Document ID: SEC-2012-2038-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2012-12-12T05:00Z

[Federal Register Volume 77, Number 239 (Wednesday, December 12, 2012)]
[Notices]
[Pages 74037-74039]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29964]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68375; File No. SR-Phlx-2012-135]

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

December 6, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that, on November 30, 2012 NASDAQ OMX PHLX LLC (``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 certain Singly Listed Options \3\ 
Transaction Charges in Section III of the Pricing Schedule.\4\ The 
Exchange is also proposing a technical amendment to its Pricing 
Schedule. While changes to the Pricing Schedule pursuant to this 
proposal are effective upon filing, the Exchange has designated the 
proposed amendment to be operative on December 3, 2012.
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    \3\ For purposes of this filing, a Singly Listed Option means an 
option that is only listed on the Exchange and is not listed by any 
other national securities exchange.
    \4\ Currently, Singly Listed Options include options overlying 
currencies, equities, ETFs, ETNs, indexes and HOLDRs not listed on 
another exchange. The following symbols are also assessed the fees 
in Section III for Singly Listed Options: SOX, HGX and OSX. The 
Exchange receives an overnight file from The Options Clearing 
Corporation, the Data Distribution Service feed, which provides the 
Exchange a list of options which are Singly and Multiply Listed. The 
Exchange provides its members with a symbol directory that indicates 
whether a security is Singly or Multiply Listed. This information, 
which is available on the exchange's Web site, is updated daily. In 
the event that a Singly Listed Option becomes Multiply Listed, the 
option would be assessed the fees in Section II of the Pricing 
Schedule.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXfilings, at 
the principal office of the Exchange, 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 purpose of the proposed rule change is to amend Section III of 
the Exchange's Pricing Schedule to increase various options transaction 
charges in Singly Listed Options in order to recoup increased costs 
associated with Singly Listed Options as compared to Multiply Listed 
Options.\5\
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    \5\ Multiply Listed Options overlying equities, ETFs, ETNs, 
indexes as well as BKX, RUT, MNX and NDX would continue to be 
subject to the fees in Section II of the Pricing Schedule. For 
purposes of this filing, a Multiply Listed Option means an option 
that is listed on more than one exchange.
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    Today, the Exchange assesses Customers, Specialists \6\ and Market 
Makers \7\ a $0.35 per contract options transaction charge for Singly 
Listed Options. The Customer fee will remain unchanged. The Specialist 
and Market Maker fees will be increased to $0.40 per contract in Singly 
Listed Options. Today, the Exchange assesses Professionals,\8\ Firms 
and Broker-

[[Page 74038]]

Dealers a $0.45 per contract options transaction charge in Singly 
Listed Options. These fees will be increased to $0.60 per contract.
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    \6\ A ``Specialist'' is an Exchange member who is registered as 
an options specialist pursuant to Rule 1020(a).
    \7\ A ``Market Maker'' includes Registered Options Traders 
(``ROTs'') (Rule 1014(b)(i) and (ii)), which include Streaming Quote 
Traders (``SQTs'') (See Rule 1014(b)(ii)(A)) and Remote Streaming 
Quote Traders (``RSQTs'') (See Rule 1014(b)(ii)(B)).
    \8\ The term ``Professional'' means 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). See Rule 
1000(b)(14).
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    The Exchange is not proposing to amend other transaction fees in 
Section III of the Pricing Schedule. Also, the Exchange proposes to 
eliminate the term ``HOLDRs'' from its Pricing Schedule as this product 
is no longer traded on the Exchange.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Pricing 
Schedule is consistent with Section 6(b) of the Act \9\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \10\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members and other persons using its 
facilities. The Exchange believes that increasing the Professional, 
Specialist, Market Maker, Firm and Broker-Dealer options transaction 
charges is reasonable because the Exchange is seeking to recoup the 
operational costs for Singly Listed Options, which costs are higher 
than those for Multiply Listed Options.\11\ Also, the Exchange believes 
the fees are reasonable because the proposed fees are within the range 
of similar fees assessed at other exchanges.\12\
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ By way of example, in analyzing an obvious error, the 
Exchange would have additional data points available in establishing 
a theoretical price for a Multiply Listed Option as compared to a 
Singly Listed Option, which requires additional analysis and 
administrative time to comply with Exchange rules to resolve an 
obvious error.
    \12\ Chicago Board Options Exchange, Incorporated (``CBOE'') 
assesses an $0.80 per contract fee to Customers, Broker-Dealers, 
Non-Trading Permit Holder Market Makers and Professional and 
Voluntary Professional market participants for SPX Range Options 
(SRO) transactions, a proprietary index, in addition to a surcharge 
fee. SPX refers to options on the Standard & Poor's 500 Index. See 
CBOE's Fees Schedule. In addition, NASDAQ Options Market LLC 
(``NOM'') assesses Non-Penny Pilot Fees for Removing Liquidity 
ranging from $0.82 to $0.89 per contract depending on the market 
participant. See Chapter XV, Section 2. of NOM's Rules. The Exchange 
also assess a Broker-Dealer an electronic options transaction charge 
(non-Penny Pilot) of $0.60 per contract for transactions in Multiply 
Listed Options. See Section II of the Exchange's Pricing Schedule.
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    The Exchange believes that increasing the Professional, Specialist, 
Market Maker, Firm and Broker-Dealer options transaction charges is 
equitable and not unfairly discriminatory because the pricing will be 
comparable among similar categories of market participants, as is the 
case today. Professionals, Firms and Broker-Dealers, will all be 
assessed the same rates ($0.60 per contract) and Customers, Specialists 
and Market Makers will continue to be assessed lower rates as compared 
to other market participants. Customer order flow is assessed the 
lowest fee because incentivizing members to continue to offer Customer 
trading opportunities in Singly Listed Options benefits all market 
participants through increased liquidity. The Exchange notes that 
Specialists and Market Makers are assessed lower options transaction 
charges as compared to other market participants, except Customers, 
because they have burdensome quoting obligations \13\ to the market 
which do not apply to Customers, Professionals, Firms and Broker-
Dealers. The proposed differentiation as between Customers, Specialists 
and Market Makers as compared to Professionals, Firms and Broker-
Dealers recognizes the differing contributions made to the liquidity 
and trading environment on the Exchange by these market participants.
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    \13\ See Rule 1014 titled ``Obligations and Restrictions 
Applicable to Specialists and Registered Options Traders.''
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    The Exchange believes that removing the term ``HOLDRs'' from the 
Pricing Schedule is reasonable, equitable and not unfairly 
discriminatory because the product is no longer traded on the Exchange 
and for clarity the term is being removed.

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 believes its fees 
for Singly Listed Options products remain competitive with other fees 
at other options exchanges.

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\ 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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    \14\ 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-2012-135 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-2012-135. This file 
number should be included on the 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-

[[Page 74039]]

2012-135 and should be submitted on or before January 2, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-29964 Filed 12-11-12; 8:45 am]
BILLING CODE 8011-01-P