Document ID: SEC-2009-0918-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Extension of a Pilot Program Related to a Specialist Fee Credit for Linkage Orders
Posted Date: 2009-07-09T04:00Z

[Federal Register: July 9, 2009 (Volume 74, Number 130)]
[Notices]               
[Page 33006-33007]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09jy09-135]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60209; File No. SR-Phlx-2009-55]

 
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
the Extension of a Pilot Program Related to a Specialist Fee Credit for 
Linkage Orders

July 1, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on June 29, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``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 extend for a one-year period until July 
31, 2010, its current pilot programs relating to: (1) An option 
transaction charge credit of $0.21 per contract for Exchange options 
specialist units \3\ that incur Phlx option transaction charges when a 
customer order is delivered electronically via Phlx XL \4\ or via the 
Exchange's Options Floor Broker Management Systems (``FBMS''),\5\ and 
is then executed via the Intermarket Option Linkage (``Linkage'') \6\ 
as a Principal Acting as Agent Order (``P/A Order''); and (2) the Floor 
Broker Linkage P/A fee and Options Specialist Unit Credit, which 
charges floor brokers an amount equal to the transaction fee(s) 
assessed on options specialist units by another exchange in connection 
with customer orders that are delivered to the limit order book via 
FBMS and executed via Linkage as P/A Orders. The Exchange then provides 
to options specialist units a credit in an amount equal to the 
transaction fee(s) assessed on them by another exchange in connection 
with executing customer orders that are delivered to the limit order 
book via FBMS and executed via Linkage as P/A Orders.
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    \3\ The Exchange uses the terms ``specialists'' and ``specialist 
units'' interchangeably herein.
    \4\ See Exchange Rule 1080.
    \5\ FBMS is designed to enable Floor Brokers and/or their 
employees to enter, route and report transactions stemming from 
options orders received on the Exchange. FBMS also is designed to 
establish an electronic audit trail for options orders represented 
and executed by Floor Brokers on the Exchange, such that the audit 
trail provides an accurate, time-sequenced record of electronic and 
other orders, quotations and transactions on the Exchange, beginning 
with the receipt of an order by the Exchange, and further 
documenting the life of the order through the process of execution, 
partial execution, or cancellation of that order. See Exchange Rule 
1080, Commentary .06.
    \6\ Linkage is governed by the Options Linkage Authority under 
the conditions set forth under the Plan for the Purpose of Creating 
and Operating an Intermarket Option Linkage (the ``Plan'') approved 
by the Commission. The registered U.S. options markets are linked 
together on a real-time basis through a network capable of 
transporting orders and messages to and from each market.
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    While changes to the fee schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated the changes to be in 
effect for transactions settling on or after July 31, 2009.\7\
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    \7\ This proposal is scheduled to be in effect for the same time 
period as a pilot program relating to fees for Linkage Principal 
Orders and P/A Orders. See Securities Exchange Act Release No. 58144 
(July 11, 2008), 73 FR 41394 (July 18, 2008) (SR-Phlx-2008-49). See 
also, SR-Phlx-2009-53 filed June 29, 2009.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/
Filings/, 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 those 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 parts 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 currently provides for an option transaction charge 
credit of $0.21 per contract for Exchange options specialist units that 
incur Phlx option transaction charges when a customer order is 
delivered electronically via Phlx XL or via FBMS and then is

[[Page 33007]]

executed via Linkage as a P/A Order. In addition, the Exchange charges 
floor brokers an amount equal to the transaction fee(s) assessed on 
options specialist units by another exchange in connection with 
customer orders that are delivered to the limit order book via FBMS and 
executed via Linkage as P/A Orders. Options specialist units are then 
credited an amount equal to the transaction fee(s) assessed on them by 
another exchange in connection with executing customer orders that are 
delivered to the limit order book via FBMS and executed via Linkage as 
a P/A Order.
    The purpose of extending the current pilot programs discussed above 
is to encourage the use of Linkage, remain competitive with other 
exchanges with respect to the assessment of Linkage-related fees and to 
help alleviate the potential economic burden of multiple transaction 
charges imposed on Exchange specialist units in connection with routing 
these types of Linkage orders. Additionally, the purpose of assessing a 
fee on floor brokers who send customer orders that are delivered to the 
limit order book via FBMS and executed via Linkage as P/A Orders is to 
more equitably assess the applicable transaction fee(s) on the member 
originally entering the order to be executed. Floor brokers may choose 
to route these orders through other systems and not place these orders 
on the limit order book.
    The above-referenced pilot programs are currently scheduled to 
expire on July 31, 2009.\8\ This proposal would extend the pilot 
programs for another year, through July 31, 2010.
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    \8\ See Securities Exchange Act Release No. 58234 (July 25, 
2008), 73 FR 45263 (August 4, 2008) (SR-Phlx-2008-55).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act, \9\ in general, and furthers the objectives of 
Section 6(b)(4) \10\ of the Act in particular, in that it is designed 
to provide for the equitable allocation of reasonable dues, fees, and 
other charges among Exchange members and other persons using its 
facilities. The Exchange believes that these pilot programs, in part, 
help alleviate the undue financial burden of multiple transaction 
charges that are incurred by specialist units in connection with P/A 
orders executed via Linkage. By assessing a fee on floor brokers and 
giving a corresponding credit to specialist units allows for the 
transaction fee(s) to be assessed on the member who submits the order 
and for the credit to be given to the specialist unit that routed the 
order to another exchange in order to obtain the National Best Bid or 
Offer.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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 that is 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 with respect 
to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) by its terms, does not become operative for 30 days from the 
date on which it was filed, or such shorter time as the Commission may 
designate, if consistent with the protection of investors and the 
public interest, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the self-regulatory organization to submit to the 
Commission written notice of its intent to file the proposed rule 
change, along with a brief description and text of the proposed rule 
change, at least five business days prior to the date of filing of 
the proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has satisfied this requirement.
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    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.

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-2009-55 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-2009-55. 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, 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-2009-55 and should be 
submitted on or before July 30, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-16177 Filed 7-8-09; 8:45 am]

BILLING CODE 8010-01-P