Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Notices 21137 

16 17 CFR 240.19b–4(f)(2). 

17 15 U.S.C. 78s(b)(3)(A). 

18 17 CFR 240.19b–4(f)(6). 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Section III of the Pricing Schedule includes 

options overlying equities, ETFs, ETNs, indexes and 

HOLDRs which are not listed on another exchange. 

4The 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’’). 

5The term ‘‘Market Maker’’ is utilized herein to 

describe fees and rebates applicable to Specialists, 

Registered Options Traders, Streaming Quote 

Traders and Remote Streaming Quote Traders. 

Act and paragraph (f)(2) of Rule 19b–4 16

thereunder. 

Additionally, because the portion of 

the foregoing proposed rule change 

pertaining to the Exchange’s trading 

floor booth policy 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 from the date on which it 

was filed, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 17 and Rule 19b– 

4(f)(6) thereunder.18

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. 

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 

Number SR–CBOE–2012–025 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–CBOE–2012–025. 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 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 offices 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–CBOE–2012–025, and 

should be submitted on or before April 

30, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2012–8429 Filed 4–6–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66721; File No. SR–Phlx– 

2012–34] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Singly Listed Options 

April 3, 2012. 

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 March 

26, 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 

Section III of the Exchange’s Pricing 

Schedule entitled ‘‘Singly Listed 

Options.’’ The Exchange also proposes 

to amend Section II of the Pricing 

Schedule entitled, ‘‘Equity Options 

Fees’’ to clarify text concerning rebates. 

While changes to the Pricing 

Schedule pursuant to this proposal are 

effective upon filing, the Exchange has 

designated certain changes be operative 

on April 2, 2012, namely the 

amendments to the Alpha Index 

Options Fees and the proposed MSCI 

Index Options Fees. The Exchange 

proposes the clarifying amendment in 

Section II be immediately effective. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://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 Exchange proposes to amend 

Section III 3 of the Exchange’s Pricing 

Schedule to: (1) Amend the Alpha Index 

Options Fees; and (ii) create fees for 

MSCI Index Options. With respect to the 

Alpha Index Options Fees, the Exchange 

is lowering the Customer fee and 

increasing the Professional,4 Market 

Maker,5 Firm and Broker-Dealer fees 

with respect to this index. Despite the 

increases, the fees will continue to be 

lower than the Options Transaction 

Charges for other Singly Listed Options. 


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21138 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Notices 

6The Exchange initially received approval to list 

Alpha Index Options limited to specific Alpha 

Indexes the Target Component of which is a single 

stock. Specifically, Alpha Indexes based on the 

following Alpha Pairs: AAPL/SPY, AMZN/SPY, 

CSCO/SPY, F/SPY, GE/SPY, GOOG/SPY, HPQ/SPY, 

IBM/SPY, INTC/SPY, KO/SPY, MRK/SPY, MSFT/ 

SPY, ORCL/SPY, PFE/SPY, RIMM/SPY, T/SPY, 

TGT/SPY, VZ/SPY and WMT/SPY. See Securities 

Exchange Act Release No. 63860 (February 7, 2011), 

76 FR 7888 (February 11, 2001) (SR–Phlx–2010– 

176). The Exchange expanded the number of Alpha 

Indexes on which options can be listed to include 

certain Alpha Indexes based on the following Alpha 

Pairs: DIA/SPY, EEM/SPY, EWJ/SPY, EWZ/SPY, 

FXI/SPY, GLD/SPY, IWM/SPY, QQQ/SPY, SLV/ 

SPY, TLT/SPY, XLE/SPY and XLF/SPY. In these 

Alpha Indexes, the Target Component as well as the 

Benchmark Component is an ETF share. The 

proposed Alpha Index Options will enable 

investors to trade the relative performance of the 

market sectors represented by the Target 

Components as compared with the overall market 

performance represented by the Benchmark 

Component SPY. See Securities Exchange Act 

Release No. 65149 (August 17, 2011), 76 FR 52729 

(August 23, 2011) (SR–Phlx–2011–89). 

7The Exchange filed to list options on the MSCI 

EM Index. The MSCI EM Index is a free floatadjusted market capitalization index consisting of 

large and midcap component securities from 

countries classified by MSCI as ‘‘emerging 

markets,’’ and is designed to measure equity market 

performance of emerging markets. The index 

consists of component securities from the following 

21 emerging market countries: Brazil, Chile, China, 

Colombia, Czech Republic, Egypt, Hungary, India, 

Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, 

Philippines, Poland, Russia, South Africa, Taiwan, 

Thailand, and Turkey. See Securities Exchange Act 

Release No. 66420 (February 17, 2012), 77 FR 11177 

(February 24, 2012) (SR–Phlx–2011–179) (an order 

granting approval of the proposal to list and trade 

options on the MSCI EM Index). The Exchange also 

proposed to list options on the MSCI EAFE Index. 

