Document ID: SEC-2012-0734-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2012-05-10T04:00Z

[Federal Register Volume 77, Number 91 (Thursday, May 10, 2012)]
[Notices]
[Pages 27525-27526]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-11258]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66926; File No. SR-Phlx-2012-56]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
Phlx's Fee Schedule Governing Routing From Its NASDAQ OMX PSX Facility

May 4, 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 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify Phlx's fee schedule governing 
routing from its NASDAQ OMX PSX (``PSX'') facility. Phlx will implement 
the change on May 1, 2012. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Phlx is making a minor modification to the schedule governing fees 
for use of the routing services of its PSX facility. Specifically, for 
PSCN \3\ and PSTG \4\ orders that execute at NASDAQ OMX BX (``BX''), 
Phlx currently charges $0.0027 per share executed. However, because BX 
currently pays a rebate with respect to orders that access liquidity, 
Phlx is proposing to replace the fee with a credit equal to the $0.0014 
per share executed credit paid by BX. The change is intended to 
encourage greater use of the routing facilities of PSX.
---------------------------------------------------------------------------

    \3\ PSCN is a routing option under which orders check the System 
for available shares and then are sent to destinations on the System 
routing table. If shares remain unexecuted after routing, they are 
posted on the book. Once on the book, should the order subsequently 
be locked or crossed by another market center, the System will not 
route the order to the locking or crossing market center. PSKP is a 
form of PSCN in which the entering firm instructs the System to 
bypass any market centers included in the PSCN System routing table 
that are not posting Protected Quotations within the meaning of 
Regulation NMS.
    \4\ PSTG is a routing option under which orders check the System 
for available shares and then are sent to destinations on the System 
routing table. If shares remain unexecuted after routing, they are 
posted on the book. Once on the book, should the order subsequently 
be locked or crossed by another accessible market center, the System 
shall route the order to the locking or crossing market center. PSKN 
is a form of PSTG in which the entering firm instructs the System to 
bypass any market centers included in the PSTG System routing table 
that are not posting Protected Quotations within the meaning of 
Regulation NMS.
---------------------------------------------------------------------------

2. Statutory Basis
    Phlx believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act,\5\ in general, and with Sections 
6(b)(4) and (5) of the Act,\6\ in particular, in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among members and issuers and other persons using any facility or 
system which Phlx operates or controls, and is not designed to permit 
unfair discrimination between customers, issuers, brokers or dealers. 
All similarly situated members are subject to the same fee structure, 
and access to Phlx is offered on fair and non-discriminatory terms. The 
change is reasonable because the proposed credit is equal to the credit 
paid by BX with respect to orders that it executes. The change is 
consistent with an equitable allocation of fees because it will bring 
the economic attributes of using the PSCN and PSTG routing strategies 
in line with the cost of executing orders at BX. Finally, the change is 
not unfairly discriminatory because it solely applies to members that 
opt to use the PSCN and PSTG routing strategies.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    Finally, Phlx notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues if they 
deem fee levels at a particular venue to be excessive. In such an 
environment, Phlx must continually adjust its fees to remain 
competitive with other exchanges and with alternative trading systems 
that have been exempted from compliance with the statutory standards 
applicable to exchanges. Phlx believes that the proposed rule change 
reflects this competitive environment because it is designed to create 
pricing incentives for greater use of the PSX routing facility.

B. Self-Regulatory Organization's Statement on Burden on Competition

    Phlx does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended. Because the market 
for order execution is extremely competitive, members may readily opt 
to disfavor Phlx's execution services if they believe that alternatives 
offer them better value. The proposed change is designed to enhance 
competition by using pricing incentives to encourage greater use of the 
PSX routing facility.

[[Page 27526]]

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\7\ 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.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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 rule-comments@sec.gov. Please include 
File No. SR-Phlx-2012-56 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-2012-56. 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 
10:00 a.m. and 3:00 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-2012-56 and should be 
submitted on or before May 31, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-11258 Filed 5-9-12; 8:45 am]
BILLING CODE 8011-01-P