16304 Federal Register / Vol. 77, No. 54 / Tuesday, March 20, 2012 / Notices 

7See supra note 4. 

8See BATS BYX Exchange Fee Schedule, 

available at http://batstrading.com/resources/ 

regulation/rule_book/BYX_Fee_Schedule.pdf. 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

orders in Nasdaq securities with a share 

price of $1 or more to $0.0027 is 

reasonable because the fee is lower than 

the fee previously charged by the 

Exchange 7 and lower than routing fees 

charged by other markets, including 

BATS BYX with its CYCLE routing fee 

of $0.0028 per share.8 The Exchange 

believes that raising the fee for routing 

to other markets for orders in Nasdaq 

securities with a share price below $1 to 

0.30% of total dollar value of the 

transaction is reasonable because it will 

cover the costs associated with routing 

orders away from the Exchange. 

With respect to the increase in rebates 

to DMMs, SLPs, and market participants 

for providing liquidity in 2,000 or more 

share orders for securities priced at $5 

or more, the Exchange believes that the 

proposed rebates are fair given that the 

Exchange is increasing the fee for taking 

liquidity. The Exchange believes the fee 

change will attract more displayed 

liquidity, lower transaction costs, and 

improve overall trading. 

Finally, the Exchange notes that it 

operates in a highly competitive market 

in which market participants can 

readily favor competing venues if they 

deem fee levels at a particular venue to 

be excessive. In such an environment, 

the Exchange must continually adjust its 

fees to remain competitive with other 

exchanges and with alternative trading 

systems that have been exempted from 

compliance with the statutory standards 

applicable to exchanges. The Exchange 

believes that the proposed rule change 

reflects this competitive environment 

because it will broaden the conditions 

under which customers may qualify for 

higher liquidity provider credits. 

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 Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 9 of the Act and 

subparagraph (f)(2) of Rule 19b–4 10

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

NYSE Amex. 

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–NYSEAmex–2012–17 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–NYSEAmex–2012–17. 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 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– 

NYSEAmex–2012–17 and should be 

submitted on or before April 10, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–6708 Filed 3–19–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66596; File No. SR–ISE– 

2012–18] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To Increase Certain Rebates 

for Certain Complex Orders 

March 14, 2012. 

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 March 1, 2012, the International 

Securities Exchange, LLC (the 

‘‘Exchange’’ or the ‘‘ISE’’) 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. 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 ISE is proposing to increase 

certain rebate amounts for certain 

complex orders. The text of the 

proposed rule change is available on the 

Exchange’s Web site (http:// 

www.ise.com), at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 54 / Tuesday, March 20, 2012 / Notices 16305 

3Options classes subject to maker/taker fees are 

identified by their ticker symbol on the Exchange’s 

Schedule of Fees. 

4See Exchange Act Release Nos. 65021 (August 

3, 2011), 76 FR 48933 (August 9, 2011) (SR–ISE– 

2011–45); and 65550 (October 13, 2011), 76 FR 

64984 (October 19, 2011) (SR–ISE–2011–65). 

5See Exchange Act Release No. 65724 (November 

10, 2011), 76 FR 71413 (November 17, 2011) (SR– 

ISE–2011–72). 

6See Exchange Act Release Nos. 66084 (January 

3, 2012), 77 FR 1103 (January 9, 2012) (SR–ISE– 

2011–84); and 66392 (February 14, 2012), 77 FR 

10016 (February 21, 2012) (SR–ISE–2012–06). 

7The term ‘‘Market Makers’’ refers to 

‘‘Competitive Market Makers’’ and ‘‘Primary Market 

Makers’’ collectively. See ISE Rule 100(a)(25). 

8A Market Maker Plus is an ISE Market Maker 

who is on the National Best Bid or National Best 

Offer 80% of the time for series trading between 

$0.03 and $5.00 (for options whose underlying 

stock’s previous trading day’s last sale price was 

less than or equal to $100) and between $0.10 and 

$5.00 (for options whose underlying stock’s 

previous trading day’s last sale price was greater 

than $100) in premium in each of the front two 

expiration months and 80% of the time for series 

trading between $0.03 and $5.00 (for options whose 

underlying stock’s previous trading day’s last sale 

price was less than or equal to $100) and between 

$0.10 and $5.00 (for options whose underlying 

stock’s previous trading day’s last sale price was 

greater than $100) in premium across all expiration 

months in order to receive the rebate. The Exchange 

determines whether a Market Maker qualifies as a 

Market Maker Plus at the end of each month by 

looking back at each Market Maker’s quoting 

statistics during that month. If at the end of the 

month, a Market Maker meets the Exchange’s stated 

criteria, the Exchange rebates $0.10 per contract for 

transactions executed by that Market Maker during 

that month. The Exchange provides Market Makers 

a report on a daily basis with quoting statistics so 

that Market Makers can determine whether or not 

they are meeting the Exchange’s stated criteria. 

