Document ID: SEC-2011-0442-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2011-04-05T04:00Z

[Federal Register Volume 76, Number 65 (Tuesday, April 5, 2011)]
[Notices]
[Pages 18813-18814]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-7978]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64150; File No. SR-Phlx-2011-38]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
ETNs

March 30, 2011.
    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 22, 2011, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Fee Schedule to 
codify the Exchange's existing practice of assessing fees for 
transactions in exchange-traded note (``ETN'') \3\ options at the same 
rates for exchange-traded fund (``ETF'') options.\4\
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    \3\ ETNs are also known as ``Index-Linked Securities,'' which 
are designed for investors who desire to participate in a specific 
market segment by providing exposure to one or more identifiable 
underlying securities, commodities, currencies, derivative 
instruments or market indexes of the foregoing. Index-Linked 
Securities are the non-convertible debt of an issuer that have a 
term of at least one (1) year but not greater than thirty (30) 
years. Despite the fact that Index-Linked Securities are linked to 
an underlying index, each trade as a single, exchange-listed 
security. Accordingly, rules pertaining to the listing and trading 
of standard equity options apply to Index-Linked Securities.
    \4\ An ETF is an open-ended registered investment company under 
the Investment Company Act of 1940 that has received certain 
exemptive relief from the Commission to allow secondary market 
trading in the ETF shares. ETFs are generally index-based products, 
in that each ETF holds a portfolio of securities that is intended to 
provide investment results that, before fees and expenses, generally 
correspond to the price and yield performance of the underlying 
benchmark index.
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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 on April 1, 2011.
    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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to codify the Exchange's 
existing practice of assessing fees for transactions in ETN options at 
the same rates for ETF options. Specifically, the Exchange is proposing 
to amend Section II of the Exchange's Fee Schedule, titled Equity 
Options Fees, and Section III, titled Singly Listed Options, by 
including references to ETNs in those

[[Page 18814]]

sections. Section II of the Exchange's Fee Schedule currently states 
that it includes options overlying equities, ETFs, HOLDRS,\5\ BKX,\6\ 
RUT,\7\ RMN,\8\ MNX \9\ and NDX.\10\ Section III of the Exchange's Fee 
Schedule currently states that it includes options overlying 
currencies, equities, ETFs, indexes and HOLDRS not listed on another 
exchange. The Exchange is proposing to add ETNS to both Sections II and 
III and assess the same rates that are currently assessed ETFs and 
other equity options today.
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    \5\ HOLDRS are Holding Company Depository Receipts.
    \6\ BKX represents the KBW Bank Index.
    \7\ RUT represents the options on the Russell 2000[reg] Index 
(the ``Full Value Russell Index'' or ``RUT'').
    \8\ RMN represents options on the one-tenth value Russell 
2000[reg] Index \8\ (the ``Reduced Value Russell Index'' or 
``RMN'').
    \9\ MNX represents options on the one-tenth value of the Nasdaq 
100 Index traded under the symbol MNX (``MNX'').
    \10\ NDX represents options on the Nasdaq 100 Index \10\ traded 
under the symbol NDX (``NDX'').
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    The Exchange is not proposing to amend any fees.\11\ The Exchange 
would apply the same rates that apply to ETFs today to ETNs. A similar 
proposal was filed by the Chicago Board Options Exchange, Incorporated 
(``CBOE'') to apply the ETF rates to ETNs and include references to 
ETNs in the fee schedule.\12\
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    \11\ This fee proposal would not impact any equity options 
transacted in any of the symbols which are listed in Section I of 
the Exchange's Fee Schedule titled ``Rebates and Fees for Adding and 
Removing Liquidity in Select Symbols.''
    \12\ See Securities Exchange Act Release No. 62579 (July 28, 
2010), 75 FR 47329 (August 5, 2010) (SR-CBOE-2010-068).
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    The Exchange is also proposing to make conforming amendments to the 
Table of Contents and Section IV, titled PIXL Pricing, of the Fee 
Schedule.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \13\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \14\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members and other persons using its 
facilities.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable to add ETNs 
specifically to Sections II and III because it would codify the 
Exchange's existing practice of assessing fees for ETN options in a 
manner similar to ETF options. This proposal would add clarity to the 
Exchange's Fee Schedule.
    The Exchange believes that it is equitable because the fees in 
Sections II and III would be uniformly applied to all market 
participants transacting equity options in symbols other than those 
listed in Section I of the Fee Schedule.

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.\15\ 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.
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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-2011-38 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-2011-38. 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 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 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 information that you wish to make available publicly.
    All submissions should refer to File Number SR-Phlx-2011-38 and 
should be submitted on or before April 26, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-7978 Filed 4-4-11; 8:45 am]
BILLING CODE 8011-01-P