The MSCI EAFE Index is a free float-adjusted 

market capitalization index that is designed to 

measure the equity market performance of 

developed markets, excluding the U.S. and Canada. 

The MSCI EAFE Index consists of component 

securities from the following twenty-two (22) 

developed market countries: Australia, Austria, 

Belgium, Denmark, Finland, France, Germany, 

Greece, Hong Kong, Ireland, Israel, Italy, Japan, the 

Netherlands, New Zealand, Norway, Portugal, 

Singapore, Spain, Sweden, Switzerland, and the 

United Kingdom. See SR–Phlx–2012–28. 

8A Singly Listed Option means an option that is 

only listed on the Exchange and is not listed by any 

other national securities exchange. 

9The Exchange has entered into a license 

agreement with MSCI Inc. (‘‘MSCI’’) to list certain 

products. 

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

11 15 U.S.C. 78f(b)(4). 

12The Exchange continues to incur costs for 

maintaining the Alpha proprietary index including 

marketing expenses. The Exchange also has 

incurred and will continue to incur costs to list 

options on MSCI Indexes. In addition, the Exchange 

incurs certain additional costs related to Singly 

Listed options as compared to Multiply Listed 

options. For example, in analyzing an obvious error 

for a Singly Listed option, the Exchange does not 

have the additional data points available in 

establishing a theoretical price as is the case for a 

Multiply Listed option. For this reason, a Singly 

Listed option requires additional analysis and 

administrative time to comply with Exchange rules 

to resolve an obvious error. 

The Exchange proposes these 

amendments to support options 

overlying certain NASDAQ OMX Alpha 

IndexesTM (‘‘Alpha Indexes’’).6 The 

Exchange is also proposing to create fees 

for the MSCI Indexes 7 and offer 

discounted pricing to encourage 

members and member organizations to 

trade options overlying MSCI Indexes. 

Both the Alpha Indexes and MSCI 

Indexes trade on the Exchange as Singly 

Listed Options.8 The Exchange 

currently assesses the following fees on 

options overlying Alpha Indexes: 

Customer Professional Market maker Firm Broker-Dealer 

Alpha Index Options ........................................ $0.15+ $0.20 $0.00 $0.20 $0.20 

+ Customer executions with average daily volume of 1,000 Customer contracts or more in a calendar month will be assessed $0.10 per 

contract. 

The Exchange is proposing to amend the 

Alpha Index Options Fees as noted 

below and assess the same fees for MSCI 

Index Options. 

Customer Professional Market maker Firm Broker-Dealer 

Alpha and MSCI Index Options ....................... $0.10 $0.25 $0.15 $0.25 $0.25 

The Exchange proposes to eliminate 

the current incentive for Customer 

executions with average daily volume of 

1,000 Customer contracts or more in a 

calendar month that are assessed $0.10 

per contract. The Exchange is proposing 

to assess a $0.05 per contract surcharge 

on non-Customer executions in MSCI 

Index Options in order to recover a 

portion of the cost associated with 

licensing MSCI products.9 The 

Exchange intends that the 

aforementioned fee amendments 

become operative on April 2, 2012. 

The Exchange also proposes to amend 

Section II of the Pricing Schedule to 

clarify that the current $0.07 per 

contract rebate that is applicable to 

Customer Orders that are electronicallydelivered to a member that has an 

average daily volume of 50,000 

contracts are Customer contracts. The 

Exchange is assessing rebates for 

Customer orders based on Customer 

volume. The Exchange proposes to 

clarify the text of the Pricing Schedule 

by adding the word ‘‘Customer’’ in the 

section of the sentence pertaining to the 

average daily volume. The Exchange 

proposes this amendment to be 

immediately effective. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Pricing Schedule 

is consistent with Section 6(b) of the 

Act 10 in general, and furthers the 

objectives of Section 6(b)(4) of the Act 11

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’s proposal to amend 

the Alpha Index Options Fees and 

assess those same fees for MSCI Index 

Options is reasonable because the 

Exchange is seeking to recoup the 

operation and development costs 

associated with both the Alpha and 

MSCI Indexes.12 The Exchange would 

also be assessing lower fees for these 

options products, despite the increase to 

certain market participants in the Alpha 

Index Options Fees, as compared to 

other Singly Listed Options products to 

encourage members and member 

organizations to trade options on Alpha 

and MSCI Indexes. For example, 

Customers would be assessed $0.10 per 

contract to transact options on Alpha 

and MSCI Indexes as compared to $0.35 

per contract for other Singly Listed 

Options products; Professionals, Firms 

and Broker-Dealers would be assessed 

$0.25 per contract as compared to $0.45 

per contract for all other Singly Listed 

Options products; and Market Makers 

would be assessed $0.15 per contract as 

compared to the $0.35 per contract for 

all other Singly Listed Options 

products. 

