Document ID: SEC-2011-0152-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2011-02-02T05:00Z

[Federal Register Volume 76, Number 22 (Wednesday, February 2, 2011)]
[Notices]
[Pages 5848-5850]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-2227]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63781; File No. SR-Phlx-2011-09]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
the Order Entry Port Fee

January 26, 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 January 21, 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 applicability of the Order Entry 
Port Fee.\3\ 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

[[Page 5849]]

the Commission's Public Reference Room.
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    \3\ The Order Entry Port Fee is a connectivity fee assessed on 
members in connection with routing orders to the Exchange via an 
external order entry port. Members access the Exchange's network 
through order entry ports. A member organization may have more than 
one order entry port.
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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 amend the 
applicability of the Order Entry Port Fee. The Exchange currently 
assesses an Order Entry Port Fee per month per mnemonic \4\ of $500. 
This fee is assessed on members regardless of whether the order entry 
mnemonic is active \5\ during the billing month. The fee is assessed 
regardless of usage, and solely on the number of order entry ports 
assigned to each member organization.
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    \4\ Order entry mnemonics are codes that identify member 
organization order entry ports.
    \5\ An order entry mnemonic is considered active if a member 
organization sends at least one order to the Exchange using that 
order entry mnemonic during the applicable billing month. See 
Securities Exchange Act Release No. 58728 (October 3, 2008), 73 FR 
59695 (October 9, 2008) (SR-Phlx-2008-70).
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    The Exchange is proposing to modify the manner in which members are 
assessed the Order Entry Port Fee as related to complex order.\6\ The 
Exchange proposes to waive the $500 per month per mnemonic Order Entry 
Port Fee for mnemonics used exclusively for complex orders where one of 
the components of the complex order is the underlying security.\7\
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    \6\ A complex order is a spread, straddle, combination, ratio or 
collar order, all of which consist of more than one component, 
priced like a single order at a net debit or credit based on the 
prices of the individual components. See Exchange Rule 1080, 
Commentary .08(a)(i).
    \7\ The Exchange recently filed a proposed rule change to add 
complex orders where one component is the underlying stock or ETF to 
the functionality on its electronic trading platform for options, 
Phlx XL. The Exchange also amended its definition of complex orders 
in Exchange Rule 1080 as follows: Complex Orders is any order 
involving the simultaneous purchase and/or sale of two or more 
different options series in the same underlying security, priced at 
a net debit or credit based on the relative prices of the individual 
components, for the same account, for the purpose of executing a 
particular investment strategy. Furthermore, a Complex Order can 
also be a stock-option order, which is an order to buy or sell a 
stated number of units of an underlying stock or ETF coupled with 
the purchase or sale of options contract(s). The Exchange also 
proposed to permit complex orders consisting of up to six 
components. See Securities Exchange Act Release No. 63509 (December 
9, 2010), 76 FR 2733 (January 14, 2011) (SR-Phlx-2010-157) [sic].
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    The Exchange believes that members who transact complex orders may 
require an increased number of ports due to the member's stock 
clearance arrangements, which may require additional mnemonics. The 
Exchange is proposing to limit the fees that would be assessed on 
members requiring additional ports to transact stock-option orders.\8\
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    \8\ A complex order with one component that is the underlying 
stock or Exchange Traded Fund Share (``ETF'') is also referred to as 
a stock-option order.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \9\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \10\ in particular, in 
that it is an equitable allocation of reasonable fees and other charges 
among Exchange members and other persons using its facilities. The 
Exchange believes that the proposal is equitable and reasonable because 
all members would be able to limit fees related to order entry ports 
for such complex orders that are stock-option orders, which may require 
additional mnemonics.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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.\11\ 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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    \11\ 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-2011-09 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-2011-09. 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. 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 5850]]

2011-09 and should be submitted on or before February 23, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-2227 Filed 2-1-11; 8:45 am]
BILLING CODE 8011-01-P