9A Customer (Professional) is a person who is not 

a broker/dealer and is not a Priority Customer. 

10A Non-ISE Market Maker, or Far Away Market 

Maker (‘‘FARMM’’), is a market maker as defined 

in Section 3(a)(38) of the Securities Exchange Act 

of 1934, as amended (‘‘Exchange Act’’), registered 

in the same options class on another options 

exchange. 

11A Priority Customer is defined in ISE Rule 

100(a)(37A) as a person or entity that is not a 

broker/dealer in securities, and does not place more 

than 390 orders in listed options per day on average 

during a calendar month for its own beneficial 

account(s). 

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 these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization 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 Exchange currently assesses per 

contract transaction charges and credits 

to market participants that add or 

remove liquidity from the Exchange 

(‘‘maker/taker fees’’) in a number of 

options classes (the ‘‘Select Symbols’’).3

The Exchange’s maker/taker fees are 

applicable to regular and complex 

orders executed in the Select Symbols. 

The maker/taker fees for complex orders 

in the Select Symbols also apply to all 

symbols that are in the Penny Pilot 

program.4 The Exchange also currently 

assesses maker/taker fees for complex 

orders in symbols that are in the Penny 

Pilot program but are not a Select 

Symbol (‘‘Non-Select Penny Pilot 

Symbols’’) 5 and for complex orders in 

all symbols that are not in the Penny 

Pilot Program (‘‘Non-Penny Pilot 

Symbols’’).6 Maker/taker fees (and 

rebates) for complex orders are assessed 

on the following order-type categories: 

ISE Market Maker,7 Market Maker Plus,8

Firm Proprietary, Customer 

(Professional),9 Non-ISE Market 

Maker,10 and Priority Customer.11 The 

Exchange is proposing to increase 

certain rebates for certain complex 

orders, as follows. 

In the Select Symbols, the Exchange 

currently provides a rebate of $0.30 per 

contract, per leg, for Priority Customer 

complex orders when these orders trade 

with non-Priority Customer complex 

orders in the complex orderbook. In 

order to enhance the Exchange’s 

competitive position and to incentivize 

Members to increase the amount of 

Priority Customer complex orders that 

they send to the Exchange, the Exchange 

is proposing to increase the base amount 

of that rebate to $0.32 per contract. 

Additionally, the Exchange is proposing 

to increase the amount of that rebate 

even further, on a month-by-month and 

Member-by-Member basis, if such 

Member achieves a certain average daily 

volume (ADV) of Priority Customer 

complex order contracts executed 

during the calendar month, as follows: 

if the Member achieves an ADV of 

75,000 Priority Customer complex order 

contracts, the rebate amount shall be 

$0.33 per contract per leg; if the Member 

achieves an ADV of 125,000 Priority 

Customer complex order contracts, the 

rebate amount shall be $0.34 per 

contract per leg. The highest rebate 

amount achieved by the Member for the 

current calendar month shall apply 

retroactively to all Priority Customer 

complex order contracts that trade with 

non-Priority Customer complex orders 

in the complex orderbook executed by 

the Member during such calendar 

month. 

In the Non-Select Penny Pilot 

Symbols, the Exchange currently 

provides a rebate of $0.25 per contract, 

per leg, for Priority Customer complex 

orders when these orders trade with 

non-Priority Customer complex orders 

in the complex orderbook. In order to 

enhance the Exchange’s competitive 

position and to incentivize Members to 

increase the amount of Priority 

Customer complex orders that they send 

to the Exchange, the Exchange is 

proposing to increase the base amount 

of that rebate to $0.26 per contract. 

Additionally, the Exchange is proposing 

increase [sic] the amount of that rebate 

even further, on a month-by-month and 

Member-by-Member basis, if such 

Member achieves a certain average daily 

volume (ADV) of Priority Customer 

complex order contracts executed 

during the calendar month, as follows: 

if the Member achieves an ADV of 

75,000 Priority Customer complex order 

contracts, the rebate amount shall be 

$0.28 per contract per leg; if the Member 

achieves an ADV of 125,000 Priority 

Customer complex order contracts, the 

rebate amount shall be $0.30 per 

contract per leg. The highest rebate 

amount achieved by the Member for the 

current calendar month shall apply 

retroactively to all Priority Customer 

complex order contracts that trade with 

non-Priority Customer complex orders 

in the complex orderbook executed by 

the Member during such calendar 

month. 

