Document ID: SEC-2010-0261-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2010-02-19T05:00Z

[Federal Register: February 19, 2010 (Volume 75, Number 33)]
[Notices]               
[Page 7534-7535]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19fe10-126]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61509; File No. SR-Phlx-2010-15]

 
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Routing Fees

February 5, 2010.
    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 January 26, 2010, 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 substantially 
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 adopt fees governing pricing for Exchange 
members using the Phlx XL II system,\3\ for routing standardized equity 
and index options to away markets for execution.
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    \3\ For a complete description of Phlx XL II, see Securities 
Exchange Act Release No. 59995 (May 28, 2009), 74 FR 26750 (June 3, 
2009) (SR-Phlx-2009-32). The instant proposed fees will apply only 
to options entered into, and routed by, the Phlx XL II system.
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    While changes to the Exchange's Fee Schedule pursuant to this 
proposal are effective upon filing, the Exchange has designated this 
proposal to be operative for trades settling on or after February 1, 
2010.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqtrader.com/micro.aspx?id=PHLXfilings, on the 
Commission's Web site at http://www.sec.gov, 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

[[Page 7535]]

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 recoup costs that the 
Exchange incurs for routing and executing orders in equity and index 
options to certain better-priced away markets.
    In May, 2009, the Exchange adopted Rule 1080(m)(iii)(A) to 
establish Nasdaq Options Services LLC (``NOS''), a member of the 
Exchange, as the Exchange's exclusive order router.\4\ NOS is utilized 
by the Phlx XL II system solely to route orders in options listed and 
open for trading on the Phlx XL II system to destination markets.
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    \4\ See Securities Exchange Act Release No. 59995 (May 28, 
2009), 74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32).
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    Currently, the Exchange's Fee Schedule includes a Routing Fee of 
$0.50 per contract side for orders routed to NYSE Arca, Inc. 
(``NYSEArca'') in penny options for execution.\5\ The Exchange proposes 
adding a Routing Fee of $0.40 per contract side for orders routed to 
the NASDAQ Options Market (``NOM'') in penny options for execution.\6\ 
There will be no routing fees for orders routed to away markets other 
than NYSEArca and NOM in penny options. Also, there will be no cost for 
executing orders at away markets in non-penny classes.
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    \5\ See Securities Exchange Act Release No. 61374 (January 19, 
2010), 75 FR 4123 (January 26, 2010) (SR-PHLX-2010-01).
    \6\ The Exchange clarified that NOM charges a $0.35 transaction 
charge to NOS and the Options Clearing Corporation charges a $0.06 
clearing charge, for a total fee of $0.41 for transactions routed to 
NOM. The Exchange proposed the $0.40 fee to recoup these costs. See 
E-mail from Angela S. Dunn, Assistant General Counsel, Phlx, to 
Johnna B. Dumler, Special Counsel, Division of Trading and Markets, 
Commission, dated January 29, 2010.
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    The Exchange incurs a cost of routing penny options to NOM and 
proposes this fee to recover the costs of routing to that exchange. 
Accordingly, the Exchange is proposing this fee to recoup transaction 
and clearing costs. The Exchange believes that the routing fees 
proposed will enable the Exchange to recover these costs.
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 because all members and member 
organizations would be assessed the same fee for penny options routed 
to and executed on NOM. The Exchange believes that this fee would 
enable it to recoup costs associated with routing customer orders on 
behalf of its members.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 \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.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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-2010-15 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-2010-15. 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 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 Number SR-Phlx-2010-15 and should be 
submitted on or before March 12, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-3159 Filed 2-18-10; 8:45 am]
BILLING CODE 8011-01-P