Document ID: SEC-2013-0729-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2013-04-15T04:00Z

[Federal Register Volume 78, Number 72 (Monday, April 15, 2013)]
[Notices]
[Pages 22353-22357]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08724]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69351; File No. SR-Phlx-2013-35]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Pricing for Mini Options

April 9, 2013.
    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 March 26, 2013, NASDAQ OMX PHLX LLC (``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. 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 the its Pricing Schedule by adding 
Section A, entitled ``Mini Options Fees,'' and by redesignating 
existing Section A as Section B.
    The text of the proposed rule change is provided in Exhibit 5. The 
text of the proposed rule change is also available on the Exchange's 
Web site at http://nasdaqomxphlx.cchwallstreet.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.
    While changes to the Pricing Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated that they become 
operative on March 28, 2013.

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 set forth in new 
Section A of the Pricing Schedule the applicability of various existing 
fees, rebates, and caps to Mini Options, and specifically to establish 
that transaction fees with respect to Mini Options will be set at 
$0.00. Existing Section A, Customer Rebate Program, will be 
redesignated as Section B.
    The Exchange represented in its filing establishing Mini Options 
(the ``Mini Options Listing Filing'') that ``the current Pricing 
Schedule will not apply to the trading of mini-option contracts'' and 
that ``[t]he Exchange will not commence trading of mini-option 
contracts until specific fees for mini-options contracts trading have 
been filed with the Commission.'' \3\ The purpose of the proposed new 
Section A is to adopt the fees that are specific to Mini Options, as 
provided for in the Mini Options Listing Filing.
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    \3\ See SR-Phlx-2012-126, page 8. See also Securities Exchange 
Act Release No. 68132 (November 1, 2012), 77 FR 66904 (November 7, 
2012) (Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To List and Trade Option Contracts Overlying 10 Shares of 
Certain Securities).
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    New Section A will appear after the Preface section of the Pricing 
Schedule which contains definitions that apply to the entire Pricing 
Schedule, including new Section A. Except where different treatment is 
specified for Mini Options in Section A, the rest of the Pricing 
Schedule will apply to Mini Options in the same way it applies to all 
other options. For example, a Mini Options class will count as an 
options class assignment for purposes of determining the level of 
Streaming Quote Trader Fees and Remote Streaming Quote Trader Fees in 
Section VI. Cross references to Section A in the Table of Contents and 
Section IV.A, PIXL Pricing, will be updated to refer to Section B, and 
the Table of Contents will be updated to refer to Mini Options as new 
Section A.
    Applicable Symbols. Proposed new Section A identifies the Mini 
Options symbols as AAPL7, AMZN7, GLD7, GOOG7 and SPY7. Accordingly, new 
Section A will apply exclusively to these new symbols.
    Transaction Fees. New Section A provides for a ``Mini Options 
Transaction Fee--Electronic'' and for a ``Mini-Options Transaction 
Fee--Floor and QCC'', both of which will apply in the Customer, 
Professional, Specialist and Market Maker, Broker-Dealer and Firm fee 
categories.\4\ In each case, the Exchange is currently setting these 
fees at $0.00 but may in the future file proposed rule changes to amend 
the transaction fee level in one or more categories. The Exchange is 
establishing the separate Section A Pricing Schedule section for Mini 
Options transaction fees in order to facilitate differentiation in the 
future between Mini Options transaction fees and other options 
transaction fees.
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    \4\ Transaction fees for options other than Mini Options are 
currently found in Sections I through III of the Pricing Schedule.
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    PIXL Executions. The new Section A transaction fees will apply to 
PIXL executions in Mini Options rather than the PIXL Pricing fees set 
forth in Section IV.A.\5\
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    \5\ PIXL is the Exchange's price improvement mechanism known as 
Price Improvement XL or (PIXL\SM\). See Rule 1080(n) and Section IV 
of the Pricing Schedule.
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    Payment for Order Flow. Pursuant to new Section A, Payment for 
Order Flow Fees set forth in Section II of the Pricing

[[Page 22354]]

