Document ID: SEC-2012-1530-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2012-09-17T04:00Z

[Federal Register Volume 77, Number 180 (Monday, September 17, 2012)]
[Notices]
[Page 57168]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-22785]

[[Page 57168]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67825; SR-Phlx-2012-27; SR-Phlx-2012-54]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Designation of Longer Period for Commission Action on Proceedings To 
Determine Whether To Approve or Disapprove Proposed Rule Relating to 
Complex Order Fees and Rebates for Adding and Removing Liquidity in 
Select Symbols

September 11, 2012.
    On March 1, 2012 and April 23, 2012, NASDAQ OMX PHLX LLC (``Phlx'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ two 
proposed rule changes relating to the transaction fees for certain 
Complex Order transactions.\3\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ A Complex Order is any order involving the simultaneous 
purchase and/or sale of two or more different options series in the 
same underlying security, priced at a net debit or credit based on 
the relative prices of the individual components, for the same 
account, for the purpose of executing a particular investment 
strategy. A Complex Order may also be a stock-option order, which is 
an order to buy or sell a stated number of units of an underlying 
stock or exchange-traded fund (``ETF'') coupled with the purchase or 
sale of options contract(s). See Exchange Rule 1080, Commentary 
.08(a)(i).
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    In SR-Phlx-2012-27 (filed on March 1, 2012), Phlx proposed to amend 
the Exchange's Fee Schedule to increase the transaction fees and 
rebates for certain Complex Order transactions and create a new rebate 
for certain Complex Orders. The proposed rule change was immediately 
effective upon filing with the Commission pursuant to Section 
19(b)(3)(A) of the Act.\4\ Notice of filing of the proposed rule change 
was published for comment in the Federal Register on March 15, 2012.\5\
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    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ See Securities Exchange Act Release No. 66551 (March 9, 
2012) 77 FR 15400.
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    In SR-Phlx-2012-54 (filed on April 23, 2012), Phlx proposed to 
replace a portion of SR-Phlx-2012-27 to provide additional information 
concerning the Directed Participant and Market Maker fees for removing 
liquidity in Complex orders (``Second Proposal,'' and, together with 
SR-Phlx-2012-27, the ``Phlx Proposals''). The proposed rule change was 
immediately effective upon filing with the Commission pursuant to 
Section 19(b)(3)(A) of the Act.\6\ Notice of filing of the proposed 
rule change was published for comment in the Federal Register on May 4, 
2012. \7\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ See Securities Exchange Act Release No. 66883 (April 30, 
2012) 77 FR 26591.
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    The Commission received no comment letters on the Phlx Proposals.
    On April 30, 2012, the Commission instituted proceedings to 
determine whether to approve or disapprove the proposed rule 
changes.\8\ Thereafter, NASDAQ OMX Group, Inc. submitted a response 
letter in support of the Phlx Proposals on July 26, 2012.\9\
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    \8\ See Securities Exchange Act Release No. 66884, 77 FR 
26595(May 4, 2012) (``Order Instituting Proceedings'').
    \9\ See Letter to Elizabeth M. Murphy, Secretary, Commission, 
from Joan C. Conley, Senior Vice President & Corporate Secretary, 
NASDAQ OMX Group, Inc., dated July 26, 2012.
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    Section 19(b)(2) of the Act \10\ provides that, after initiating 
disapproval proceedings, the Commission shall issue an order approving 
or disapproving the proposed rule change not later than 180 days after 
the date of publication of notice of the filing of the proposed rule 
change. The Commission may extend the period for issuing an order 
approving or disapproving the proposed rule change, however, by not 
more than 60 days if the Commission determines that a longer period is 
appropriate and publishes the reasons for such determination. The 
proposed rule changes were published for notice and comment in the 
Federal Register on March 15, 2012 and May 4, 2012, respectively. 
September 11, 2012 is 180 days from March 15, 2012 and November 10, 
2012 is an additional 60 days from that date.
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    \10\ 15 U.S.C. 78s(b)(2).
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    The Commission finds it appropriate to designate a longer period 
within which to issue an order approving or disapproving the Phlx 
Proposals so that it has sufficient time to consider the Phlx Proposals 
and the issues raised by those proposals, and the Exchange's response 
to such issues in its response letter.\11\ The Commission also finds it 
appropriate to designate a longer period within which to issue an order 
approving or disapproving the proposed rule changes so that it has 
sufficient time to consider data that has been provided by the Exchange 
in support of its proposals, including additional data that it 
anticipates will be provided by the Exchange.\12\
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    \11\ For example, in the order instituting proceedings to 
determine whether to approve or disapprove the proposed rule 
changes, the Commission sought comment on whether discrimination on 
the basis of whether a market maker has an off-exchange arrangement 
to pay an order flow provider to direct its orders to that market 
maker is a ``fair'' basis for discrimination among exchange members 
with respect to the fees charged by the exchange. The Commission 
also sought comment on whether the Phlx Proposals adequately 
addressed the reasonableness of the proposed fees (and thus the 
proposed fee differential).
    \12\ To date, the Exchange has provided data on price 
improvement for directed customer complex orders, and the rates of 
interaction with customer complex orders by types of market 
participant, among other things.
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    Accordingly, the Commission, pursuant to Section 19(b)(2) of the 
Act,\13\ designates November 10, 2012, and December 30, 2012, as the 
respective dates by which the Commission should either approve or 
disapprove the proposed rule changes (SR-Phlx-2012-27 and SR-Phlx-2012-
54).
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    \13\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(57).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-22785 Filed 9-14-12; 8:45 am]
BILLING CODE 8011-01-P