

16The Exchange recently increased the Rebate for 

Adding Liquidity for Professionals. See Securities 

Exchange Act Release No. 65940 (December 12, 

2011), 76 FR 78322 (December 16, 2011) (SR–Phlx– 

2011–162). 

17See NYSE Arca’s Fee Schedule. A customer 

executing an electronic order is assessed a $0.45 per 

contract fee to remove liquidity in Penny Pilot 

Issues. 

18See NASDAQ Stock Market LLC’s Rules at 

Chapter XV, Section 2. A NASDAQ Options Market 

(‘‘NOM’’) Participant is assessed a $0.45 per 

contract fee for removing liquidity electronically in 

Penny Pilot Options and non-Penny Pilot Options. 

19See note 13. 

20The Exchange recently decreased the 

Professional Rebate for Adding Liquidity for Single 

contra-side orders to $0.23 per contract. The rule 

change was filed as immediately effective with an 

operative date of January 3, 2012. See SR–Phlx– 

2011–184. 21 15 U.S.C. 78s(b)(3)(A)(ii). 

% Customer Directed 

participant 

Specialist, 

ROT, SQT 

and RSQT 

Firm Brokerdealer Professional 

Fee for Removing Liquidity .................................. $0.31 $0.35 $0.37 $0.45 $0.45 $0.45 

The Exchange proposes to increase 

the Customer Fee for Removing 

Liquidity for Single contra-side orders 

from $0.31 per contract to $0.39 per 

contract. The Exchange is not proposing 

to amend any other rebates or fees in 

Section I. 

While changes to the Fee Schedule 

pursuant to this proposal are effective 

upon filing, the Exchange has 

designated these changes to be operative 

on February 1, 2012. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 11

in general, and furthers the objectives of 

Section 6(b)(4) of the Act 12 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 its 

proposal to increase the Single contraside Customer Fee for Removing 

Liquidity is reasonable because the 

Customer would pay a lower fee as 

compared to all other market 

participants except market makers,13

which includes Directed Participants. 

Market makers have obligations to the 

market, which do not apply to Firms, 

Professionals and Broker-Dealers.14

Also, Directed Participants have higher 

quoting obligations as compared to 

other market makers.15 In addition, the 

Exchange is filing this proposal to 

recoup costs associated with paying 

Customers higher rebates to attract order 

flow to the Exchange.16 Customers will 

continue to receive the highest Rebate 

for Adding Liquidity, which rebate 

incentivizes Broker-Dealers to route 

Customer orders to the Exchange, which 

in turn should increase liquidity and 

benefit all market participants. Also, the 

fee is within the range of fees assessed 

by NYSE Arca, Inc. (‘‘NYSE Arca’’) 17

and NASDAQ Stock Market LLC.18

The Exchange believes it is equitable 

and not unfairly discriminatory to 

increase the Customer Fee for Removing 

Liquidity because, as mentioned, 

compared to other participants, except 

market makers,19 Customers would pay 

the lowest Fee for Removing Liquidity 

and Customers would also receive the 

highest Rebate for Adding Liquidity as 

compared to other market 

participants.20 In addition, as 

previously mentioned, the Exchange is 

filing this proposal to recoup costs 

associated with paying Customers 

higher rebates to attract order flow to 

the Exchange. 

The Exchange 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. The Exchange believes that 

the fees it charges and rebates it pays for 

options overlying the various Select 

Symbols remain competitive with fees 

and rebates charged/paid by other 

venues and therefore continue to be 

reasonable and equitably allocated to 

those members that opt to direct orders 

to the Exchange rather than competing 

venues. 

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.21 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 email to rulecomments@sec.gov. Please include File 

No. SR–Phlx–2012–15 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 No. 

SR–Phlx–2012–15. This file number 

should be included on the subject line 

if email 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/ 


sroberts on DSK5SPTVN1PROD with NOTICES
8936 Federal Register / Vol. 77, No. 31 / Wednesday, February 15, 2012 / Notices 

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 65717 

(November 9, 2011), 76 FR 70784 (November 15, 

2011) (SR–NASDAQ–2011–150). 

