22034 Federal Register / Vol. 77, No. 71 / Thursday, April 12, 2012 / Notices 

11 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

12 15 U.S.C. 78f(b)(5). 

13 15 U.S.C. 78f(b)(1) and 15 U.S.C. 78f(b)(6). 

14The Commission believes that it is appropriate 

to include in NYSE Rule 476A references to rules 

that are currently operating on a pilot basis. 

15See NYSE Rule 476A(d). 

16 15 U.S.C. 78f(b)(7) and 15 U.S.C. 78f(d)(1). 

17 17 CFR 240.19d–1(c)(2). 

18 15 U.S.C. 78s(b)(2). 

19 17 CFR 200.30–3(a)(12); 17 CFR 200.30– 

3(a)(44). 

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

2 17 CFR 240.19b–4. 

3Section I of the Exchange’s Pricing Schedule is 

entitled ‘‘Rebates and Fees for Adding and 

Removing Liquidity in Select Symbols.’’ 

4SPY is one of the Select Symbols subject to the 

rebates and fees in Section I. A complete list of 

Select Symbols is included in Section I of the 

Pricing Schedule. 

III. Discussion and Commission 

Findings 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange.11 In particular, the 

Commission believes that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act 12 because expanding 

the list of DMM obligations that are 

subject to the Minor Rule Violation Plan 

should afford the Exchange increased 

flexibility in carrying out its supervisory 

responsibilities, and, in doing so, help 

to meet the aim of protecting investors 

and the public interest. 

The Commission also believes that the 

proposed rule change is consistent with 

Sections 6(b)(1) and 6(b)(6) of the Act,13

which require that an exchange enforce 

compliance with, and have rules that 

provide appropriate discipline for 

violations of, the Act, the rules and 

regulations thereunder, and Exchange 

rules. As an initial matter, the proposed 

rule change will further these objectives 

through its clarification of the list of 

Exchange rule violations that are subject 

to NYSE Rule 476A by updating rule 

titles and rule references, deleting 

references to rules that have been 

deleted, updating descriptions of rules 

that have been amended, and fixing a 

typographical error. 

Further, the Commission recognizes 

that the proposed rule change will 

render violations of DMM obligations 

under Rule 104 14 and Rule 123D that 

were not previously on the Rule 476A 

List as now eligible for treatment as 

minor violations. However, the 

Commission notes that designating a 

rule as subject to the Minor Rule 

Violation Plan does not signify that 

violation of the rule will always be 

deemed a minor violation. As noted by 

the Exchange, Rule 476A preserves the 

Exchange’s discretion to seek formal 

discipline, as warranted, when 

transgressions of rules designated as 

eligible for the Minor Rule Violation 

Plan are found to be more serious. Thus, 

the Exchange will remain able to 

require, on a case-by-case basis, formal 

disciplinary action for any particular 

violation. Therefore, the Commission 

believes that the proposed rule change 

will not compromise the Exchange’s 

ability to seek more stringent sanctions 

for the more serious violations of Rules 

104 and 123D. 

In addition, because NYSE Rule 476A 

provides procedural rights to a person 

fined under the rule, entitling the 

person to contest the fine and receive a 

full disciplinary proceeding,15 the 

Commission believes that NYSE Rule 

476A, as amended by this proposed rule 

change, will provide a fair procedure for 

the disciplining of Exchange members 

and persons associated with members, 

consistent with Sections 6(b)(7) and 

6(d)(1) of the Act.16

Finally, the Commission finds that the 

proposed rule change is consistent with 

the public interest, the protection of 

investors, or is otherwise in furtherance 

of the purposes of the Act, as required 

by Rule 19d–1(c)(2) under the Act,17

which governs minor rule violation 

plans. The Commission believes that the 

proposed changes to NYSE Rule 476A 

will strengthen the Exchange’s ability to 

carry out its oversight and enforcement 

responsibilities as a self-regulatory 

organization, in cases where full 

disciplinary proceedings are unsuitable 

in view of the nature of a particular 

violation. 

In approving this proposed rule 

change, the Commission emphasizes 

that in no way should the amendment 

of the rule be seen as minimizing the 

importance of compliance with NYSE 

rules and all other rules subject to the 

imposition of fines under NYSE Rule 

476A. The Commission believes that the 

violation of any self-regulatory 

organization’s rules, as well as 

Commission rules, is a serious matter. 

