Document ID: SEC-2009-1092-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2009-08-03T04:00Z

[Federal Register: August 3, 2009 (Volume 74, Number 147)]
[Notices]               
[Page 38477-38478]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03au09-106]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60392; File No. SR-Phlx-2009-57]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating 
to a Pilot Program for U.S. Dollar-Settled Foreign Currency Options

July 28, 2009.
    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 July 8, 2009, 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 initiate a Pilot Program, for a period 
beginning July 13, 2009 and ending December 31, 2009, applicable to 
specialists and Registered Options Traders (``ROTs'') \3\ trading 
certain U.S. dollar-settled foreign currency options (``FCOs''), 
specifically the Mexican peso, Swedish krona, South African rand or the 
New Zealand dollar (``Pilot FCOs'').\4\ The Pilot Program would allow 
the Exchange to waive the applicable specialist and ROT option 
transaction fees for specialists and ROTs trading Pilot FCOs.\5\ 
Furthermore, the Exchange Pilot Program would allow the Exchange to pay 
a $1,700 monthly stipend (``Monthly Stipend'') per currency to each 
member organization acting as a specialist.
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    \3\ A ROT is a regular member or a foreign currency options 
participant of the Exchange located on the trading floor who has 
received permission from the Exchange to trade in options for his 
own account. The term ``ROT'' shall include a Streaming Quote 
Trader, and a Remote Streaming Quote Trader. See Exchange Rule 1014.
    \4\ The Exchange recently filed to list and trade options in 
these Pilot FCOs. See Securities Exchange Release No. 61069 (June 
24, 2009), 74 FR 31782 (July 2, 2009) (SR-Phlx-2009-40) (modifying 
the pricing methodology for FCOs). The Pilot FCOs are listed and 
traded electronically over the Exchange's options trading platform.
    \5\ FCOs are currently traded on the Exchange under the name 
PHLX World Currency Options[reg] (``WCOs'').

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[[Page 38478]]

    While changes to the Exchange's fee schedule pursuant to this 
proposal are effective upon filing, the Exchange has designated this 
proposal to be effective on July 13, 2009 through December 31, 2009.
    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, 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 the proposed rule change is to create an additional 
financial incentive for specialists and ROTs to make markets in the 
Pilot FCOs. By paying specialists a Monthly Stipend on the Pilot FCOs 
of $1,700 per currency, the Exchange hopes to defray the operational 
costs of the specialists. Specifically, the Exchange seeks to defray 
the specialists' costs associated with their obligations to 
continuously quote and support the Pilot FCOs.\6\ The Monthly Stipend 
will be paid on a per currency basis. For example, a member 
organization acting as a specialist in two of the Pilot FCOs will 
receive $3,400 per month.
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    \6\ The Exchange currently pays a subsidy, an Options Floor 
Broker Subsidy, to member organizations with Exchange registered 
floor brokers for eligible contracts that are entered into the 
Exchange's trading system to provide an incentive to floor brokers 
for increased order flow. See Securities Exchange Release No. 59705 
(April 3, 2009), 74 FR 16906 (April 13, 2009) (SR-Phlx-2009-28).
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    In addition, the Exchange proposes to waive the options transaction 
charges assessed on specialists and ROTs in the Pilot FCOs in order to 
further encourage the trading of the Pilot FCOs. Currently, specialists 
pay a transaction fee of $.24 per contract as do ROTs.\7\ The Exchange 
believes the revenue generated from customer transaction charges and 
increased order flow would offset the foregone transaction fees of $.24 
per contract that is currently assessed on specialists and ROTS, 
thereby allowing the Exchange to recoup those fees while increasing 
order flow and generating increased revenues.
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    \7\ Customers are assessed a transaction fee of $.44 per options 
transaction charge in FCOs.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of 
fees 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 
the Pilot Program will generate additional order flow to the Exchange 
by creating incentives to trade FCOs as well as defray operational 
costs for specialists.
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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 the proposed 
rule change, the Commission may summarily abrogate 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-2009-57 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2009-57. 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 inspection and 
copying in the Commission's Public Reference Room, 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-2009-57 and should be submitted on or before August 24, 2009.
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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\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-18421 Filed 7-31-09; 8:45 am]

BILLING CODE 8010-01-P