Document ID: SEC-2012-0928-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2012-06-12T04:00Z

[Federal Register Volume 77, Number 113 (Tuesday, June 12, 2012)]
[Notices]
[Pages 35092-35095]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14189]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67123; File No. SR-Phlx-2012-75]

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

June 5, 2012.
    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 May 30, 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

[[Page 35093]]

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 certain Routing Fees to recoup costs 
incurred by the Exchange in routing to The NASDAQ Options Market LLC 
(``NOM'').
    While the changes proposed herein are effective upon filing, the 
Exchange has designated these changes to be operative on June 1, 2012.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.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 this filing is to recoup costs that the Exchange 
incurs for routing and executing certain orders in equity and index 
options to NOM. The Exchange's Pricing Schedule at Section V currently 
includes the following Routing Fees for routing Customer, Professional, 
Firm, Broker-Dealer and Market Maker \3\ orders to away markets.
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    \3\ For the purposes of Routing Fees, a Market Maker includes 
Specialists (see Rule 1020) and ROTs (Rule 1014(b)(i) and (ii), 
which includes SQTs (see Rule 1014(b)(ii)(A)) and RSQTs (see Rule 
1014(b)(ii)(B)).

----------------------------------------------------------------------------------------------------------------
                                                                                                  Firm/broker-
                         Exchange                               Customer        Professional      dealer/market
                                                                                                      maker
----------------------------------------------------------------------------------------------------------------
NYSE AMEX.................................................             $0.11             $0.31             $0.55
BATS Penny................................................              0.55              0.55              0.55
BATS non-Penny............................................              0.86              0.91              0.91
BOX.......................................................              0.11              0.11              0.55
CBOE......................................................              0.11              0.31              0.55
CBOE orders greater than 99 contracts in RUT, RMN, NDX,                 0.29              0.31              0.55
 MNX, ETFs, ETNs and HOLDRs...............................
C2........................................................              0.55              0.56              0.55
ISE.......................................................              0.11              0.29              0.55
ISE Select Symbols........................................              0.31              0.39              0.55
NYSE ARCA (Penny Pilot)...................................              0.55              0.55              0.55
NYSE ARCA (Standard)......................................              0.11              0.11              0.55
NOM.......................................................              0.54              0.54              0.55
NOM (NDX and MNX).........................................              0.56              0.56              0.55
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    The Exchange is proposing to amend the current ``NOM (NDX and 
MNX)'' Routing Fees by renaming those fees as ``NOM-MNX.'' The Exchange 
is proposing to adopt separate Routing Fees for NOM-NDX as follows:

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                                                                                                  Firm/broker-
                        Exchange                              Customer         Professional      dealer/market
                                                                                                     maker
----------------------------------------------------------------------------------------------------------------
NOM-NDX................................................             $0.11              $0.81              $0.81
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    NOM recently amended its fees relating to options on the Nasdaq 100 
Index traded under the symbol NDX to assess Professionals, Firms, Non-
NOM Market Makers and NOM Market Makers (``Non-Customers'') a $0.70 per 
contract Fee for Removing Liquidity.\4\ The Exchange is proposing to 
amend its Routing Fees to adopt new NDX NOM Routing Fees to account for 
the revised Customer and Non-Customer NOM NDX Fees to Remove Liquidity 
and other routing costs incurred by the Exchange when routing to NOM.
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    \4\ See SR-NASDAQ-2012-068. NOM is not assessing a Customer a 
Fee to Remove Liquidity in NDX. NOM previously assessed the 
following Fees for Removing Liquidity for NDX and MNX: $0.50 per 
contract for Customers, $0.50 per contract for Professionals, $0.50 
per contract for Firms, $0.50 per contract for Non-NOM Market Makers 
and $0.40 per contract for NOM Market Makers. The Exchange recently 
adopted separate fees for NDX as noted herein.
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    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.\5\ NOS is utilized by the Exchange's 
fully automated options trading system, PHLX XL[supreg],\6\ solely to 
route orders in options listed and open for trading on the PHLX XL 
system to destination markets. Each time NOS routes to away markets NOS 
is charged a $0.06 clearing fee and, in the case of certain exchanges, 
a transaction fee is also charged in certain symbols, which fees are 
passed through to the Exchange. The Exchange