However, NYSE Rule 476A provides a 

reasonable means of addressing rule 

violations that do not rise to the level of 

requiring formal disciplinary 

proceedings, while providing greater 

flexibility in handling certain violations. 

The Commission expects that the 

Exchange will continue to conduct 

surveillance with due diligence and 

make a determination based on its 

findings, on a case by-case basis, of 

whether a violation requires formal 

disciplinary action under Rule 476. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,18 that the 

proposed rule change (SR–NYSE–2012– 

05) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–8782 Filed 4–11–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66757; File No. SR–Phlx– 

2012–45] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Rebates for Adding and Removing 

Liquidity in SPY 

April 6, 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 April 2, 

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 I 3 of its Pricing Schedule to 

further incentivize market participants 

to transact SPDR S&P 500 (‘‘SPY’’) 4

options. 

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 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 77, No. 71 / Thursday, April 12, 2012 / Notices 22035 

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

6 15 U.S.C. 78f(b)(4). 

7For March 2012, SPY options accounted for 

17.21% of the total listed equity and ETF options 

volume traded in the U.S. 8 15 U.S.C. 78s(b)(3)(A)(ii). 

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 Exchange proposes to further 

incentivize Customers who transact 

Complex Orders in SPY. The Exchange 

currently pays a Customer Complex 

Order Rebate for Adding Liquidity of 

$0.32 per contract and a Customer 

Complex Order Rebate for Removing 

Liquidity of $0.06 per contract. The 

Exchange is proposing to amend Section 

I of the Pricing Schedule to specify that 

the Exchange will increase the Customer 

Complex Order Rebates for Adding and 

Removing Liquidity by $0.01 per 

contract for transactions in SPY. 

Therefore, Customer Complex Orders 

that add liquidity in SPY will receive a 

rebate of $0.33 per contract and 

Customer Complex Orders that remove 

liquidity in SPY will receive a rebate of 

$0.07 per contract. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Pricing Schedule 

is consistent with Section 6(b) of the 

Act 5 in general, and furthers the 

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

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 further 

incentivize Customers who transact 

Complex Orders in SPY is reasonable 

because Customer Complex Orders are 

becoming an increasingly important 

segment of options trading. The 

Exchange believes that it is reasonable 

to further incentivize Customer 

Complex Orders by offering a $0.01 per 

contract incentive for SPY options in 

addition to the Customer Complex 

Order Rebates for Adding and Removing 

Liquidity because the Exchange seeks to 

incentivize market participants to direct 

and transact a greater number of 

Customer Complex Orders at the 

Exchange, particularly in SPY. Creating 

these incentives and attracting Customer 

Complex Orders to the Exchange, in 

turn, benefits all market participants 

through increased liquidity at the 

Exchange. The Exchange’s proposal to 

further incentivize Customers who 

transact Complex Orders in SPY is 

equitable and not unfairly 

discriminatory because the Exchange 

will uniformly pay an additional $0.01 

per contract incentive in addition to the 

Customer Complex Order Rebates for 

Adding and Removing Liquidity to all 

Customer Complex Orders in SPY that 

receive the rebates. 

Further, the Exchange also believes it 

is reasonable, equitable and not unfairly 

discriminatory to only offer rebates to 

Customers and not other market 

participants because Customer Complex 

Order flow brings unique benefits to the 

marketplace in terms of liquidity and 

order interaction. It is an important 

Exchange function to provide an 

opportunity to all market participants to 

trade against Customer Complex Orders. 

In addition, the Exchange believes 

that paying an additional $0.01 per 

contract incentive in addition to the 

Customer Complex Order Rebates for 

Adding and Removing Liquidity in SPY, 

as compared to other option symbols, is 

reasonable, equitable and not unfairly 

discriminatory because any market 

participant is able to transact a 

Customer Complex Order in SPY and 

receive the additional rebate incentive 

regardless of volume. There is no 

requirement to transact a certain volume 

of Customer Complex Orders to qualify 

for the additional $0.01 per contract 

rebate incentive. Further, options 

overlying SPY are the most actively 

traded equity and ETF option in the 

United States (U.S.), accounting for 

more than 15% of the total volume on 

any given day.7 Because of the 

substantial volume opportunity, the 

Exchange believes this additional $0.01 

per contract incentive for SPY, as 

compared to other symbols, would 

continue to attract volume to the 

Exchange and benefit all market 

participants. 

