Document ID: SEC-2011-1362-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2011-09-09T04:00Z

[Federal Register Volume 76, Number 175 (Friday, September 9, 2011)]
[Notices]
[Pages 55995-55996]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-23114]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65253; File No. SR-Phlx-2011-121]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Regarding 
Clarifying Amendments to Direct Connectivity Services

September 2, 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 August 31, 2011, NASDAQ OMX PHLX LLC (the ``Exchange'') filed 
with the Securities and Exchange Commission (``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 clarifying amendments to the Exchange's Fee 
Schedule regarding the Exchange's direct connectivity services. The 
text of the proposed rule change is available on the Exchange's Web 
site at http://nasdaqomxphlx.cchwallstreet.com/, 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 rule filing is to relocate certain text in the 
Exchange's Fee Schedule for ease of reference and to clarify the Fee 
Schedule regarding direct connectivity to the Exchange. The direct 
connectivity fees are currently located in Section VI, entitled 
``Access Service, Cancellation, Membership, Regulatory and Other 
Fees.'' The Exchange proposes to relocate the fees to a new Section XI 
and title that section ``Direct Connectivity to Phlx.'' The Exchange's 
proposal is the result of its desire to prominently place language in 
the Exchange's Fee Schedule to make transparent that the connectivity 
services are provided by NASDAQ Technology Services, LLC and to group 
similar fees together. Such changes will assist with easy 
identification of items not serviced, and billed, by the Exchange.
    Currently, the Exchange assesses fees for direct 10Gb circuit 
connections, and fees for direct circuit connections capable of 
supporting up to 1Gb, for customers who are not co-located at the 
Exchange's datacenter.\3\ The Exchange noted in SR-Phlx-2010-89 that it 
makes available to both co-located and non-co-located customers direct 
connections capable of supporting up to 1Gb, with per connection 
monthly fees of $500 for co-located customers and $1000 for non co-
located customers.\4\ Monthly fees are higher for non co-located 
customers because direct connection requires Phlx to provide cabinet 
space and middleware for those customers' third-party vendors to 
connect to the datacenter and, ultimately, to the trading system.\5\ 
The Exchange also assesses an optional installation fee of $925 if the 
customer chooses to use an on-site router (collectively ``Direct 
Connectivity Fees'').\6\ The Exchange provides direct connectivity 
services and assesses fees through NASDAQ Technology Services, LLC, as 
it does with similar co-location services.\7\
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    \3\ See Securities Exchange Act Release No. 62639 (August 4, 
2010), 75 FR 48391 (August 10, 2010) (SR-Phlx-2010-89).
    \4\ Id. at page 4 and page 8.
    \5\ Id.
    \6\ Id.
    \7\ See Exchange Fee Schedule, Section X(b), Connectivity.
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    Subsequently, the Exchange amended these Direct Connectivity Fees 
to establish pricing for customers who are not co-located in the 
Exchange's data center, but require shared cabinet space and power for 
optional routers, switches, or modems to support their direct circuit 
connections. The Exchange assesses customers who are not co-located in 
the Exchange's data center monthly fees for space based on a height 
unit of approximately two inches high, commonly call a ``U'' space and 
a maximum power of 125 Watts per U space.\8\
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    \8\ See Securities Exchange Act Release No. 64441 (May 9, 2011), 
76 FR 28251 (May 16, 2011) (SR-Phlx-2011-60).
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    The Exchange now seeks to relocate the direct connectivity fees, 
which are provided by NASDAQ Technology Services, LLC, within the Fee 
Schedule. The Exchange proposes to remove the direct connectivity fees 
from Section VI of the Exchange's Fee Schedule and relocate the direct 
connectivity fees in a new section--Section XI--of the Fee Schedule. 
This administrative change allows the grouping of all services provided 
by NASDAQ Technology Services, LLC to be in one location for the 
convenience to the customers.
    The Exchange also proposes to add clarifying text to the new 
Section XI to state that the direct connectivity services are provided 
by NASDAQ Technology Services, LLC. This change merely codifies the 
practice of the Exchange.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\9\ in general, and 
furthers the objectives of Section 6(b)(5) of the Act \10\ in 
particular, in that it is designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
of a free and open market and a national market system, and, in general 
to protect investors and the public interest. The Exchange believes 
that amending the Exchange Fee Schedule to relocate the fees for ease 
of reference within the Fee Schedule as proposed will benefit all 
market participants by codifying and making transparent the source of 
the direct connectivity services and grouping the direct connectivity 
services with similar services on the Exchange's Fee Schedule.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).
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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

[[Page 55996]]

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)(i) 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)(i).
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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-2011-121 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-2011-121. 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-2011-121 and should be submitted on or before September 30, 2011.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-23114 Filed 9-8-11; 8:45 am]
BILLING CODE 8011-01-P