16906 Federal Register / Vol. 74, No. 69 / Monday, April 13, 2009 / Notices 

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

2 17 CFR 240.19b–4. 

3FBMS is designed to enable floor brokers and/ 

or their employees to enter, route, and report 

transactions stemming from options orders received 

on the Exchange. FBMS also is designed to establish 

an electronic audit trail for options orders 

represented and executed by floor brokers on the 

Exchange. See Exchange Rule 1080, commentary 

.06. 

4For purposes of calculating the 75,000 and 

40,000 thresholds, customer-to-customer 

transactions, customer-to-non-customer 

transactions, and non-customer-to-non-customer 

transactions would be included. 

5Customer-to-customer transactions would count 

towards reaching the 75,000 contract and 40,000 

contract thresholds, but a per contract subsidy 

would not be paid on any customer-to-customer 

transactions. Dividend, merger and short stock 

interest strategies would be excluded from all 

threshold volume calculations, and no per contract 

subsidy would be paid on these transactions. The 

per contract subsidy would be paid based on the 

average daily contract volume for that month, 

which are customer-to-non-customer transactions 

and are in excess of 75,000 contracts. Payments 

would be made at the stated rate for each tier for 

those contracts that fall within that tier. These 

contracts may include customer-to-customer 

transactions for the purposes of reaching a tier, but 

as stated above, a per contract subsidy would not 

be paid on these executions. When computing the 

threshold amounts, the Exchange intends to first 

count all customer-to-customer transactions and 

then all other customer-to-non-customer 

transactions. See also Securities Exchange Act 

Release No. 57253 (February 1, 2008), 73 FR 7352 

(February 7, 2008) (SR–Phlx–2008–08) (adopting a 

tiered per contract floor broker options subsidy 

payable to member organization with Exchange 

registered floor brokers). 

6The second of the two threshold volume 

requirements, ‘‘* * * at least 400,000 [sic] executed 

contracts or more per day for at least eight trading 

days during that same month’’, would remain the 

same. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59705; File No. SR–Phlx– 

2009–28] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to the 

Option Floor Broker Subsidy 

April 3, 2009. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 26, 

2009, NASDAQ OMX PHLX, Inc. 

(‘‘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 

threshold volume requirements related 

to the Options Floor Broker Subsidy and 

amend the Per Contract Average Daily 

Volume Subsidy Payment from a five 

tiered structure to a three tiered 

structure. 

While changes to the Exchange’s fee 

schedule pursuant to this proposal are 

effective upon filing, the Exchange has 

designated this proposal to be effective 

for trades settling on or after April 1, 

2009. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http:// 

nasdaqomxphlx.cchwallstreet.com/ 

NASDAQOMXPHLX/Filings/, 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 purpose of the proposed rule 

change is to increase the threshold 

volume requirements related to the 

Options Floor Broker Subsidy and 

simplify the current tiered fee structure 

for the Options Floor Broker Subsidy 

Per Contract Average Daily Volume 

Subsidy Payment by reducing the 

number of tiers. The Exchange believes 

the proposed tier structure is more 

aligned with existing average daily 

volumes and that increasing the 

threshold volume requirement and 

compressing the tiers is necessary to 

continue to attract additional floor 

brokerage business to the Exchange. 

The Exchange currently pays an 

Options Floor Broker Subsidy to 

member organizations with Exchange 

registered floor brokers for eligible 

contracts that are entered into the 

Exchange’s Floor Broker Management 

System (‘‘FBMS’’).3 To qualify for the 

per contract subsidy, a member 

organization with Exchange registered 

floor brokers must have: (1) More than 

an average of 75,000 executed contracts 

per day in the applicable month; and (2) 

at least 40,000 executed contracts or 

more per day for at least eight trading 

days during that same month.4 Only the 

floor broker volume from orders entered 

into FBMS and subsequently executed 

on the Exchange would be counted. The 

75,000 contract and 40,000 contract 

thresholds, as described above, would 

be calculated per member organization 

floor brokerage unit. In the event that 

two or more member organizations with 

Exchange registered floor brokers each 

entered one side of a transaction into 

FBMS, then the executed contracts 

would be divided among each 

qualifying member organization that 

participates in that transaction.5

The Exchange proposes amending the 

threshold volume requirements related 

to the Option Floor Broker Subsidy so 

that in order to qualify for the per 

contract subsidy a member organization 

with Exchange registered floor brokers 

must have more than an average of 

100,000, instead of 75,000, executed 

contracts per day in the applicable 

month.6 The Exchange also proposes 

amending the current five tiered Per 

Contract Average Daily Volume Subsidy 

Payment to a three tiered structure. 

