Document ID: SEC-2009-0094-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2009-01-23T05:00Z

[Federal Register: January 23, 2009 (Volume 74, Number 14)]
[Notices]               
[Page 4272-4274]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23ja09-112]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59243; File No. SR-Phlx-2008-86]

 
 Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Relating 
to Amending the Phlx Fee Schedule

January 13, 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 December 30, 2008, NASDAQ OMX PHLX, Inc. (``Phlx'' 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 substantially prepared by the Exchange. Phlx has 
designated this proposal as one establishing or changing a member due, 
fee, or other charge imposed under Section 19(b)(3)(A)(ii) of the Act 
\3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to

[[Page 4273]]

solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, pursuant to Section 19(b)(1) of the Act \5\ and Rule 
19b-4 thereunder,\6\ proposes to amend its Summary of Equity Option, 
and MNX, NDX, RUT and RMN Charges (``Summary of Equity Option''), 
Summary of Index Option Charges, $60,000 ``Firm Related'' Equity Option 
and Index Option Cap, and Summary of U.S. Dollar-Settled Foreign 
Currency Option Charges fee schedules. Specifically, the Exchange 
proposes to: (1) Consolidate the comparison and transaction charges on 
its fee schedules into one charge, (2) assess a customer execution 
charge of $0.12 per contract side on options on the Russell 2000 [reg] 
Index (the ``Full Value Russell Index'' or ``RUT''), and options on the 
one-tenth value Russell 2000[supreg] Index \7\ (the ``Reduced Value 
Russell Index'' or ``RMN'') on the Summary of Equity Option fee 
schedule; and (3) create a Broker-Dealer transaction charge on the 
Summary of Index Option Charges and Summary of U.S. Dollar-Settled 
Foreign Currency Option Charges fee schedules.
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    \5\ 15 U.S.C. 78s(b)(1).
    \6\ 17 CFR 240.19b-4.
    \7\ Russell 2000[supreg] is a trademark and service mark of the 
Frank Russell Company, used under license. Neither Frank Russell 
Company's publication of the Russell Indexes nor its licensing of 
its trademarks for use in connection with securities or other 
financial products derived from a Russell Index in any way suggests 
or implies a representation or opinion by Frank Russell Company as 
to the attractiveness of investment in any securities or other 
financial products based upon or derived from any Russell Index. 
Frank Russell Company is not the issuer of any such securities or 
other financial products and makes no express or implied warranties 
of merchantability or fitness for any particular purpose with 
respect to any Russell Index or any data included or reflected 
therein, nor as to results to be obtained by any person or any 
entity from the use of the Russell Index or any data included or 
reflected therein.
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    The Exchange also proposes to delete from the Summary of Equity 
Option fee schedule the Specialist Deficit (Shortfall) fee and the 
14,000 contract cap that is applied to Registered Options Traders 
(``ROTs'') transaction and comparison charges and Specialist 
transaction charges when contra-party to a non-AUTOM delivered customer 
order.
    The Exchange also proposes to delete from its Summary of Equity 
Option fee schedule unnecessary footnotes \8\ and to delete from its 
Summary of Index Option Charges and Summary of U.S. Dollar-Settled 
Foreign Currency Option Charges fee schedules unnecessary text (marked 
with ``**'') relating to rebate request forms for Firm/Proprietary 
transaction charges.
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    \8\ The Commission also notes that the remaining footnotes have 
been re-numbered.
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    Additionally, the Exchange proposes to increase the Firm Related 
\9\ equity option and index option cap from $60,000 per month to 
$65,000 per month and to exclude the current U.S. dollar-settled 
foreign currency option transaction and comparison charges from this 
cap.
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    \9\ See, e.g., Securities Exchange Act Release Nos. 54981 
(December 20, 2006), 71 FR 78251 (December 28, 2006) (SR-Phlx-2006-
86); 53287 (February 14, 2006), 71 FR 9186 (February 22, 2006) (SR-
Phlx-2006-10) and 56437 (September 13, 2007), 72 FR 53616 (September 
19, 2007) (SR-Phlx-2007-65).
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    While changes to the fee schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative for transactions settling on or after January 2, 2009.\10\
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    \10\ This filing was inadvertently filed as a Stock Clearing 
Corporation of Philadelphia filing instead of a NASDAQ OMX PHLX 
filing. As a result of refiling, Exhibit 5 now reflects amendments 
that were made in SR-Phlx-2008-85. The Commission notes that SR-
Phlx-2008-85 has since been withdrawn and re-filed as SR-Phlx-2008-
87.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings.