The Exchange believes that its 

proposal to amend the Alpha Index 

Options Fees is equitable and not 

unfairly discriminatory because despite 


pmangrum on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Notices 21139 

13The term ‘‘Market Maker’’ is utilized herein to 

describe fees and rebates applicable to Specialists, 

Registered Options Traders, Streaming Quote 

Traders and Remote Streaming Quote Traders. 

14See Exchange Rule 1014 titled ‘‘Obligations 

and Restrictions Applicable to Specialists and 

Registered Options Traders.’’ 

15See Securities Exchange Release Act No. 64096 

(March 18, 2011), 76 FR 16646 (March 24, 2011) 

(SR–Phlx–2011–34). 

16See CBOE’s Comment Letter dated June 21, 

2010 to the Proposed Amendments to Rule 610 of 

Regulation NMS, File No. S7–09–10. CBOE further 

noted that options exchanges expend considerable 

resources on research and development related to 

new product offerings and options exchanges incur 

large licensing costs for many products. 

17The proposed fees for the MSCI Index Options 

are lower than the options transaction charges for 

other Singly Listed options products even including 

the proposed $0.05 surcharge on non-Customer 

executions. 

18The Alpha Indexes are still in an early phase 

of their life cycle and the MSCI EM Index is not 

yet listed. If the Exchange determines to increase 

the pricing for options overlying Alpha or MSCI 

Indexes at a later date, the Exchange would file a 

proposal with the Commission. 

19See CBOE’s Fees Schedule. 

20See CBOE’s Fees Schedule. CBOE has a sliding 

scale for its proprietary products whereby 

transaction fees are reduced when a Clearing 

Trading Permit Holder reaches certain volume 

thresholds in Multiply Listed options on CBOE in 

a month. 

the increase for all market participants, 

except Customers, the fees for Alpha 

Index Options would be lower than 

those for other Singly Listed Options 

products as detailed above. Specifically, 

the Customer fee for Alpha Index 

Options is being lowered from $0.15 per 

contract to $0.10 per contract to 

encourage market participants to 

transact a greater number of Customer 

orders in options overlying Alpha 

Indexes. The Exchange believes that it is 

equitable and not unfairly 

discriminatory to assess lower fees to 

Customers, because all market 

participants benefit from Customer 

order flow. The Professional, Firm and 

Broker-Dealer Alpha Index Options Fees 

would be increased by $0.05 per 

contract (from $0.20 per contract to 

$0.25 per contract) and these fees would 

be uniformly assessed to these market 

participants and exclude Customers and 

Market Makers, which market 

participant fees are more specifically 

described herein. Currently, Market 

Makers 13 are not assessed a fee for 

Alpha Index Options. The Exchange did 

not initially assess Market Makers a fee 

because the Exchange desired to 

encourage such Market Makers to 

transact Alpha Index Options. At this 

time, the Exchange still desires to 

encourage Market Makers to transact 

Alpha Index Options by assessing them 

a fee equal to that of a Customer ($0.15 

per contract) while still continuing to 

recognize the burdensome quoting 

obligations 14 to the market which do 

not apply to Customers, Professionals, 

Firms and Broker-Dealers. The 

Exchange also believes the Market 

Maker fee amendment is equitable and 

not unfairly discriminatory because the 

amendment will more closely align the 

Market Maker fee with other market 

participant fees for Alpha Index 

Options. 

The Exchange believes that the 

proposed MSCI Index Options fees are 

equitable and not unfairly 

discriminatory because the fees would 

be lower than those for other Singly 

Listed Options products as detailed 

above. In addition, the Exchange would 

be assessing a lower Customer fee ($0.10 

per contract) because the Exchange, as 

noted above, seeks to encourage 

Customer order flow, which benefits all 

market participants. The Exchange 

would assess Market Makers a lower fee 

similar to a Customer ($0.15 per 

contract) because of the burdensome 

quoting obligations borne by these 

participants. The remaining market 

participants, Professionals, Firms and 

Broker-Dealers, would be uniformly 

assessed a $0.25 per contract fee to 

transact MSCI Index Options. 

The Exchange also believes that it is 

reasonable, equitable and not unfairly 

discriminatory to assess a surcharge of 

$0.05 per contract for non-Customer 

executions in MSCI Index Options. The 

Exchange incurs licensing fees 

associated with MSCI products and 

seeks to recoup those costs with the 

surcharge. The Exchange believes it is 

equitable and not unfairly 

discriminatory to assess this surcharge 

on all participants except Customers 

because the Exchange seeks to 

encourage Customer order flow and the 

liquidity such order flow brings to the 

marketplace, which in turn benefits all 

market participants. 

