Document ID: SEC-2010-1216-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2010-08-10T04:00Z

[Federal Register: August 10, 2010 (Volume 75, Number 153)]
[Notices]               
[Page 48391-48393]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10au10-89]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62631; File No. SR-Phlx-2010-102]

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

August 3, 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 July 21, 2010, 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 amend its fees governing pricing for 
Exchange members using the Phlx XL II system,\3\ for routing 
standardized equity and index option customer and professional 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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[[Page 48392]]

    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 customer and professional 
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 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 assess 
a Routing Fee of $.26 per contract in customer option orders that are 
routed to the International Securities Exchange LLC (``ISE'') and 
subject to the ISE's Rebates and Fees for Adding and Removing Liquidity 
in Select Symbols to apply only for orders of 100 contracts or more. 
The Exchange proposes to assess a Routing Fee of $.31 per contract in 
professional option orders that are routed to the International 
Securities Exchange LLC (``ISE'') and subject to the ISE's Rebates and 
Fees for Adding and Removing Liquidity in Select Symbols.
    The Exchange would continue to assess $.06 for all other customer 
orders routed to ISE and $0.24 per contract for all other professional 
orders routed to ISE, where those orders are not subject to the ISE's 
Rebates and Fees for Adding and Removing Liquidity in Select Symbols or 
the customer orders are for less than 100 contracts. The Exchange is 
proposing to name these proposed fees ``ISE Select Symbols.'' The 
Exchange also proposes to add a note to the Fee Schedule to indicate 
that the fee for customer orders in ISE Select Symbols applies to 
orders of 100 or more contracts. The Exchange is proposing this 
amendment in order to recoup clearing and transaction charges incurred 
by the Exchange when orders are routed to ISE in the ISE Select 
Symbols, and in the case of customer orders for 100 or more contracts. 
Each destination market's transaction charge varies and there is a 
standard clearing charge for each transaction incurred by the Exchange. 
The Exchange proposes this fee change to account for an increase in 
cost for routing to ISE relative to the fees in the ISE Select 
Symbols.\5\
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    \5\ ISE assesses a taker fee of $0.20 for priority customer 
orders of 100 or more contracts and taker fee of $.25 for Customer 
(Professional) orders in its rebates and fees for adding and 
removing liquidity in select symbols. See Securities Exchange Act 
Release No. 61869 (April 7, 2010), 75 FR 19449 (April 14, 2010) (SR-
ISE-2010-25).
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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 \6\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \7\ in particular, in that 
it is an equitable allocation of reasonable fees and other charges 
among Exchange members. The Exchange believes that this fee is 
reasonable because it seeks to recoup costs that are incurred by the 
Exchange when routing customer and professional orders to ISE in the 
select symbols, and for customer orders when the orders are for 100 or 
more contracts, on behalf of its members. The Exchange also believes 
that the proposed fee change to both customers and professionals is 
equitable because it will be uniformly applied to all customers and 
professionals.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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 \8\ and paragraph (f)(2) of Rule 19b-4 \9\ 
thereunder. At any time within 60 days of the filing of such 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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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 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-2010-102 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-2010-102. 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

[[Page 48393]]

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-2010-102 and should be 
submitted on or before August 31, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19716 Filed 8-9-10; 8:45 am]
BILLING CODE 8010-01-P