In the Non-Penny Pilot Symbols, the 

Exchange currently provides a rebate of 

$0.50 per contract, per leg, for Priority 

Customer complex orders when these 

orders trade with non-Priority Customer 

complex orders in the complex 

orderbook. In order to enhance the 

Exchange’s competitive position and to 

incentivize Members to increase the 

amount of Priority Customer complex 

orders that they send to the Exchange, 

the Exchange is proposing to increase 

the base amount of that rebate to $0.52 

per contract. Additionally, the Exchange 

is proposing increase [sic] the amount of 

that rebate even further, on a month-bymonth and Member-by-Member basis, if 

such Member achieves a certain average 

daily volume (ADV) of Priority 

Customer complex order contracts 

executed during the calendar month, as 

follows: if the Member achieves an ADV 

of 75,000 Priority Customer complex 

order contracts, the rebate amount shall 

be $0.54 per contract per leg; if the 

Member achieves an ADV of 125,000 

Priority Customer complex order 

contracts, the rebate amount shall be 


srobinson on DSK4SPTVN1PROD with NOTICES
16306 Federal Register / Vol. 77, No. 54 / Tuesday, March 20, 2012 / Notices 

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

13 15 U.S.C. 78f(b)(4). 

14For example, the customer fee is $0.00 per 

contract for products other than Singly Listed 

Indexes, Singly Listed ETFs and FX Options. For 

Singly Listed Options, Singly Listed ETFs and FX 

Options, the customer fee is $0.18 per contract. The 

Exchange also currently has an incentive plan in 

place for certain specific FX Options which has its 

own pricing. See ISE Schedule of Fees. 

15The Exchange currently has a sliding scale fee 

structure that ranges from $0.01 per contract to 

$0.18 per contract depending on the level of volume 

a Member trades on the Exchange in a month. 16 15 U.S.C. 78s(b)(3)(A)(ii). 

$0.56 per contract per leg. The highest 

rebate amount achieved by the Member 

for the current calendar month shall 

apply retroactively to all Priority 

Customer complex order contracts that 

trade with non-Priority Customer 

complex orders in the complex 

orderbook executed by the Member 

during such calendar month. 

Finally, the Exchange does not 

currently provide a rebate for Priority 

Customer complex orders when these 

orders trade against quotes or orders in 

the regular orderbook. In order to 

enhance the Exchange’s competitive 

position and to incentivize Members to 

increase the amount of Priority 

Customer complex orders that they send 

to the Exchange, the Exchange is 

proposing to provide a rebate of $0.06 

per contract, per leg, for Priority 

Customer complex orders, regardless of 

size, when these orders trade against 

quotes or orders in the regular 

orderbook. This rebate shall apply in the 

Select Symbols, Non-Select Penny Pilot 

Symbols, and Non-Penny Pilot Symbols. 

For the avoidance of doubt, this rebate 

is not included in the ADV incentive 

program described above for Priority 

Customer complex orders executed in 

the complex orderbook. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Schedule of Fees 

is consistent with Section 6(b) of the 

Exchange Act 12 in general, and furthers 

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

Exchange Act 13 in particular, in that it 

is an equitable allocation of reasonable 

dues, fees and other charges among 

Exchange members and other persons 

using its facilities. The impact of the 

proposal upon the net fees paid by a 

particular market participant will 

depend on a number of variables, most 

important of which will be its 

propensity to interact with and respond 

to certain types of orders. 

The Exchange believes that it is 

reasonable and equitable to provide 

rebates for Priority Customer complex 

orders when these orders trade with 

Non-Priority Customer complex orders 

in the complex order book because 

paying a rebate would continue to 

attract additional order flow to the 

Exchange and create liquidity in the 

symbols that are subject to the rebate, 

which the Exchange believes ultimately 

will benefit all market participants who 

trade on ISE. The Exchange already 

provides these types of rebates, and is 

now merely proposing to increase those 

rebate amounts. The Exchange believes 

that the proposed rebates are 

competitive with rebates provided by 

other exchanges and are therefore 

reasonable and equitably allocated to 

those members that direct orders to the 

Exchange rather than to a competing 

exchange. 

The Exchange is also establishing a 

volume-based incentive program, 

designed to encourage Members to send 

their Priority Customer complex orders 

to the Exchange. The concept of a 

volume-based incentive program is not 

novel. The Exchange notes that it 

currently has other incentive programs 

to promote and encourage growth in 

specific business areas. For example, the 

Exchange has lower fees (or no fees) for 

customer orders; 14 and tiered pricing 

that reduces rates for ISE Market Makers 

based on the level of business they bring 

to the Exchange.15 This proposed rule 

change targets a particular segment in 

which the Exchange seeks to attract 

greater order flow. The Exchange also 

has a volume-based rebate program in 

place for Qualified Contingent Cross 

(‘‘QCC’’) and Solicitation orders, which 

gives Members who trade a minimum of 

200,000 qualifying contracts in QCC and 

Solicitation orders on the Exchange a 

benefit by way of a rebate. This program 

is similar to the proposed program in 

that once a Member reaches an 

established volume threshold, all of the 

trading activity in the specified order 

type by that Member will be subject to 

the corresponding rebate. 

