Document ID: SEC-2010-1993-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc
Posted Date: 2010-12-23T05:00Z

[Federal Register Volume 75, Number 246 (Thursday, December 23, 2010)]
[Notices]
[Pages 80869-80870]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-32222]

[[Page 80869]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63562; File No. SR-Phlx-2010-177]

Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating 
to Options Overlying QNET

December 16, 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 December 15, 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 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 for 
Sector Index Options to expand the promotional pricing period for 
options overlying the NASDAQ Internet Index (``QNET'').
    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 Exchange previously filed a rule change to add additional 
transaction fees to Category III of its Fee Schedule, titled Sector 
Index Options, for options overlying QNET from trade date April 30, 
2010 through trade date December 30, 2010.\3\ The purpose of the 
promotional pricing is to assess a fixed rate across all market 
participants for a specified period of time to incentivize members to 
trade QNET.
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    \3\ See Securities Exchange Act Release No. 61984 (April 26, 
2010), 75 FR 23313 (May 3, 2010) (SR-Phlx-2010-60).
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    The Exchange currently assesses a $.20 per contract transaction fee 
for options overlying QNET for the following market participants: 
Customers, registered options traders (on-floor), specialists, 
professionals,\4\ firms and broker-dealers. Pursuant to the rule 
change, on December 31, 2010, the Exchange will assess the options 
transaction charges for sector index options as designated by category 
of market participant on the Fee Schedule.\5\
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    \4\ The Exchange defines a ``professional'' as any person or 
entity that (i) is not a broker or dealer in securities, and (ii) 
places more than 390 orders in listed options per day on average 
during a calendar month for its own beneficial account(s).
    \5\ See footnote 3. The Exchange's filing eliminates the $.20 
per contract transaction promotional pricing after December 30, 
2010, and instead assesses members the applicable sector index 
options transaction charges, by market participant, starting on 
December 31, 2010. For example, for transactions in QNET sector 
index options, a customer would no longer be assessed the $.20 per 
contract on trade date December 31, 2010, but instead would be 
assessed the option transaction charge, which is currently $.44 per 
contract.
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    The Exchange is proposing to expand the promotional pricing to 
trade date December 31, 2010. This proposal would eliminate the $.20 
per contract transaction promotional pricing after December 31, 2010, 
and would instead cause members to be assessed the applicable sector 
index options transaction charges, by market participant, starting on 
January 3, 2011 (the next trade date). For example, for transactions in 
QNET sector index options, a customer would no longer be assessed $.20 
per contract on trade date January 3, 2011, but instead would be 
assessed the option transaction charge, which is currently $.44 per 
contract.
    The Exchange recently filed a proposal to amend its calculation of 
transaction fees for billing purposes from settlement date to trade 
date billing.\6\ In that filing, the Exchange amended the billing cycle 
so that a member who receives an invoice for the month of December 2010 
will be assessed fees from November 30, 2010 (trade date) through 
December 31, 2010 (trade date) instead of through December 30, 2010 
(trade date).\7\ The Exchange is proposing to amend the QNET 
promotional pricing to allow members to obtain the promotional pricing 
through the end of the December billing period. The Exchange also 
proposes amending the Fee Schedule to reflect this amendment of the 
date for the QNET promotional period.
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    \6\ See Securities Exchange Act Release No. 63406 (December 1, 
2010), 75 FR 76511 (December 8, 2010) (SR-Phlx-2010-165).
    \7\ See footnote 6.
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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 \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. The Exchange believes that expanding the 
promotional pricing for sector index option fees for QNET is equitable 
because all market participants would be able to obtain the promotional 
pricing for the extra day. The Exchange further believes that offering 
the $.20 per contract fee for a specified promotional period and 
thereafter assessing the standard sector index option transaction fees 
is also equitable because it is intended to encourage trading in QNET.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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 \10\ and

[[Page 80870]]

paragraph (f)(2) of Rule 19b-4 \11\ thereunder. 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 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-2010-177 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-2010-177. 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-2010-177 and should be submitted on or before 
January 13, 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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-32222 Filed 12-22-10; 8:45 am]
BILLING CODE 8011-01-P