Schedule will not apply to Mini Options.\6\
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    \6\ The Payment for Order Flow program started on July 1, 2005 
as a pilot and after a series of orders extending the pilot became 
effective on April 29, 2012. See Securities Exchange Act Release No. 
52114 (July 22, 2005), 70 FR 44138 (August 1, 2005) (SR-Phlx-2005-
44); 57851 (May 22, 2008), 73 FR 31177 (May 20, 2008) (SR-Phlx-2008-
38); 55891 (June 11, 2007), 72 FR 333271 (June 15, 2007) (SR-Phlx-
2007-39); 53754 (May 3, 2006), 71 FR 27301 (May 10, 2006) (SR-Phlx-
2006-25); 53078 (January 9, 2006), 71 FR 2289 (January 13, 2006) 
(SR-Phlx-2005-88); 52568 (October 6, 2005), 70 FR 60120 (October 14, 
2005) (SR-Phlx-2005-58); and 59841 (April 29, 2009), 74 FR 21035 
(May 6, 2009) (SR-Phlx-2009-38).
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    Customer Rebate Program. New Section A clarifies that Mini Options 
volume will not be included in and will not be eligible for the 
Customer Rebate Program which is being moved from Section A of the 
Pricing Schedule to Section B of the Pricing Schedule.\7\
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    \7\ The Exchange has recently described and amended its Customer 
Rebate Program. See SR-Phlx-2013-13. See also Securities Exchange 
Act Release No. 68924 (February 13, 2013), 78 FR 11916 (February 20, 
2013).
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    Routing Fees. Today, the Exchange calculates Routing Fees by 
assessing certain Exchange costs related to routing orders to away 
markets plus the away market's actual transaction fee.\8\ The Exchange 
assesses a $0.05 per contract fixed Routing Fee when routing orders to 
the NASDAQ Options Market LLC (``NOM'') and NASDAQ OMX BX, Inc. (``BX 
Options'') and a $0.11 per contract fixed Routing Fee to all other 
options exchanges in addition to the actual transaction fee or rebate 
paid by the away market.\9\ With respect to the rebate, the Exchange 
pays a market participant the rebate offered by an away market where 
there is such a rebate. Any rebate available is netted against a fee 
assessed by the Exchange. With respect to orders routed to C2 Options 
Exchange, Incorporated (``C2''), the Exchange assesses non-Customer 
simple, non-complex orders in equity options (single stock) that are 
routed to C2 a Routing Fee which includes a fixed cost of $0.11 per 
contract plus a flat rate of $0.85 per contract, except with respect to 
Customers. With respect to Customers, the Exchange does not pass the 
rebate offered by C2, rather, Customer simple, non-complex orders in 
equity options (single stock) that are routed to C2 are assessed $0.00 
per contract.
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    \8\ Routing fees applicable to options other than Mini Options 
are set forth in Section V of the Pricing Schedule. Routing fees 
allow the Exchange to recoup costs it incurs for routing and 
executing orders in equity options to various away markets.
    \9\ The fixed Routing Fee is based on costs that are incurred by 
the Exchange when routing to an away market in addition to the away 
market's transaction fee. For example, the Exchange incurs a fee 
when it utilizes Nasdaq Options Services LLC (``NOS''), a member of 
the Exchange and the Exchange's exclusive order router, to route 
orders in options listed and open for trading on the PHLX XL system 
to destination markets. Each time NOS routes to away markets NOS 
incurs a clearing-related cost and, in the case of certain 
exchanges, a transaction fee is also charged in certain symbols, 
which fees are passed through to the Exchange. The Exchange also 
incurs administrative and technical costs associated with operating 
NOS, membership fees at away markets, Options Regulatory Fees 
(``ORFs'') and technical costs associated with routing options. The 
transaction fee assessed by the Exchange is based on the away 
market's actual transaction fee or rebate for a particular market 
participant at the time that the order was entered into the 
Exchange's trading system. This transaction fee is calculated on an 
order-by-order basis, since different away markets charge different 
amounts. In the event that there is no transaction fee or rebate 
assessed by the away market, the only fee assessed is the fixed 
Routing Fee.
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    The Exchange has recently filed a proposed rule change to make a 
number of pricing changes described in this paragraph to its Routing 
Fees. Effective April 1, 2013, the Exchange's Routing Fees in Section V 
of the Pricing Schedule will be as follows: Non-Customers will be 
assessed a $0.95 per contract flat fee and the Customer Routing Fee 
will be dependent on the away market.\10\ With respect to Customer 
orders routed to NOM, the Exchange will assess a fixed fee of $0.05 per 
