Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices 63225 

8As noted above, all representations and 

conditions contained in the application and the 

Prior Applications that require a Fund to disclose 

particular information in the Fund’s prospectus 

and/or annual report shall remain effective with 

respect to the Fund until the time that the Fund 

complies with the disclosure requirements adopted 

by the Commission in the Summary Prospectus 

Rule. 

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

2 17 CFR 240.19b–4. 

securities are issued by a foreign issuer. 

The ADR is registered under the 

Securities Act on Form F–6. ADR trades 

occur either on an Exchange or offexchange. Rule 6620 of the Financial 

Industry Regulatory Authority 

(‘‘FINRA’’) requires all off-exchange 

transactions in ADRs to be reported 

within 90 seconds and ADR trade 

reports to be disseminated on a realtime basis. With respect to GDRs, the 

depositary may be foreign or a U.S. 

entity, and the underlying securities 

may have a foreign or a U.S. issuer. All 

GDRs are sponsored and trade on a 

foreign exchange. No affiliated persons 

of applicants will serve as the 

depositary for any Depositary Receipts 

held by a Fund. A Fund will not invest 

in any Depositary Receipts that the 

Adviser deems to be illiquid or for 

which pricing information is not readily 

available. 

4. Applicants also seek to amend the 

terms and conditions of the Prior 

Applications to provide that all 

representations and conditions 

contained in the Prior Applications that 

require a Fund to disclose particular 

information in the Fund’s prospectus 

and/or annual report shall remain 

effective with respect to the Fund until 

the time the Fund complies with the 

disclosure requirements adopted by the 

Commission in the Summary Prospectus 

Rule. Applicants believe that the 

proposal to supersede the 

representations and conditions 

requiring certain disclosures in the Prior 

Applications is warranted because the 

Commission’s amendments to Form N– 

1A with respect to ETFs as part of the 

Summary Prospectus Rule reflect the 

Commission’s view with respect to the 

appropriate types of prospectus and 

annual report disclosures for an ETF. 

5. Applicants also wish to amend the 

Prior Order to permit the personnel of 

the Adviser or any Sub-Adviser who are 

responsible for the designation and 

dissemination of Deposit Securities or 

Fund Securities to also select securities 

for purchase or sale by activelymanaged accounts of the Adviser or 

Sub-Adviser. The Prior Applications 

currently state that such personnel will 

have no responsibilities for the selection 

of securities for purchase or sale by any 

actively-managed accounts of the 

Adviser or Sub-Adviser. Applicants 

state that the Codes of Ethics adopted by 

the Adviser and Distributor, among 

other procedures, adequately address 

any conflicts of interest. Applicants also 

note that the Commission more recently 

has granted exemptive relief with 

respect to index-based ETFs that does 

not contain the prohibition on adviser 

personnel designating securities for a 

creation or redemption with respect to 

such ETFs and also managing activelymanaged accounts for the adviser. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the same conditions as those 

imposed by the Prior Order, except for 

condition 5 to the Prior Order, which 

will be deleted.8

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25819 Filed 10–13–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63050; File No. SR–Phlx– 

2010–137] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Regarding 

Anti-Internalization Functionality for 

NASDAQ OMX PSX 

October 6, 2010. 

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 

September 30, 2010, NASDAQ OMX 

PHLX LLC (‘‘Phlx’’ or the ‘‘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 amend 

Phlx Rule 3307 to provide an optional 

anti-internalization functionality on 

NASDAQ OMX PSX (‘‘PSX’’). The text of 

the proposed rule change is available 

from the Exchange’s Web site at 

http:// 

nasdaqomxphlx.cchwallstreet.com, 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. The text of 

these statements may be examined at 

the places specified in Item IV below, 

and is set forth in Sections A, B, and C 

below. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing to provide 

a voluntary anti-internalization function 

for the PSX System. Under the proposal, 

market participants entering orders 

under a specific market participant 

identifier (‘‘MPID’’) may voluntarily 

direct that they not execute against 

other orders entered into the System 

under the same MPID. 

Under the proposal, the System, if 

requested, will not execute orders 

entered under the same MPID against 

each other. Instead, the System will 

execute against all eligible trading 

interest of other market participants, in 

accordance with PSX’s price-size 

execution priority, up to the point 

where an incoming order would interact 

with a resting order having the same 

MPID. In such a case, share amounts 

equal to the size of the portion of an 

incoming order that is designated by the 

order execution algorithm to interact 

with an order already in the System 

with the same MPID will be 

decremented from each order. 

