Document ID: SEC-2010-0686-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2010-05-10T04:00Z

[Federal Register: May 10, 2010 (Volume 75, Number 89)]
[Notices]               
[Page 25898-25899]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10my10-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62009; File No. SR-Phlx-2010-64]

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

April 30, 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 April 26, 2010, NASDAQ OMX PHLX, Inc. (``Phlx'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. Phlx has designated this 
proposal as one establishing or changing a member due, fee, or other 
charge imposed under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 
19b-4(f)(2) thereunder,\4\ which renders the proposal effective upon 
filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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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 the Exchange's Fee Schedule to 
increase the number of options to be included in the Exchange's current 
schedule of transaction rebates for adding, and fees for removing, 
liquidity.
    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 May 3, 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, 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 Exchange proposes to increase liquidity and to attract order 
flow by increasing the number of options to be included in the 
Exchange's current schedule of rebates for adding liquidity, and fees 
for removing liquidity.
    Specifically, the Exchange proposes to add the following options: 
Brocade Communications Systems, Inc. (``BRCD''); International Business 
Machines Corp., (``IBM''); Nokia Corp. (``NOK''); Sirius XM Radio, Inc. 
(``SIRI''); and Direxion Daily Small Cap Bear 3X Shares (``TZA'') 
collectively (``the options''). The options would be subject to the 
rebates for adding and fees for removing liquidity.
    The Exchange currently assesses a per-contract transaction charge 
in various select symbols \5\ (the ``select Symbols'') on six different 
categories of market participants that submit orders and/or quotes that 
remove, or ``take,'' liquidity from the Exchange: (i) Specialists, 
Registered Options Traders (``ROTs''), Streaming Quote Traders 
(``SQTs'') \6\ and Remote Streaming Quote

[[Page 25899]]

Traders (``RSQTs''); \7\ (ii) customers; \8\ (iii) specialists, SQTs 
and RSQTs that receive Directed Orders (``Directed Participants'' \9\ 
or ``Directed Specialists, RSQTs, or SQTs'' \10\); (iv) Firms; (v) 
broker-dealers; and (vi) Professionals.\11\ The current per-contract 
transaction charge depends on the category of market participant 
submitting an order or quote to the Exchange that removes liquidity.
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    \5\ The fees and rebates for adding and removing liquidity are 
applicable to executions in options overlying AA, AAPL, AIG, ALL, 
AMD, AMR, AMZN, BAC, C, CAT, CSCO, DELL, DIA, DRYS, EK, F, FAS, FAZ, 
GDX, GE, GLD, GS, INTC, IWM, JPM, LVS, MGM, MSFT, MU, NEM, PALM, 
PFE, POT, QCOM, QQQQ, RIMM, SBUX, SKF, SLV, SMH, SNDK, SPY, T, UAUA, 
UNG, USO, UYG, VZ, WYNN, X and XLF (``Symbols'').
    \6\ 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).
    \7\ 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).
    \8\ This applies to all customer orders, directed and non-
directed.
    \9\ 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.
    \10\ 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.
    \11\ 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'').
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    The Exchange also currently assesses a per-contract rebate of 
transaction charges 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.
    The Exchange proposes to add the five additional options to the 
list of select Symbols and apply the applicable fees and rebates to 
these options.
    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 May 3, 2010.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \12\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \13\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members. The Exchange believes that 
the addition of the options to the rebates for adding and fees for 
removing liquidity is reasonable and equitable in that it will apply to 
all categories of participants in the same manner.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 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 \14\ and paragraph (f)(2) of Rule 19b-4 \15\ 
thereunder. 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.
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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 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-2010-64 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, Station Place, 100 F Street, NE., Washington, 
DC 20549-1090.
    All submissions should refer to File Number SR-Phlx-2010-64. 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 
publicly available. All submissions should refer to File Number SR-
Phlx-2010-64 and should be submitted on or before June 1, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-10961 Filed 5-7-10; 8:45 am]
BILLING CODE 8011-01-P