contract (``Fixed Fee'') in addition to the actual transaction fee 
assessed by the away market would apply. With respect to Customer 
orders that are routed to BX Options, the Exchange will not assess a 
Routing Fee and will not pass the rebate. The Exchange will assess a 
Customer Routing Fee of $0.11 per contract (``Fixed Fee'') in addition 
to the actual transaction fee when routing to an options exchange other 
than NOM and BX Options. Similar to Customer orders routed to BX, the 
Exchange will no longer pass any rebate paid by any away market for any 
Customer orders.
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    \10\ See SR-Phlx-2013-23 (not yet published) [sic].
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    New Section A establishes Routing Fees for Mini Options that will 
apply instead of the existing Routing Fees set forth in Section V of 
the Pricing Schedule. Routing Fees for Customers are set at $0.01 per 
contract in addition to the actual transaction fee assessed. If the 
away market pays a rebate, the Customer Routing Fee will be $0.00. 
Routing Fees for all other participants (non-Customers) will be a flat 
rate of $0.15 per contract and the Exchange will not charge non-
Customers the actual transaction fee assessed by the away market or 
pass back any rebate.
    QCC Transaction Fees and Rebates. New Section A establishes that 
QCC Transaction fees and rebates, set forth in Section II \11\ of the 
Pricing Schedule, are not applicable to Section A of the Pricing 
Schedule.
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    \11\ QCC Orders are defined in Rule 1080(o).
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    Fee Caps. New Section A provides that the Monthly Market Maker Cap 
\12\ and the Monthly Firm Fee Cap \13\, defined in Section II of the 
Pricing Schedule, will not be applicable to transactions in Mini 
Options. Therefore, any fees that may be assessed with respect to 
transactions in Mini Options will not be applied toward these caps.
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    \12\ The Monthly Market Maker Cap is $550,000 for: (i) 
Electronic and floor Option Transaction Charges; (ii) QCC 
Transaction Fees (as defined in Exchange Rule 1080(o) and Floor QCC 
Orders, as defined in 1064(e)); and (iii) fees related to an order 
or quote that is contra to a PIXL Order or specifically responding 
to a PIXL auction. The trading activity of separate Specialist and 
Market Maker member organizations will be aggregated in calculating 
the Monthly Market Maker Cap if there is Common Ownership between 
the member organizations. All dividend, merger, short stock interest 
and reversal and conversion strategy executions (as defined in this 
Section II) will be excluded from the Monthly Market Maker Cap. In 
addition, Specialists or Market Makers that (i) are on the contra-
side of an electronically-delivered and executed Customer order; and 
(ii) have reached the Monthly Market Maker Cap will be assessed a 
$0.16 per contract fee. For QCC Orders as defined in Exchange Rule 
1080(o), and Floor QCC Orders, as defined in 1064(e), a Service Fee 
of $0.07 per side applies once a Specialist or Market Maker has 
reached the Monthly Market Maker Cap. The $0.07 Service Fee applies 
to every contract side of the QCC Order and Floor QCC Order after a 
Specialist or Market Maker has reached the Monthly Market Maker Cap, 
except for reversal and conversion strategies executed via QCC. The 
Service Fee is not being assessed to a Specialist or Market Maker 
that does not reach the Monthly Market Maker Cap in a particular 
calendar month.
    \13\ Firms are subject to a maximum fee of $75,000 (``Monthly 
Firm Fee Cap''). Firm floor option transaction charges and QCC 
Transaction Fees as defined in Section II of the Pricing Schedule in 
the aggregate, for one billing month will not exceed the Monthly 
Firm Fee Cap per member organization when such members are trading 
in their own proprietary account.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its Pricing 
Schedule is consistent with Section 6(b) of the Act \14\ in general, 
and furthers the objectives of Section 6(b)(4) of the Act \15\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members and other persons using its 
facilities.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
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    Transaction Fees. The Exchange believes that the proposed Mini 
Options Transaction Fee-Electronic and Mini Options Transaction Fee--
Floor and QCC, as well as the applicability of those fees to PIXL 
executions in Mini Options, are reasonable because those fees are set 
at zero in order to encourage market participants to transact Mini 
Options. They are also equitable and not unfairly discriminatory 
because all the market participant categories will be