For example, if market participant 

ABCD had an order to sell 1,000 shares 

at $10 on the book, entered an order to 

buy 1,000 shares at $10, and the System 

allocated 100 shares of the incoming 

order to the resting ABCD order and 900 

shares to other market participants’ 

orders, the System would execute the 

900 shares allocated to other market 

participants and would decrement, 

without execution, the remaining 100 

shares of the incoming order as well as 

100 shares from ABCD’s resting order. 

Similarly, if ABCD had a resting order 

to sell 2,000 shares at $10, entered an 

order to buy 500 shares at $10, and the 

System allocated all 500 shares to the 

resting ABCD order, the System would 

cancel the incoming order and 


jlentini on DSKJ8SOYB1PROD with NOTICES
63226 Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices 

3 15 U.S.C. 78f. 

4 15 U.S.C. 78f(b)(5). 

5NASDAQ Exchange Rule 4757(a)(4). 

6 15 U.S.C. 78s(b)(3)(A). 

7 17 CFR 240.19b–4(f)(6). In addition, Phlx has 

given the Commission written notice of its intent 

to file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date on 

which the Exchange filed the proposed rule change. 

8 17 CFR 240.19b–4(f)(6)(iii). 

9 Id. 

10NASDAQ Exchange Rule 4757(a)(4), BATS 

Exchange Rule 11.9(f) and NYSE ArcaEquities Rule 

7.31(qq). 

11For the purposes only of waiving the operative 

date of this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

12The text of the proposed rule change is 

available on Exchange’s Web site at http:// 

nasdaqtrader.com/micro.aspx?id=PHLXfilings, on 

the Commission’s website at http://www.sec.gov, at 

Phlx, and at the Commission’s Public Reference 

Room. 

decrement the resting order by 500 

shares. 

Anti-internalization functionality is 

designed to assist market participants in 

complying with certain rules and 

regulations of the Employee Retirement 

Income Security Act (‘‘ERISA’’) that 

preclude and/or limit managing brokerdealers of such accounts from trading as 

principal with orders generated for 

those accounts. It can also assist market 

participants in reducing execution fees 

potentially resulting from the 

interaction of executable buy and sell 

trading interest from the same firm. The 

Exchange notes that use of the 

functionality does not relieve or 

otherwise modify the duty of best 

execution owed to orders received from 

public customers. As such, market 

participants using anti-internalization 

functionality will need to take 

appropriate steps to ensure that public 

customer orders that do not execute 

because of the use of anti-internalization 

functionality ultimately receive the 

same execution price (or better) that 

they would have originally obtained if 

execution of the order was not inhibited 

by the functionality. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,3

in general, and with Sections 6(b)(5) of 

the Act,4 in particular, in that the 

proposal is designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. The 

Exchange notes that similar 

functionality has previously been 

approved for The NASDAQ Stock 

Market LLC (the ‘‘NASDAQ 

Exchange’’).5

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 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (1) Significantly affect 

the protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate if 

consistent with the protection of 

investors and the public interest, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 6 and Rule 19b– 

4(f)(6) thereunder.7

A proposed rule change filed under 

Rule 19b–4(f)(6) normally may not 

become operative prior to 30 days after 

the date of filing.8 However, Rule 19b– 

4(f)(6) 9 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange requests that the Commission 

waive the 30-day operative delay so that 

the benefits of this functionality to PSX 

market participants expected from the 

rule change can be implemented on or 

about October 8, 2010, when the 

Exchange expects to launch trading on 

PSX and have the technological changes 

in place to support the proposed rule 

change. The Commission notes that the 

proposal is similar to rules adopted by 

other exchanges.10 For these reasons, 

the Commission believes it is consistent 

with the protection of investors and the 

public interest to waive the 30-day 

operative delay, and hereby grants such 

waiver.11

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 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 

rule-comments@sec.gov. Please include 

File Number SR–Phlx-2010–137 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–2010–137. 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,12 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 website 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 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices 63227 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3A Member is any registered broker or dealer, or 

any person associated with a registered broker or 

dealer, that has been admitted to membership in the 

Exchange. 

4 15 U.S.C. 78f. 

5 15 U.S.C. 78f(b)(4). 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–Phlx– 

2010–137 and should be submitted on 

or before November 4, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25808 Filed 10–13–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63054; File No. SR–EDGX– 

2010–13] 

Self-Regulatory Organizations; EDGX 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Amendments 

to the EDGX Exchange, Inc. Fee 

Schedule 

October 6, 2010. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on 

September 30, 2010, the EDGX 

Exchange, Inc. (the ‘‘Exchange’’ or the 

‘‘EDGX’’) 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 selfregulatory organization. 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 

EDGX Exchange, Inc. (‘‘Exchange’’ or 

‘‘EDGX’’) proposes to amend its fees and 

rebates applicable to Members 3 of the 

Exchange pursuant to EDGX Rule 

15.1(a) and (c). 

