Document ID: SEC-2011-0313-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2011-03-08T05:00Z

[Federal Register Volume 76, Number 45 (Tuesday, March 8, 2011)]
[Notices]
[Pages 12780-12781]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-5142]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64010; File No. SR-Phlx-2011-26]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Inactive Nominee Fee

March 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 February 22, 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 its Fee Schedule to memorialize its 
Inactive Nominee \3\ Fee. 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, on 
the Commission's Web site at http://www.sec.gov, and at the 
Commission's Public Reference Room.
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    \3\ The term ``inactive nominee'' means a natural person 
associated with and designated as such by a member organization and 
who has been approved for such status and is registered as such with 
the Membership Department. An inactive nominee shall have no rights 
or privileges under a permit unless and until said inactive nominee 
becomes admitted as a member of the Exchange pursuant to the By-Laws 
and Rules of the Exchange. An inactive nominee merely stands ready 
to exercise rights under a permit upon notice by the member 
organization to the Membership Department on an expedited basis. See 
Exchange Rule 1(i).
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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 memorialize the 
Inactive Nominee Fee in the Exchange's Fee Schedule.
    The Exchange currently assesses a member organization an Inactive 
Nominee Fee of $500 to maintain an individual's inactive nominee status 
for a six month period, as provided for in Exchange By-Law Article XII, 
Section 12-10.\4\ The member organization is required to pay a fee for 
the privilege of maintaining the inactive nominee status of an 
individual.\5\ An inactive nominee's status terminates after six months 
unless it has been reaffirmed in writing by the Member Organization or 
is terminated sooner.\6\ An inactive nominee is assessed the $500 fee 
every time the status is reaffirmed.\7\
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    \4\ Pursuant to Exchange By-Law Article XII, Section 12-10, a 
member organization may designate an individual as an inactive 
nominee. To be eligible to be an inactive nominee an individual must 
be approved as eligible to hold a permit in accordance with the 
Exchange's By-Laws and Rules. An inactive nominee has no rights and 
privileges of a permit holder until the inactive nominee becomes an 
effective permit holder and all applicable Exchange fees are paid. 
See By-Law Article XII, Section 12-10.
    \5\ See Securities Exchange Act Release No. 39851 (April 10, 
1998), 63 FR 19282 (April 17, 1998) (SR-Phlx-97-35) (a rule change 
which subjected inactive nominees to the membership application 
process, including fees, including a fee for the privilege of 
maintaining an inactive nominee status).
    \6\ See By-Law Article XII, Section 12-10.
    \7\ An inactive nominee is also assessed the Application and 
Initiation Fees when such person applies to be an inactive nominee. 
Such fees are reassessed if there is a lapse in the inactive 
nominee's membership status. However, an inactive nominee would not 
be assessed the Application and Initiation Fees if such inactive 
nominee applied for membership without a lapse in that individual's 
association with a particular member organization. See Securities 
Exchange Act Release No. 63780 (January 26, 2011), 76 FR 5846 
(February 2, 2011) (SR-Phlx-2011-07). See also By-Law Article XII, 
Section 12-10.
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    The Exchange has assessed the Inactive Nominee Fee of $500 since 
the inception of the inactive nominee category.\8\ This fee was 
administered pursuant to By-Law Article XII, Section 12-10, and never 
appeared in the Exchange's Fee Schedule. In recent years, the Exchange 
has memorialized additional fees within the Fee Schedule to create a 
centralized location for fees. The Exchange desires to memorialize this 
fee in the Fee Schedule and to make clear which membership fees an 
Inactive Nominee Fee [sic] would be assessed and when an inactive 
nominee would be assessed such fees by adding explanatory text to the 
Fee Schedule.
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    \8\ Originally, the inactive nominee was defined in Exchange 
Rule 21, but the definition was later moved to the definitions 
section in Rule 1.
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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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable to memorialize the 
Inactive Nominee Fee on the Exchange's Fee Schedule so the fee is 
transparent to all members. While the Exchange has been assessing the 
Inactive Nominee Fee since 1998, the fee was administered pursuant to 
By-Law Article XII, Section 12-10 and was not located on the Fee 
Schedule. The Exchange believes that placing the fee on the Fee 
Schedule would summarize all the membership fees in one location and 
clarify all the fees an individual is subject to for the privilege of 
maintain [sic] an inactive nominee status.
    The Exchange believes that it is equitable to place the Inactive 
Nominee Fee on the Fee Schedule because it uniformly impacts all 
inactive nominees as they are all subject to the Inactive Nominee Fee.

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.

[[Page 12781]]

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-2011-26 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-2011-26. 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 Number SR-Phlx-2011-26 and should be 
submitted on or before March 29, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Cathy H. Ahn,
Deputy Secretary.
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    \12\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2011-5142 Filed 3-7-11; 8:45 am]
BILLING CODE 8011-01-P