[[Page 22355]]

able to take advantage of the zero fee level and will therefore be 
treated in a uniform matter. Likewise, the Exchange believes that not 
applying QCC Transaction fees and rebates to transactions in Mini 
Options is reasonable, equitable and not unfairly discriminatory 
because the Exchange does not desire to assess certain transaction fees 
to encourage all market participants to transact Mini Options. No 
market participant would be assessed QCC Transaction fees or rebates.
    Fee Caps. The Exchange believes that it is reasonable, equitable 
and not unfairly discriminatory to not apply the Monthly Market Maker 
Cap or Monthly Firm Fee Cap to Mini Options transaction fees because 
the Mini Options transaction fees are set at zero in any event for all 
market participants. The fee caps would not be affected by transactions 
in Mini Options for which transaction fees are not assessed in the 
first place.
    Customer Rebate Program. The Exchange believes that it is 
reasonable, equitable and not unfairly discriminatory that Mini Options 
volume will not be included in and will not be eligible for the 
Customer Rebate Program defined in newly relocated Section B of the 
Pricing Schedule. The Customer Rebate Program was established to 
incentivize market participants to increase the amount of Customer 
order flow they transact on the Exchange.\16\ The Customer Rebate 
Program is predicated on certain volume tiers that assume an option 
contract size of 100 shares. Due to the smaller size of the Mini 
Options contract, Mini Options will not make sense in the context of 
the volume tiers upon which the calculation of the Customer Rebate is 
based and the logic behind the Customer Rebate Program would not be 
achieved by including them. For this reason the Exchange believes that 
it is reasonable to not permit Mini Options to qualify in the Customer 
Rebate Program. Also, the Exchange would uniformly not pay rebates to 
any market participant transacting Customer Mini Options. Finally, 
redesignation of the caption of the Customer Rebate Program from A. to 
B. will provide clarity to the Pricing Schedule as it accommodates the 
new Mini Options Fees language in A.
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    \16\ See Securities Exchange Act Release No. 68924 (February 13, 
2013), 78 FR 11916 (February 20, 2013).
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    Payment for Order Flow Fees. The Exchange believes that it is 
reasonable, equitable and not unfairly discriminatory that the Payment 
for Order Flow fees set forth in Section II will not apply to Mini 
Options because the Exchange is not charging any transaction fees for 
these products at this time. By eliminating Payment for Order Flow Fees 
as applied to Mini Options the Exchange will incentivize members to 
transact in them. Further, Specialists and Market Makers will not be 
singled out from among other market participants for assessment of this 
fee. All market participants will be treated the same way by not having 
the Payment for Order Flow fees imposed on them with respect to Mini 
Options.
    Proposed Mini Options Routing Fees--Customers. In the proposed new 
language in Section A of the Pricing Schedule, for Mini Options a $0.01 
per contract Routing Fee will be charged for Customer orders in 
addition to the actual transaction fee assessed, provided that if the 
away market pays a rebate to the Exchange, the Customer Routing Fee is 
$0.00. The Customer Routing Fees for Mini Options are reasonable 
because they will allow the Exchange to recoup and cover its costs of 
providing routing services for Customer orders in Mini Options just as 
it does for other standard equity options for which it incurs the same 
costs. The Exchange believes this Routing Fee for Customers in Mini 
