Document ID: SEC-2010-1854-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2010-12-08T05:00Z

[Federal Register Volume 75, Number 235 (Wednesday, December 8, 2010)]
[Notices]
[Pages 76500-76502]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-30830]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63412; File No. SR-Phlx-2010-164]

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

December 2, 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 November 24, 2010, 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 [sic] to amend its fees governing pricing for Exchange 
members using the Phlx XL II system,\3\ for routing certain equity and 
index option Customer orders 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 option orders entered into, and routed by, the Phlx XL II system.
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    While fee changes pursuant to this proposal are effective upon 
filing, the Exchange has designated these changes to be operative for 
trades settling on or after December 1, 2010.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings, 
at the principal office of the Exchange, at the Commission's Public 
Reference Room, and on the Commission's Web site at http://www.sec.gov.

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 recoup costs that the 
Exchange incurs for routing and executing certain Customer orders in 
equity and index options to 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 currently 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 Routing Fees for 
both Customer and Professional orders. The Exchange proposes to 
establish a Routing Fee of $0.24 per contract in Customer option orders 
that are routed to the Chicago Board Options Exchange, Incorporated 
(``CBOE''). This would apply to orders greater than 99 contracts

[[Page 76501]]

in options on the Russell 2000[supreg] Index (the ``Full Value Russell 
Index'' or ``RUT''), options on the one-tenth value Russell 
2000[supreg] Index \5\ (the ``Reduced Value Russell Index'' or 
``RMN''), options on the Nasdaq 100 Index \6\ traded under the symbol 
NDX (``NDX'') and options on the one-tenth value of the Nasdaq 100 
Index traded under the symbol MNX (``MNX'') as well as exchange-traded 
funds (``ETFs''), exchange-traded notes (``ETNs'') and Holding Company 
Depositary Receipts (``HOLDRs''). The Exchange is proposing to caption 
these proposed fees ``CBOE orders greater than 99 contracts in RUT, 
RMN, NDX, MNX, ETFs, ETNs and HOLDRs.'' The CBOE routing fee of $0.26 
per contract for Professional orders, which is assessed today, would 
apply to CBOE orders greater than 99 contracts in RUT, RMN, NDX, MNX, 
ETFs, ETNs and HOLDRs as well.
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    \5\ Russell 2000[supreg] is a trademark and service mark of the 
Frank Russell Company, used under license. Neither Frank Russell 
Company's publication of the Russell Indexes nor its licensing of 
its trademarks for use in connection with securities or other 
financial products derived from a Russell Index in any way suggests 
or implies a representation or opinion by Frank Russell Company as 
to the attractiveness of investment in any securities or other 
financial products based upon or derived from any Russell Index. 
Frank Russell Company is not the issuer of any such securities or 
other financial products and makes no express or implied warranties 
of merchantability or fitness for any particular purpose with 
respect to any Russell Index or any data included or reflected 
therein, nor as to results to be obtained by any person or any 
entity from the use of the Russell Index or any data included or 
reflected therein.
    \6\ NASDAQ[supreg], NASDAQ-100[supreg] and NASDAQ-100 
Index[supreg] are registered trademarks of The NASDAQ OMX Group, 
Inc. (which with its affiliates are the ``Corporations'') and are 
licensed for use by NASDAQ OMX PHLX, Inc. [sic] in connection with 
the trading of options products based on the NASDAQ-100 
Index[supreg]. The options products have not been passed on by the 
Corporations as to their legality or suitability. The options 
products are not issued, endorsed, sold, or promoted by the 
Corporations. The Corporations make no warranties and bear no 
liability with respect to the options products.
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    The Exchange believes that the routing fees proposed will enable 
the Exchange to recover the transaction fees assessed by away markets, 
where applicable, plus clearing fees for the execution of Customer 
orders routed from the Phlx XL II system. Specifically, the Exchange 
seeks to recoup transaction and clearing fees assessed by CBOE in the 
above listed categories for orders greater than 99 contracts.\7\
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    \7\ See Securities Exchange Act Release No. 62902 (September 14, 
2010), 75 FR 57313 (September 20, 2010) (SR-CBOE-2010-081) (a rule 
change to assess a transaction fee of $.18 per contract on public 
customer orders in options on Standard & Poor's Depositary Receipts, 
except for orders of 99 contracts or less).
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    As with all fees, the Exchange may adjust these Routing Fees in 
response to competitive conditions by filing a new proposed rule 
change. While fee changes pursuant to this proposal are effective upon 
filing, the Exchange has designated these changes to be operative for 
trades settling on or after December 1, 2010.
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 these fees are 
reasonable because they seek to recoup costs that are incurred by the 
Exchange when routing Customer orders to CBOE for orders greater than 
99 contracts in the following symbols RUT, RMN, NDX and MNX as well as 
ETFs, ETNs and HOLDRs, on behalf of its members. The Exchange also 
believes that the proposed fees will be uniformly applied to all 
Customers orders.
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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 paragraph (f)(2) of Rule 19b-4 \11\ 
thereunder. At any time within 60 days of the filing of such 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).
    \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-2010-164 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-2010-164. 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 No. SR-Phlx-2010-164 and should be 
submitted on or before December 29, 2010.

[[Page 76502]]

    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. 2010-30830 Filed 12-7-10; 8:45 am]
BILLING CODE 8011-01-P