Document ID: SEC-2011-0071-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, LLC
Posted Date: 2011-01-14T05:00Z

[Federal Register Volume 76, Number 10 (Friday, January 14, 2011)]
[Notices]
[Pages 2733-2734]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-716]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63679; File No. SR-Phlx-2010-187]

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

January 7, 2011.
    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 December 29, 2010, NASDAQ OMX PHLX, Inc. [sic] (``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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    While fee changes pursuant to this proposal are effective upon 
filing, the Exchange has designated these changes to be operative on 
January 3, 2011.
    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 the International Securities 
Exchange LLC (``ISE'') in Select Symbols \4\ for orders of 100 or more 
contracts. ISE recently amended its fees and the amendments proposed 
herein reflect the proposed ISE amendments.\5\
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    \4\ Select Symbols refer to the symbols which are subject to 
ISE's Rebates and Fees for Adding and Removing Liquidity in Select 
Symbols in ISE's Schedule of Fees.
    \5\ See SR-ISE-2010-120.
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    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.\6\ 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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    \6\ 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 assesses a Routing Fee of $0.26 per 
contract for Customer orders and $0.31 per contract for Professional 
orders. The Exchange proposes to amend its Routing Fees for orders 
routed to ISE in Select Symbols by assessing $0.18 per contract for 
Customer orders and $0.34 per contract for Professional Orders.
    The Exchange also proposes to remove a footnote reference to the 
ISE Select Symbols which states ``[t]his fee applies to orders of 100 
or more contracts.'' This proposal reflects recent amendments to ISE's 
fees, which eliminate the fee differential between priority customers 
with 100 or more contracts and priority customers with less than 100 
contracts.\7\ All other orders that are routed to ISE, which are not in 
the Select Symbols, would be assessed the rates labeled ``ISE''.
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    \7\ See SR-ISE-2010-120. See also E-mail from Angela S. Dunn, 
Assistant General Counsel, Phlx, to Johnna B. Dumler, Special 
Counsel, Commission, dated January 5, 2011.
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    The Exchange is proposing these fees to recoup the majority of 
transaction and clearing costs associated with routing Customer and 
Professional orders to ISE in Select Symbols. These proposed fees will 
enable the Exchange to recover the transaction fees assessed by ISE, 
where applicable, plus clearing fees for the execution of Customer and 
Professional orders routed from the Phlx XL II system. As with all 
fees, the Exchange may adjust these Routing Fees in response to 
competitive conditions by filing a new proposed rule change.
    While fee changes pursuant to this proposal are effective upon 
filing, the Exchange has designated these changes to be operative on 
January 3, 2011.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \8\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \9\ in particular, in that 
it is an equitable allocation of reasonable fees and other charges 
among Exchange members. The Exchange believes that these fees are 
reasonable because the Exchange is seeking to recoup costs that it 
incurs when routing orders to ISE in Select Symbols on

[[Page 2734]]

behalf of its members. The Exchange believes that the proposed fee 
amendments are equitable because these amendments mirror recent 
proposed amendments to ISE's Schedule of Fees and are being uniformly 
applied to the Exchange's members.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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 \10\ and paragraph (f)(2) of Rule 19b-4 \11\ 
thereunder. At any time within 60 days of the filing of such 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 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-2010-187 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-2010-187. 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-2010-187 and should be 
submitted on or before February 4, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-716 Filed 1-13-11; 8:45 am]
BILLING CODE 8011-01-P