Options is reasonable because it is lower than the other fixed Routing 
Fees for standard options, as discussed above, which are assessed with 
respect to Customer transactions in other options pursuant to Section V 
of the Pricing Schedule. Additionally, the Customer Routing Fees will 
be similar to the new Routing Fees that the Exchange recently filed and 
which will be operative on April 1, 2013, except the fixed cost will be 
lower in the case of Mini Options. Similar to that filing, the Exchange 
would not pass rebates back to Customers, but would also not asses a 
Customer a Routing Fee if a rebate were paid by the away market. The 
Exchange believes that its proposal to not pass a rebate that is 
offered by an away market for Customers orders in Mini Options is 
reasonable because to the extent that another market is paying a 
rebate, the Exchange will not assess a Routing Fee for that 
transaction. If a market participant desires the rebate, the market 
participant has the option to direct the order to that away market. 
Other options exchanges today do not pass the rebate.\17\
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    \17\ See CBOE's Fees Schedule and International Securities 
Exchange LLC's (``ISE'') Fee Schedule.
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    The Exchange believes the Routing Fees for Mini Options for 
Customers are equitable and not unfairly discriminatory because the 
Exchange would uniformly assess the same Routing Fees to all Customers, 
and because market participants have the ability to directly route 
orders in Mini Options to an away market and avoid the Routing Fee. 
Also, market participants may submit orders to the Exchange as 
ineligible for routing or ``DNR'' to avoid Routing Fees. The Exchange 
believes that its proposal to not pass a rebate that is offered by an 
away market for Customer Mini Option orders is equitable and not 
unfairly discriminatory because the Exchange would not pay such a 
rebate on any Customer Mini Option order.
    Proposed Mini Options Routing Fees--Non-Customers. In the proposed 
new language in Section A of the Pricing Schedule, Routing Fees for 
Mini Options for all participants other than Customers (``non-
Customers'') will be a flat fee of $0.15 per contract. The Exchange 
believes this fee is reasonable because it is lower than the $0.95 per 
contract flat fee that will be in effect on April 1, 2013 for non-
Customers orders routed to all options exchanges (other than BX Options 
and NOM) for orders in options other than Mini Options.\18\ The non-
Customer Routing Fees for Mini Options are reasonable because they will 
allow the Exchange to recoup and cover its costs of providing routing 
services for non-Customer orders in Mini Options just as it does for 
other equity options for which it incurs the same costs. The Exchange 
believes that its proposal to amend its non-Customer Routing Fees from 
a fixed fee plus actual transaction charges to a flat rate is 
reasonable because the flat rate makes it easier for market 
participants to anticipate the Routing Fees which they would be 
assessed at any given time. The Exchange believes that assessing all 
non-Customer orders the same flat rate will provide market participants 
with certainty with respect to Routing Fees. While each destination 
market's transaction charge varies and there is a cost incurred by the 
Exchange when routing orders to away markets, including clearing costs, 
administrative and technical costs associated with operating NOS, 
membership fees at away markets, ORFs and technical costs associated 
with routing options, the Exchange believes that the proposed Routing 
Fees will enable it to recover the costs it incurs to route non-
Customer orders to away markets. Other