Currently, in order to be eligible for the 

Options Floor Broker Subsidy, the 

member organization must have an 

average daily volume in a particular 

calendar month as follows: 

PER CONTRACT AVERAGE DAILY VOLUME SUBSIDY PAYMENT

Tier I Tier II Tier III Tier IV Tier V 

75,001 to 100,000 ............. 100,001 to 200,000 ........... 200,001 to 300,000 ........... 300,001 to 400,000 ........... 400,001 and greater. 

$0.01 per contract ............. $0.04 per contract ............. $0.05 per contract ............. $0.06 per contract ............. $0.07 per contract. 

Federal Register / Vol. 74, No. 69 / Monday, April 13, 2009 / Notices 16907 

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

8 15 U.S.C. 78f(b)(4). 

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

10 17 CFR 240.19b–4(f)(2). 11 17 CFR 200.30–3(a)(12). 

The Exchange proposes a three tiered 

structure where to be eligible for the 

Options Floor Broker Subsidy, the 

member organization must have an 

average daily volume in a particular 

calendar month as follows: 

PER CONTRACT AVERAGE DAILY VOLUME SUBSIDY PAYMENT

Tier I Tier III [sic] Tier IV [sic] 

100,001 to 200,000 ............................................ 200,001 to 300,000 .......................................... 300,001 and greater. 

$0.04 per contract .............................................. $0.05 per contract ............................................ $0.06 per contract. 

In connection with increasing the 

threshold volume requirements, the 

Exchange proposes increasing the 

corresponding eligible contract 

requirements to reflect the increase from 

75,000 to 100,000 for average executed 

contracts per day in the applicable 

month as follows: 

• Customer-to-customer executions 

will count towards reaching the 100,000 

contract and 40,000 contract thresholds, 

but a per contract subsidy will not be 

paid on any customer-to-customer 

executions. 

• Orders entered through FBMS but 

executed away through Linkage, as well 

as dividend, merger and short stock 

interest strategies will not count 

towards the 100,000 contract or the 

40,000 contract thresholds nor will a per 

contract subsidy be paid on these 

transactions. 

• Only the largest component of a 

Complex Order (i.e., the component that 

includes the greatest number of 

contracts) will count towards the 

100,000 contract and the 40,000 contract 

thresholds. The Options Floor Broker 

Subsidy does not apply to any contracts 

that are executed as part of a Complex 

Order. 

Similarly, the Exchange proposes to 

amend the fee schedule to note that 

‘‘[t]he per contract subsidy would be 

paid based on the average daily contract 

volume on customer-to-non-customer as 

well as non-customer-to-non-customer 

transactions for that month in excess of 

100,000 contracts’’ instead of 75,000 as 

currently stated. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its schedule of fees 

is consistent with Section 6(b) of the 

Act 7 in general, and furthers the 

objectives of Section 6(b)(4) of the Act 8

in particular, in that it is an equitable 

allocation of reasonable fees and other 

charges among Exchange members. 

Pursuant to this proposal, all member 

organizations with Exchange registered 

floor brokers are offered the continued 

opportunity to receive a subsidy. By 

allowing for a subsidy, the Exchange 

believes that floor brokers will be 

encouraged to send additional orders to 

the Exchange for execution. 

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 9 and paragraph 

(f)(2) of Rule 19b–4 10 thereunder. At 

any time within 60 days of the filing of 

the proposed rule change, the 

Commission may summarily abrogate 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–Phlx–2009–28 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington DC 

20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2009–28. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 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–2009–28 and should be 

submitted on or before May 4, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8324 Filed 4–10–09; 8:45 am] 

BILLING CODE 8010–01–P