4After the initial designation of NASDAQ MPIDs 

for EHIP use, a member may add or remove such 

EHIP designations for existing MPIDs, provided that 

NASDAQ must be appropriately notified of such a 

change on or before the first trading day of the 

month when the change is to become effective. A 

newly established MPID may be designated for 

EHIP use immediately upon establishment. 

5Originally, the rebate was set at $0.0001 per 

share executed, but effective February 1, 2012, 

NASDAQ increased the rate to $0.0002 per share 

executed. See SR–NASDAQ–2012–020 (January 27, 

2012). 

6Formerly, the PMI Execution Ratio. 

7 ‘‘Market Hours Immediate-or-Cancel’’ or 

‘‘System Hours Immediate-or-Cancel’’ orders. 

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 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 No. SR–Phlx–2012– 

15 and should be submitted on or before 

March 7, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–3536 Filed 2–14–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66369; File No. SR– 

NASDAQ–2012–024] 

Self-Regulatory Organizations; the 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Modify 

NASDAQ’s Pre-Market Investor 

Program 

February 10, 2012. 

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 February 

1, 2012, The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’ 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 

NASDAQ is proposing to modify its 

NASDAQ’s Pre-Market Investor 

Program. NASDAQ proposes to 

implement the proposed rule change on 

February 1, 2011. The text of the 

proposed rule change is available at 

http://nasdaq.cchwallstreet.com/, at 

NASDAQ’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, 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Last year, NASDAQ introduced a PreMarket Investor Program to encourage 

greater use of NASDAQ’s facilities for 

trading before the market open at 9:30 

a.m. and through the trading day.3 The 

goal of the program is to encourage the 

development of a deeper, more liquid 

trading book during pre-market hours, 

while also recognizing the correlation 

observed by NASDAQ between levels of 

liquidity provided during pre-market 

hours and levels provided during 

regular trading hours. While 

maintaining the structure of the existing 

program, NASDAQ is now proposing to 

modify the program to also encourage 

greater use of NASDAQ’s facilities for 

trading after the market close at 4 p.m. 

In connection with the change, 

NASDAQ will also rename the program 

as the ‘‘Extended Hours Investor 

Program’’ (‘‘EHIP’’). 

Under the program, a member is 

required to designate one or more 

market participant identifiers (‘‘MPIDs’’) 

for use under the program.4 The 

member will then qualify for an extra 

rebate of $0.0002 per share executed 5

with respect to all displayed liquidity 

provided through a designated MPID 

that executes at a price of $1 or more 

during the month if the following 

conditions are met: 

(1) The MPID’s ‘‘EHIP Execution 

Ratio’’ 6 for the month is less than 10. 

The EHIP Execution Ratio is defined as 

‘‘the ratio of (A) the total number of 

liquidity-providing orders entered by a 

member through an EHIP-designated 

MPID during the specified time period 

to (B) the number of liquidity-providing 

orders entered by such member through 

such EHIP-designated MPID and 

executed (in full or partially) in the 

Nasdaq Market Center during such time 

period; provided that: (i) No order shall 

be counted as executed more than once; 

and (ii) no Pegged Orders, odd-lot 

orders, or MIOC or SIOC orders 7 shall 

be included in the tabulation.’’ Thus, 

the requirement stipulates that a high 

proportion of potentially liquidityproviding orders entered through the 

MPID actually execute and provide 

liquidity. This requirement is designed 

to focus the availability of the program 

on members representing retail and 

institutional customers. 

(2) Currently, the member must 

provide an average daily volume of 2 

million or more shares of liquidity 

during the month using orders that are 

executed prior to NASDAQ’s Opening 

Cross. NASDAQ has observed that 

members that provide higher volumes of 

liquidity-providing orders during the 

pre-market hours generally do so 

throughout the rest of the trading day. 

Accordingly, the program pays a credit 

with respect to all liquidity-providing 

orders, but only in the event that 

comparatively large volumes of such 

orders execute in pre-market hours. To 

broaden the focus of the program to 

include after-hours trading, NASDAQ is 

proposing to modify this provision to 

provide an alternative criterion for 

participation in the program, but 

without removing or modifying the 


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