[[Page 22356]]

exchanges similarly assess a fixed rate fee to route non-Customer 
orders.\19\
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    \18\ The Exchange believes that the proposed non-Customer 
Routing Fee for Mini Options that are routed to BX and NOM is 
reasonable even though it is higher than $0.05 Routing Fee assessed 
with respect to non-Customer orders routed to BX and NOM today in 
options other than Mini Options, inasmuch as the Exchange is not 
charging any transaction fees with respect to Mini Options.
    \19\ BATS Exchange, Inc. (``BATS'') assesses non-Customer fixed 
rates of $0.57 and $0.95 per contract when routing to away markets. 
See BATS BZX Exchange Fee Schedule. The Chicago Board Options 
Exchange Incorporated (``CBOE'') assesses non-Customer orders a 
$0.50 per contract routing fee in addition to the customary CBOE 
execution charges. See CBOE's Fees Schedule.
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    The Exchange believes that its proposal to amend the non-Customer 
Routing Fees from a fixed fee plus actual transaction charges to a flat 
rate is equitable and not unfairly discriminatory because the Exchange 
would uniformly assess the same Routing Fees to all non-Customer market 
participants. Under its flat fee structure, taking all costs to the 
Exchange into account, the Exchange may operate at a slight gain or a 
slight loss for non-Customer orders routed to and executed at away 
markets. The proposed Routing Fee for non-Customer orders is an 
approximation of the maximum fees the Exchange will be charged for such 
executions, including costs, at away markets. As a general matter, the 
Exchange believes that the proposed fees will allow it to recoup and 
cover its costs of providing routing services for non-Customer orders. 
The Exchange believes that the fixed rate non-Customer Routing Fee is 
equitable and not unfairly discriminatory because market participants 
have the ability to directly route orders to an away market and avoid 
the Routing Fee. Also, market participants may submit orders to the 
Exchange as ineligible for routing or ``DNR'' to avoid Routing Fees. It 
is important to note that when orders are routed to an away market they 
are routed based on price first.
    The Exchange believes that its proposal to not pass a rebate that 
is offered by an away market for non-Customers orders is reasonable 
because to the extent that another market is paying a rebate, the 
Exchange will assess a $0.15 per contract fee as its total cost in each 
instance. The Routing Fee is transparent and simple. If a market 
participant desires the rebate, the market participant has the option 
to direct the order to that away market. Other options exchanges today 
do not pass the rebate. The Exchange believes that its proposal to not 
pass a rebate that is offered by an away market for non-Customers 
orders is equitable and not unfairly discriminatory because the 
Exchange would not pay such a rebate on any non-Customer order. The 
Exchange believes the Routing Fees for Mini Options for non-Customers 
are equitable and not unfairly discriminatory because the Exchange 
would uniformly assess the same Routing Fees to all non-Customer market 
participants.
    Finally, the Exchange believes that it is reasonable, equitable and 
not unfairly discriminatory to assess different fees for Customers 
orders as compared to non-Customer orders because the Exchange has 
traditionally assessed lower fees to Customers as compared to non-
Customers. Customers will continue to receive the lowest fees or no 
fees when routing orders, as is the case today. Other options exchanges 
also assess lower Routing Fees for customer orders as compared to non-
customer orders in standard options.\20\
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    \20\ BATS assesses lower customer routing fees as compared to 
non-customer routing fees per the away market. For example BATS 
assesses ISE customer routing fees of $0.30 per contract and an ISE 
non-customer routing fee of $0.57 per contract. See BATS BZX 
Exchange Fee Schedule.
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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.
    The Exchange operates in a highly competitive market, comprised of 
eleven exchanges, in which market participants can easily and readily 
direct order flow to competing venues if they deem fee levels at a 
particular venue to be excessive or rebates to be inadequate. 
Accordingly, the fees that are assessed and the rebates paid by the 
Exchange described in the above proposal are influenced by these robust 
market forces and therefore must remain competitive with fees charged 
and rebates paid by other venues and therefore must continue to be 
reasonable and equitably allocated to those members that opt to direct 
orders to the Exchange rather than competing venues.
    The Mini Options are a new product that will commence trading on 
the Exchange on March 28, 2013. The Exchange believes that 
incentivizing market participants to transact Mini Options by not 
assessing transaction fees and certain other fees encourages 
competition in these products. There is no intra-market competition as 
the Exchange will treat all market participants in a like manner with 
respect to the transaction fees. Also, the Exchange believes that 
because other markets will also list Mini Options there is no undue 
burden on intermarket competition because market participants will be 
able to select the venue where they will trade these products. In terms 
of Routing, the Exchange-believes that assessing Customers lower fees 
as compared to Non-Customers and assessing the same Routing Fees to all 
Non-Customers regardless of the venue does not create an undue burden 
on competition. The Exchange has traditionally assessed no or lower 
fees to Customers. Also, the Exchange believes that because Mini 
Options represent 1/10th of the size of a standard option contract, 
reduced Routing Fees will not misalign the cost to transact Mini 
Options.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor 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.\21\ At any time within 60 days of the 
filing of the proposed rule change, the Commission summarily may 
temporarily suspend 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. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.
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    \21\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 email to rule-comments@sec.gov. Please 
include File Number SR-Phlx-2013-35 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-2013-35. This file 
number should be included on the

[[Page 22357]]

subject line if email 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 10:00 a.m. and 3:00 p.m. Copies of 
the 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-2013-35 and should be submitted on or before May 6, 
2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-08724 Filed 4-12-13; 8:45 am]
BILLING CODE 8011-01-P