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 rebates paid 

by the Exchange must remain 

competitive with rebates offered 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 

19(b)(3)(A)(ii) of the Act.8 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–2012–45 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–2012–45. This file number 

should be included on the subject line 

if email is used. To help the 

Commission process and review your 

mstockstill on DSK4VPTVN1PROD with NOTICES

22036 Federal Register / Vol. 77, No. 71 / Thursday, April 12, 2012 / Notices 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Select Symbols’’ refers to the symbols 

which are subject to the Rebates and Fees for 

Adding and Removing Liquidity in Section I of the 

Exchange’s Pricing Schedule. 

4Section II includes options overlying equities, 

ETFs, ETNs, indexes and HOLDRs which are 

Multiply Listed. 

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

6 15 U.S.C. 78f(b)(4). 

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–Phlx–2012– 

45 and should be submitted on or before 

May 3, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–8781 Filed 4–11–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66756; File No. SR–Phlx– 

2012–43] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Rebates and Fees for Adding and 

Removing Liquidity in Select Symbols 

April 6, 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 28, 

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 I of the Exchange’s Pricing 

Schedule entitled ‘‘Rebates and Fees for 

Adding and Removing Liquidity in 

Select Symbols,’’ specifically to remove 

various Select Symbols.3

While changes to the Pricing 

Schedule pursuant to this proposal are 

effective upon filing, the Exchange has 

designated these changes to be operative 

on April 2, 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 the list of Select 

Symbols in Section I of the Exchange’s 

Pricing Schedule, entitled ‘‘Rebates and 

Fees for Adding and Removing 

Liquidity in Select Symbols’’ in order to 

attract additional order flow to the 

Exchange. 

The Exchange displays a list of Select 

Symbols in its Pricing Schedule at 

Section I, ‘‘Rebates and Fees for Adding 

and Removing Liquidity in Select 

Symbols,’’ which are subject to the 

rebates and fees in that section. The 

Exchange is proposing to delete the 

following symbols from the list of Select 

Symbols in Section I of the Pricing 

Schedule: Apple Inc. (‘‘AAPL’’); 

Citigroup, Inc. (‘C’’); JP Morgan Chase & 

Co. (‘‘JPM’’); Amazon.com, Inc. 

(‘‘AMZN’’); AT&T Inc. (‘‘T’’), 

Caterpillar, Inc. (‘‘CAT’’); Exxon Mobil 

Corporation Common (‘‘XOM’’); 

International Business Machines 

(‘‘IBM’’); and American Express 

Company Common (‘‘AXP’’) 

(collectively ‘‘Proposed Deleted 

Symbols’’). These Proposed Deleted 

Symbols would be subject to the rebates 

and fees in Section II of the Pricing 

Schedule entitled ‘‘Equity Options 

Fees.’’ 4

While changes to the Pricing 

Schedule pursuant to this proposal are 

effective upon filing, the Exchange has 

designated these changes to be operative 

on April 2, 2012. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Pricing Schedule 

is consistent with Section 6(b) of the 

Act 5 in general, and furthers the 

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

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 it is 

reasonable to remove the Proposed 

Deleted Symbols from its list of Select 

Symbols to attract additional order flow 

to the Exchange. The Exchange believes 

that applying the fees in Section II of the 

Pricing Schedule to the Proposed 

Deleted Symbols, including the 

opportunity to receive payment for 

order flow, will attract order flow to the 

Exchange. 

The Exchange believes that it is 

equitable and not unfairly 

discriminatory to amend its list of Select 

Symbols to remove the Proposed 

Deleted Symbols because the list of 

Select Symbols would apply uniformly 

to all categories of participants in the 

same manner. All market participants 

who trade the Select Symbols would be 

subject to the rebates and fees in Section 

I of the Pricing Schedule, which would 

not include the Proposed Deleted 

Symbols. Also, all market participants 

would be uniformly subject to the fees 

in Section II, which would include the 

Proposed Deleted Symbols. 

mstockstill on DSK4VPTVN1PROD with NOTICES