Document ID: SEC-2010-1152-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2010-07-29T04:00Z

[Federal Register: July 29, 2010 (Volume 75, Number 145)]
[Notices]               
[Page 44832-44833]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29jy10-93]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62562; File No. SR-Phlx-2010-98]

 
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
the Rebates and Fees for Adding and Removing Liquidity in Select 
Symbols

July 23, 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 15, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Fee Schedule to both 
add and remove certain options from the Exchange's current Rebates and 
Fees for Adding and Removing Liquidity in Select Symbols in Section I 
of the Fee Schedule.
    While changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative for transactions settling on or after August 2, 2010.
    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.

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 Exchange proposes to increase liquidity and to attract order 
flow by increasing the number of options to be included in the 
Exchange's current Rebates and Fees for Adding and Removing Liquidity 
in Select Symbols as well as removing three options. Currently, the 
Exchange has 81 symbols \3\ (``Select Symbols'') to which this applies.
---------------------------------------------------------------------------

    \3\ These 81 currently include: AA, AAPL, ABK, ABX, AIG, ALL, 
AMD, AMR, AMZN, ARIA, AXP, BAC, BRCD, C, CAT, CIEN, CIGX, CSCO, 
DELL, DIA, DNDN, DRYS, EBAY, EK, F, FAS, FAZ, GDX, GE, GLD, GLW, GS, 
HAL, IBM, INTC, IWM, IYR, JPM, LVS, MGM, MOT, MSFT, MU, NEM, NOK, 
NVDA, ONNN, ORCL, PALM, PFE, POT, QCOM, QID, QQQQ, RIG, RIMM, RMBS, 
SBUX, SDS, SIRI, SKF, SLV, SMH, SNDK, SPY, T, TBT, TZA, UAUA, UNG, 
USO, UYG, V, VALE, VZ, WYNN, X, XHB, XLF, XRX and YHOO (``Select 
Symbols'').
---------------------------------------------------------------------------

    Specifically, the Exchange proposes to add the following four 
options to the Select Symbols: (i) BP p.l.c. Common Stock (``BP''), 
(ii) Baidu, Inc. (``BIDU''), (iii) IShares FTSE/Xinhua China 25 Index 
(``FXI''), and (iv) Exxon Mobil Corp. (``XOM''), collectively (``the 
options''). These additional 4 symbols would be subject to the Rebates 
and Fees for Adding and Removing Liquidity in Select Symbols. 
Additionally, the Exchange proposes to remove the following three 
options from the Select Symbols: (i) ARIAD Pharmaceuticals, Inc. 
(``ARIA''), (ii) Star Scientific, Inc. (``CIGX'') and (iii) Palm, Inc. 
(``PALM'').
    The Exchange currently assesses a per-contract transaction charge 
in various Select Symbols on six different categories of market 
participants that submit orders and/or quotes that ``take,'' liquidity 
from the Exchange: (i) Specialists, Registered Options Traders 
(``ROTs''),\4\ Streaming Quote Traders (``SQTs'') \5\ and Remote 
Streaming Quote Traders (``RSQTs''); \6\ (ii) customers; \7\ (iii) 
specialists, SQTs and RSQTs that receive Directed Orders (``Directed 
Participants'' \8\ or ``Directed Specialists, RSQTs, or SQTs'' \9\); 
(iv) Firms; (v)

[[Page 44833]]

broker-dealers; and (vi) Professionals.\10\ The current per-contract 
transaction charge depends on the category of market participant 
submitting orders and/or quotes that ``take,'' liquidity from the 
Exchange.
---------------------------------------------------------------------------

    \4\ A ROT includes a SQT, a RSQT and a Non-SQT, which by 
definition is neither a SQT or a RSQT. See Exchange Rule 1014 (b)(i) 
and (ii).
    \5\ An SQT is an Exchange Registered Options Trader (``ROT'') 
who has received permission from the Exchange to generate and submit 
option quotations electronically through an electronic interface 
with AUTOM via an Exchange approved proprietary electronic quoting 
device in eligible options to which such SQT is assigned. See 
Exchange Rule 1014(b)(ii)(A).
    \6\ An RSQT is an ROT that is a member or member organization 
with no physical trading floor presence who has received permission 
from the Exchange to generate and submit option quotations 
electronically through AUTOM in eligible options to which such RSQT 
has been assigned. An RSQT may only submit such quotations 
electronically from off the floor of the Exchange. See Exchange Rule 
1014(b)(ii)(B).
    \7\ This applies to all customer orders, directed and non-
directed.
    \8\ For purposes of the fees and rebates related to adding and 
removing liquidity, a Directed Participant is a Specialist, SQT, or 
RSQT that executes a customer order that is directed to them by an 
Order Flow Provider and is executed electronically on PHLX XL II.
    \9\ See Exchange Rule 1080(l), ``* * * The term `Directed 
Specialist, RSQT, or SQT' means a specialist, RSQT, or SQT that 
receives a Directed Order.'' A Directed Participant has a higher 
quoting requirement as compared with a specialist, SQT or RSQT who 
is not acting as a Directed Participant. See Exchange Rule 1014.
    \10\ The Exchange defines a ``professional'' as any person or 
entity that (i) is not a broker or dealer in securities, and (ii) 
places more than 390 orders in listed options per day on average 
during a calendar month for its own beneficial account(s) 
(hereinafter ``Professional''). See Exchange Rule 1000(b)(14).
---------------------------------------------------------------------------

    The Exchange also currently provides certain per-contract rebates 
for orders or quotations that add liquidity in the Select Symbols. The 
amount of the rebate depends on the category of participant whose order 
or quote was executed as part of the Phlx Best Bid and Offer. Finally, 
the Exchange assesses a $0.05 per contract fee for adding liquidity in 
the select Symbols for Firms and Broker-Dealers.
    While changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative for transactions settling on or after August 2, 2010.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \11\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \12\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members. The Exchange believes that 
the addition and removal of certain options from the Rebates and Fees 
for Adding and Removing Liquidity in Select Symbols is both equitable 
and reasonable, because the Select Symbols apply to all categories of 
participants in the same manner. The Rebates and Fees for Adding and 
Removing Liquidity in Select Symbols, which are currently applicable to 
each market participant, will continue to apply to the Select Symbols.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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 \13\ and paragraph (f)(2) of Rule 19b-4 \14\ 
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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2010-98 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-2010-98. 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 No. SR-Phlx-2010-98 and should be 
submitted on or before August 19, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-18672 Filed 7-28-10; 8:45 am]
BILLING CODE 8010-01-P