[[Page 35094]]

currently recoups clearing and transaction charges incurred by the 
Exchange as well as certain other costs incurred by the Exchange when 
routing to away markets, such as administrative and technical costs 
associated with operating NOS, membership fees at away markets, and 
technical costs associated with routing.\7\
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    \5\ See Securities Exchange Act Release No. 59995 (May 28, 
2009), 74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32).
    \6\ This proposal refers to ``PHLX XL'' as the Exchange's 
automated options trading system. In May 2009 the Exchange enhanced 
the system and adopted corresponding rules referring to the system 
as ``Phlx XL II.'' See Securities Exchange Act Release No. 59995 
(May 28, 2009), 74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32). The 
Exchange intends to submit a separate technical proposed rule change 
that would change all references to the system from ``Phlx XL II'' 
to ``PHLX XL'' for branding purposes.
    \7\ The Exchange is therefore adopting NOM's Fees for Removing 
Liquidity of $0.70 per contract for Professional, Firm, Non-NOM 
Market Maker and NOM Maker Makers orders, a $0.06 clearing cost and 
another $0.05 per contract associated with administrative and 
technical costs associated with operating NOS, a total of $0.81 per 
contract. The Exchange would only assess a Customer the 0.06 
clearing cost and another $0.05 per contract associated with 
administrative and technical costs associated with operating NOS (a 
total of $0.11 per contract) because a Customer is not assessed a 
Fee for Removing Liquidity on NOM.
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    The Exchange also proposes to amend Section V to relocate note 13 
to reference the ISE Select Symbols Routing Fee and remove the stray 
asterisk that is currently next to the ISE Select Symbols title. The 
Exchange believes that the asterisk is more appropriately placed near 
the fee it is describing.
    As with all fees, the Exchange may adjust these Routing Fees in 
response to competitive conditions by filing a new proposed rule 
change.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Pricing 
Schedule is consistent with Section 6(b) of the Act \8\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \9\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed amendment to the current 
NOM Routing Fees to rename the current fees to apply solely to options 
on the one-tenth value of the Nasdaq 100 Index traded under the symbol 
MNX and adopt separate fees for NDX orders routed to NOM is reasonable 
because the two separate categories take into account the different 
fees for removing liquidity assessed by NOM for MNX and NDX. The 
Exchange seeks to recoup costs incurred when routing orders to NOM on 
behalf of its members.
    The Exchange believes that the proposed amendment to the current 
NOM Routing Fees to rename those fees as ``NOM-MNX'' and not otherwise 
amend those fees but adopt separate Routing Fees for NDX options routed 
to NOM is equitable and not unfairly discriminatory because the 
Exchange will uniformly apply the NOM-MNX and NOM-NDX Routing Fees to 
its members.
    The proposed NOM Routing Fees for NDX are reasonable because they 
seek to recoup costs that are incurred by the Exchange when routing 
Customer, Professional, Firm, Broker-Dealer and Market Maker orders to 
NOM on behalf of members. Each destination market's transaction charge 
varies and there is a standard clearing charge for each transaction 
incurred by the Exchange along with other administrative and technical 
costs that are incurred by the Exchange. The Exchange believes that the 
proposed Routing Fees would enable the Exchange to recover the remove 
fees assessed to Non-Customers by NOM for NDX options, plus clearing 
and other administrative and technical fees for the execution of 
Customer and Non-Customer orders when routed to NOM. The Exchange also 
believes that the proposed NOM NDX Routing Fees are equitable and not 
unfairly discriminatory because they would be uniformly applied to all 
Non-Customer NDX orders that are routed to NOM and to cover the costs 
for Customer NDX orders that are routed to NOM.
    The Exchange believes that the proposed technical amendment to 
relocate the note in Section V is reasonable, equitable and not 
unfairly discriminatory because it will further clarify the note and 
the ISE Select Symbols Routing Fee.

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.\10\ 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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    \10\ 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 email to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2012-75 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-2012-75. 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 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-

[[Page 35095]]

2012-75 and should be submitted on or before July 3, 2012.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14189 Filed 6-11-12; 8:45 am]
BILLING CODE 8011-01-P