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
    Generally, the purpose of the proposed rule change is to update the 
Exchange's fee schedules by adopting new fees and deleting fees and 
text that are no longer deemed necessary.
    Currently, the Exchange separately itemizes comparison and 
transaction charges. The Exchange proposes to eliminate the comparison 
fee as a separate line item and instead imbed the fee in the existing 
transaction charge. This change will not change the actual amount being 
charged to Exchange members, but should simplify the fee schedules so 
that total transaction costs are more easily understood.\11\
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    \11\ This proposal is similar to a proposal filed by the 
International Securities Exchange, LLC (``ISE'') whereby ISE 
eliminated its comparison fee as a separate line item and imbedded 
the fee into the execution fee. See Securities Exchange Act Release 
No. 58139 (July 10, 2008), 73 FR 41142 (July 17, 2008) (SR-ISE-2008-
54).
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    The purpose of creating a separate Broker-Dealer transaction charge 
on the Summary of Index Option Charges and Summary of U.S. Dollar-
Settled Foreign Currency Option Charges fee schedules is to raise 
revenue and to specifically set forth the Broker-Dealer transaction 
charges, which are currently included in the customer transaction 
charges. Previously, Broker-Dealers and customers were each charged a 
$.40 transaction fee and a $.04 comparison fee for a combined charge of 
$.44. The Exchange proposes to raise revenue by increasing the total 
fee charged to Broker-Dealers by $.01. This new rate of $.45 for 
Broker-Dealers is the same charge that Broker-Dealer incur with respect 
to equity options.\12\ The Exchange believes that separating the 
Broker-Dealer transaction charges from the customer transaction charges 
should help to more readily identify the applicable transaction 
charges.
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    \12\ See e-mail from Angela S. Dunn, Counsel, Phlx, to Richard 
Holley III, Senior Special Counsel, Commission, dated January 8, 
2009.
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    The purpose of assessing a customer an equity option transaction 
charge of $0.12 per contract side for customer executions in RUT and 
RMN is to raise revenue, while remaining competitive in the 
marketplace.\13\
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    \13\ The Exchange currently assesses an equity option 
transaction charge of $0.12 per contract for customer executions 
options on the one-tenth of the value of the Nasdaq 100 Index (the 
``Mini Nasdaq 100 Index'' or ``MNX'') and options on the full value 
of the Nasdaq 100 Index (the ``Full-size Nasdaq 100 Index'' or 
``NDX''). See Securities Exchange Act Release No. 58049 (June 27, 
2008), 73 FR 38286 (July 3, 2008) (SR-Phlx-2008-46).
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    The Exchange proposes to delete the language that is marked with 
``**'' on both the Summary of Index Option Charges and the Summary of 
U.S. Dollar-Settled Foreign Currency Option Charges in order to delete 
obsolete language. The Exchange is able to identify Firm/Proprietary 
Orders electronically and therefore submitting a rebate request form is 
no longer necessary.
    The purpose of deleting language, which relates to identifying 
certain trademarks, from footnotes that appear in the Summary of Equity 
Option fee schedule is to remove unnecessary and/or outdated language 
from the fee schedule. Although the Exchange

[[Page 4274]]

intends to continue trading the MNX, NDX, RUT and RMN products, it does 
not believe that, at this time, the language in the related footnotes 
should be included on the Summary of Equity Option fee schedule.
    The Exchange has decided for business purposes to exclude the 
current U. S. dollar-settled foreign currency option transaction and 
comparison charges from the $60,000 Firm-Related Equity Option and 
Index Option Cap calculation. The Exchange believes that it can 
continue to attract this business without offering the cap, which 
should also help to raise revenue.
2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of 
fees is consistent with Section 6(b) of the Act \14\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \15\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members. By amending the Exchange's 
fee schedule and adding nominal fees and deleting fees and text the 
Exchange no longer deems necessary, the Exchange believes that members 
and member organizations should benefit from the proposals described 
herein.
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    \14\15 U.S.C. 78f(b).
    \15\15 U.S.C. 78f(b)(4).
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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 \16\ and paragraph (f)(2) of Rule 19b-4 \17\ 
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.
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    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \17\ 17 CFR 240.19b-4(f)(2).
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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-2008-86 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2008-86. 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 publicly available. All 
submissions should refer to File Number SR-Phlx-2008-86 and should be 
submitted on or before February 13, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-1297 Filed 1-22-09; 8:45 am]

BILLING CODE 8011-01-P