All of the changes described herein 

are applicable to EDGX Members. The 

text of the proposed rule change is 

available on the Exchange’s Internet 

Web site at http://www.directedge.com. 

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 proposes to make 

several amendments to its fee schedule. 

First, it proposes to increase the fee for 

removing liquidity from $0.0029 per 

share to $0.0030 per share. Conforming 

amendments have been made to the B, 

V, Y, 3, and 4 Flags (‘‘add liquidity’’ 

flags) to reflect this change. Secondly, it 

proposes to decrease the rebate for 

adding liquidity from $0.0029 per share 

to $0.0026 per share. Conforming 

amendments have been made to the N, 

W, and 6 flags (‘‘remove liquidity’’ flags) 

to reflect this change. The Exchange 

believes that these rate changes will 

enable it to maintain a competitive 

position with regards to other away 

market centers. 

Secondly, the Exchange proposes to 

incorporate a three tier rebate structure. 

The Exchange proposes to introduce the 

Mega Tier, which modifies the rebate 

incorporated in footnote 1 of the fee 

schedule. There are two alternative 

ways a Member can qualify for the Mega 

Tier rebate. First, footnote 1 of the fee 

schedule currently provides that 

Members can qualify for a rebate of 

$0.0032 per share for all liquidity 

posted on EDGX if they add or route at 

least 5,000,000 shares of average daily 

volume prior to 9:30 AM or after 4:00 

PM (includes all flags except 6) AND 

add a minimum of 50,000,000 shares of 

average daily volume on EDGX in total. 

The Exchange proposes to amend the 

50,000,000 share minimum to 

25,000,000 shares. Secondly, footnote 1 

further provides that Members will be 

provided a $0.0031 rebate per share for 

liquidity added on EDGX if the Member 

on a daily basis, measured monthly, 

posts 0.75% of the Total Consolidated 

Volume (‘‘TCV’’) in average daily 

volume. TCV is defined as volume 

reported by all exchanges and trade 

reporting facilities to the consolidated 

transaction reporting plans for Tapes A, 

B and C securities. The Exchange 

proposes to increase this rebate to 

$0.0032 per share. 

Next, the Exchange proposes to 

introduce the Ultra Tier, in which a 

Member will be provided a $0.0031 

rebate per share for liquidity added on 

EDGX if the Member posts 0.50% of 

TCV in average daily volume to EDGX, 

as measured on a monthly basis. 

Finally, the Exchange propose to 

introduce the Super Tier, in which a 

Member will be provided a $0.0030 

rebate per share for liquidity added on 

EDGX if the Member posts 10,000,000 

shares or more of average daily volume 

to EDGX, as measured on a monthly 

basis. 

The Exchange believes that the above 

pricing is appropriate since higher 

rebates are directly correlated with more 

stringent criteria. The Mega Tier rebate 

($0.0032 per share) has the most 

stringent criteria, and is $0.0001 greater 

than the Ultra Tier rebate ($0.0031 per 

share) and $0.0002 greater than the 

Super Tier rebate ($0.0030 per share). 

For example, based on average TCV for 

August 2010 (7.2 billion), in order for a 

Member to qualify for the Mega Tier, the 

Member would have to post 54 million 

shares on EDGX. In order to qualify for 

the Ultra Tier, which has less stringent 

criteria than the Mega Tier, the Member 

would have to post 36 million shares on 

EDGX. Finally, the Super Tier has the 

least stringent criteria. In order for a 

Member to qualify for this rebate, the 

Member would have to post 10 million 

shares on EDGX. In addition, these 

rebates also result, in part, from lower 

administrative costs associated with 

higher volume. 

Finally, the Exchange proposes to 

make a clarifying amendment to the 

price guarantee language found in 

footnote 1 of the schedule to clarify that 

the share amounts are based upon 

average daily volume. 

EDGX Exchange proposes to 

implement these amendments to the 

Exchange fee schedule on October 1, 

2010. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the objectives of Section 6 of the Act,4

in general, and furthers the objectives of 

Section 6(b)(4),5 in particular, as it is 

designed to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its members and 

other persons using its facilities. The 


jlentini on DSKJ8SOYB1PROD with NOTICES