The Exchange also believes that it is 

reasonable and equitable to provide 

rebates for Priority Customer complex 

orders when these orders trade against 

quotes or orders in the regular 

orderbook because paying a rebate, in 

those instances, would also attract 

additional order flow to the Exchange. 

The Exchange notes that the rebate 

amount is the same for all symbols, 

including Select Symbols, Non-Select 

Penny Pilot Symbols, and Non-Penny 

Pilot Symbols. 

The complex order pricing employed 

by the Exchange has proven to be an 

effective pricing mechanism and 

attractive to Exchange participants and 

their customers. The Exchange believes 

that increasing its complex order rebates 

will attract additional complex order 

business. 

The Exchange further believes that the 

Exchange’s complex order rebates are 

not unfairly discriminatory because the 

fee structure is consistent with fee 

structures that exist today at other 

options exchanges. Additionally, the 

Exchange believes that the proposed 

rebates are fair, equitable and not 

unfairly discriminatory because the 

proposed rebates are consistent with 

price differentiation that exists today at 

other option exchanges. The Exchange 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to another 

exchange if they deem fee levels at a 

particular exchange to be excessive. 

With this proposed rebate change, the 

Exchange believes it remains an 

attractive venue for market participants 

to trade complex orders. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does not 

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 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

members or other interested parties. 

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 Exchange Act.16 At 

any time within 60 days of the filing of 

such 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 Exchange 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, 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 54 / Tuesday, March 20, 2012 / Notices 16307 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3All co-location services are provided by 

NASDAQ Technology Services LLC and pursuant to 

agreements with the owner/operator of its data 

center. 

4See Exchange Fee Schedule, Section X(b), 

Connectivity to Nasdaq. 

5The 100MB option that is being eliminated— 

which is used to connect co-located servers to the 

Exchange—should be contrasted with a recently 

introduced option for customers to establish 100MB 

connections between their co-located servers and 

select external locations. These external 

connections are generally combined with other 

bandwidth options and are not utilized to transmit 

the same volume of data as the 100MB connection 

between co-located services and the Exchange. For 

this reason, the Exchange believes that the same 

latency and data loss considerations that are 

prompting it to eliminate the 100MB connection to 

the Exchange do not apply to the 100MB 

connection to external locations. 

including whether the proposed rule 

change is consistent with the Exchange 

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 

Number SR–ISE–2012–18 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–ISE–2012–18. 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–ISE– 

2012–18 and should be submitted on or 

before April 10, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–6620 Filed 3–19–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66593; File No. SR–Phlx– 

2012–30] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Eliminate 

the 100MB Connectivity Option and 

Fee 

March 14, 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 March 6, 

2012, NASDAQ OMX PHLX LLC 

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

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

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 eliminate 

100MB connectivity between the 

Exchange and co-located servers, as well 

as associated fees, as set forth in the 

Phlx Fee Schedule, Section X(b). The 

Exchange will implement the proposed 

change on April 1, 2012. The text of the 

proposed rule change is available at 

http://nasdaqtrader.com/ 

micro.aspx?id=PHLXRulefilings at the 

Exchange’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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to modify the 

Phlx Fee Schedule, Section X(b) to 

eliminate 100MB connectivity between 

the Exchange and co-located servers, as 

well as associated fees.3 The Exchange 

currently offers each co-located 

customer one 100MB connection to the 

Exchange at no charge; additional 

connections are available for a $50 onetime installation fee and a monthly fee 

of $100.4 Due to the continuous growth 

of the size of consolidated and 

proprietary market data feeds, use of 

100MB connectivity to the Exchange 

may result in high data transmission 

latencies, a loss of data packets, and a 

reduction in client service satisfaction. 

As a result, the Exchange proposes to 

eliminate the 100MB connection option 

to the Exchange. The proposal to 

eliminate the 100MB connection option 

will eliminate potential latencies and 

loss of data that could occur with lower 

bandwidths, issues that are potentially 

damaging to investors.5

Currently, there are four co-located 

customers that utilize 100MB 

connectivity to the Exchange. All four 

customers also have larger bandwidth 

connections to the Exchange. While 

these customers will need to assess the 

adequacy of their bandwidth and may 

need to make adjustments, the Exchange 

strongly believes that these changes will 

be beneficial to these customers because 

they will decrease the risk of latency 

and data loss. In addition, as the 

number of customers making use of 

100MB connectivity to the Exchange 

dwindles, maintaining the option would 

require the Exchange to impose 

associated fixed costs on a smaller 

customer base, or upon customers that 

are not themselves using this legacy 

connectivity option. The Exchange 


srobinson on DSK4SPTVN1PROD with NOTICES