The Exchange has previously stated 

that it incurs higher costs for Singly 

Listed options as compared to Multiply 

Listed options.15 The Chicago Board 

Options Exchange, Incorporated 

(‘‘CBOE’’) noted in a comment letter 

dated June 21, 2010 that CBOE relies 

upon fees to recoup licensing costs 

incurred on options products that use 

third-party proprietary indexes as 

benchmarks (such as the S&P 500®), and 

to generate returns on its investments 

for its own popular proprietary products 

(such as The CBOE Volatility Index®

(‘‘VIX®’’) Options).16 The Exchange 

agrees with CBOE’s position and while 

the Exchange continues to assert that 

Singly Listed products incur higher 

costs and therefore market participants 

should be assessed higher fees as 

compared to Multiply Listed products, 

the Exchange is proposing to assess 

lower fees for the Alpha Indexes, and 

MSCI Indexes,17 as a means to promote 

these new index products.18 In addition, 

the Exchange believes that the proposed 

fees are reasonable, equitable and not 

unfairly discriminatory because the fees 

are consistent with price differentiation 

that exists today at all option exchanges. 

For example, CBOE assesses different 

rates for certain proprietary indexes as 

compared to other index products 

transacted at CBOE. VIX options and 

The S&P 500® Index options (‘‘SPXSM’’) 

are assessed different fees than other 

indexes.19 In addition, the concept of 

offering a volume discount to 

incentivize order flow is not novel.20

The Exchange believes that its 

proposal to add the term ‘‘Customer’’ as 

a clarifying amendment to a sentence 

describing rebates in Section II is 

reasonable because the addition of the 

word ‘‘Customer’’ will further clarify 

that the rebate, applicable to Customer 

orders, is based on members that have 

a certain amount of Customer volume. 

The Exchange believes that the proposal 

to amend this text is equitable and not 

unfairly discriminatory because it will 

help to clarify the Pricing Schedule and 

the Exchange’s calculation of its fees. 

The Exchange operates in a highly 

competitive market, comprised of nine 

exchanges, in which market participants 

can easily and readily direct order flow 

to competing venues if they deem fee 

levels at a particular venue to be 

excessive. Accordingly, the fees that are 

assessed by the Exchange must remain 

competitive with fees charged by other 

venues and therefore must 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 


pmangrum on DSK3VPTVN1PROD with NOTICES
21140 Federal Register / Vol. 77, No. 68 / Monday, April 9, 2012 / Notices 

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

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The change applies to securities priced at $1 or 

more per share. Fees and rebates for lower-priced 

securities are unchanged. 

4The $0.0014 per share executed rebate is also 

available for orders entered through an MPID 

through which the member (i) accesses an average 

daily volume of 3.5 million or more shares of 

liquidity, or (ii) provides an average daily volume 

of 25,000 or more shares of liquidity during the 

month. 

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 

Number SR–Phlx–2012–34 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–2012–34. 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–

2012–34 and should be submitted on or 

before April 30, 2012. 

For the Commission, by the Division 

of Trading and Markets, pursuant to 

delegated authority.22

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2012–8427 Filed 4–6–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66718; File No. SR–BX– 

2012–021] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Modify 

Pricing for BX Members Using the 

NASDAQ OMX BX Equities System 

April 3, 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 29, 

2012, The NASDAQ OMX BX, Inc. 

(‘‘BX’’ 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 BX. 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 

BX proposes to modify pricing for BX 

members using the NASDAQ OMX BX 

Equities System. BX will implement the 

proposed change on April 2, 2012. The 

text of the proposed rule change is 

available at http:// 

nasdaqomxbx.cchwallstreet.com, at 

BX’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, BX 

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. BX 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 

BX is proposing to modify its rebate 

schedule with respect to orders that 

access liquidity at BX.3 Currently, BX 

pays a rebate of $0.0014 per share 

executed with respect to orders entered 

through a market participant identifier 

(‘‘MPID’’) through which a member 

routes an average daily volume of 

25,000 or more shares during the 

month.4 For members that qualify for 

this rebate provision, the rebate applies 

to all shares entered through the MPID 

and executed on BX during the month, 

regardless of whether they are 

designated for routing. BX is proposing 

to eliminate this method of qualifying 

for a $0.0014 per share rebate, and 

replace it with an across-the-board 

rebate of $0.0014 per share executed for 

all orders that are designated for routing 

but that access liquidity on BX. 

Both the provision being eliminated 

and the new provision are designed to 

provide incentives for BX members to 

make greater use of the Exchange’s 

recently introduced routing service. The 

change reflects a concern that some 

members may be ‘‘gaming’’ the current 

provision by using BX’s router only to 

the extent necessary to qualify for the 

higher rebate, which then applies to all 

of their orders entered through the 

applicable MPID. By contrast, the 

change would apply the $0.0014 rebate 

to all orders that are designated for 

routing, regardless of volume, but would 

not apply to orders that are not 

designated for routing. Other methods of 


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