Document ID: SEC-2012-0366-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2012-03-06T05:00Z

[Federal Register Volume 77, Number 44 (Tuesday, March 6, 2012)]
[Notices]
[Pages 13377-13379]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-5328]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66488; File No. SR-Phlx-2012-22]

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

February 29, 2012.
    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 February 16, 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 Section I of the Exchange's Fee 
Schedule titled ``Rebates and Fees for Adding and Removing Liquidity in 
Select Symbols,'' specifically to amend the Select Symbols \3\ and 
transaction fees for Single contra-side orders.
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    \3\ The term ``Select Symbols'' refers to the symbols which are 
subject to the Rebates and Fees for Adding and Removing Liquidity in 
Section I of the Exchange's Fee Schedule.
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    While changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative on March 1, 2012.
    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, 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend the list of 
Select Symbols in Section I of the Exchange's Fee Schedule, entitled 
``Rebates and Fees for Adding and Removing Liquidity in Select 
Symbols,'' in order to attract additional order flow to the Exchange.
    The Exchange displays a list of Select Symbols in its Fee Schedule 
at Section I, entitled ``Rebates and Fees for Adding and Removing 
Liquidity in Select Symbols,'' which are subject to the rebates and 
fees in that section. The Exchange is proposing to delete the following 
symbols from the list of Select

[[Page 13378]]

Symbols: Ciena Corporation (``CIEN''), Goldman Sachs Group, Inc. 
(``GS''), Halliburton Company Common Stock (``HAL''), Las Vegas Sands 
Corp. Common Stock (``LVS''), MGM Resorts International (``MGM''), 
Micron Technology, Inc. (``MU''), NVidia Corporation (``NVDA''), 
Qualcomm Incorporated (``QCOM''), Transocean Ltd (Switzerland) Co. 
(``RIG''), Rambus, Inc. (``RMBS''), Silver Wheaton Corp Common Shares 
(``SLW''), PowerShares DB USD Index Bull (``UUP''), Visa, Inc. (``V''), 
Wynn Resorts, Limited (``WYNN''), United States Steel Corporation 
(``X'') and SPDR S&P Oil & Gas Exploration & Production (``XOP'') 
(``Deleted Symbols''). These Deleted Symbols would be subject to the 
rebates and fees in Section II of the Fee Schedule entitled ``Equity 
Options Fees.'' \4\ The Exchange also proposes to add the following 
symbols to its list of Select Symbols: iShares MSCI Emerging Index Fund 
(``EEM''), iShares MSCI EAFE Index Fund (``EFA''), iShares MSCI Brazil 
Index Fund (``EWZ''), iShares Barclays 20 Year Treasury (``TLT''), SPDR 
Select Sector Fund (``XLI'') and SPDR Select Sector Fund--Energy 
(``XLE'') (``New Select Symbols''). These New Select Symbols would be 
subject to the rebates and fees in Section I of the Fee Schedule.
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    \4\ Section II includes options overlying equities, ETFs, ETNs, 
indexes and HOLDRs which are multiply listed.
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    The Exchange also proposes to amend certain of the Single contra-
side transaction fees in Section I of the Fee Schedule to raise 
revenues and allow the Exchange to compete more effectively by 
subsidizing rebates for Single contra-side transactions. Specifically, 
the Exchange proposes to increase the Single contra-side Fee for 
Removing Liquidity for a Directed Participant \5\ from $0.35 to $0.36 
per contract. The Exchange also proposes to increase the Single contra-
side Fee for Removing Liquidity for Market Makers \6\ from $0.37 to 
$0.38 per contract. The Exchange does not propose to amend the Single 
contra-side transaction Fees for Removing Liquidity for Customers,\7\ 
Firms,\8\ Broker-Dealers \9\ and Professionals.\10\
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    \5\ The term ``Directed Participant'' applies to transactions 
for the account of a Specialist, Streaming Quote Trader (``SQT'') or 
Remote Streaming Quote Trader (``RSQT'') resulting from a Customer 
order that is (1) directed to it by an order flow provider, and (2) 
executed by it electronically on Phlx XL II.
    \6\ A ``market maker'' includes Specialists (see Rule 1020) and 
Registered Options Traders (``ROTs'') (Rule 1014(b)(i) and (ii), 
which includes SQTs (see Rule 1014(b)(ii)(A)) and RSQTs (see Rule 
1014(b)(ii)(B)).
    \7\ Customers are assessed a $0.39 per contract Fee for Removing 
Liquidity for Single contra-side transactions.
    \8\ Firms are assessed a $0.45 per contract Fee for Removing 
Liquidity for Single contra-side transactions.
    \9\ Broker-Dealers are assessed a $0.45 per contract Fee for 
Removing Liquidity for Single contra-side transactions.
    \10\ Professionals are assessed a $0.45 per contract Fee for 
Removing Liquidity for Single contra-side transactions.
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    The Exchange is also proposing to make a minor amendment to Section 
I of its Fee Schedule to change the caption of Section I, Part A from 
``Single contra-side order'' to ``Single contra-side.'' The Exchange 
believes that removing the word ``order'' from the title will more 
accurately reflect the fees and rebates listed in Section I, Part A 
because Market Makers, for example, trade with both quotes and orders.
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 and other persons using its 
facilities. The Exchange also believes that it is an equitable 
allocation of reasonable rebates among Exchange members and other 
persons using its facilities.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable to remove the Deleted 
Symbols from its list of Select Symbols to attract additional order 
flow to the Exchange. The Exchange believes that applying the fees in 
Section II of the Fee Schedule to the Deleted Symbols, including the 
opportunity to receive payment for order flow, will attract order flow 
to the Exchange. Likewise, the Exchange believes that applying the fees 
and rebates in Section I to the New Select Symbols would attract 
additional order flow to the Exchange.
    The Exchange believes that it is equitable and not unfairly 
discriminatory to amend its list of Select Symbols in order to remove 
the Deleted Symbols because the list of Select Symbols would apply 
uniformly to all categories of participants in the same manner. All 
market participants who trade the Select Symbols would be subject to 
the rebates and fees in Section I of the Fee Schedule, which would not 
include the Deleted Symbols. Also, all market participants would be 
uniformly subject to the fees in Section II, which would include the 
Deleted Symbols. Likewise, the Exchange believes that it is equitable 
and not unfairly discriminatory to amend its list of Select Symbols to 
add the New Select Symbols because these symbols would apply uniformly 
to all categories of participants in the same manner. The fees and 
rebates in Section I would apply uniformly to all market participants 
transacting the New Select Symbols.
    The Exchange believes that increasing the Single contra-side Fees 
for Removing Liquidity for Directed Participants and Market Makers by 
$0.01 per contract is reasonable because the Exchange is attempting to 
further subsidize the rebates it pays for Single contra-side 
transactions by increasing fees for certain market participants that 
are also recipients of rebates for Single contra-side transactions. In 
addition, the Exchange believes that its fees are competitive as 
compared to other exchanges.\13\
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    \13\ Both NASDAQ Options Market LLC (``NOM'') and NYSE Arca, 
Inc. (``NYSE Arca'') assess a remove fee of $0.45 per contract. See 
NOM's fees at Chapter XV, Section 2 and NYSE Arca's Fee Schedule.
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    The Exchange believes that increasing the Single contra-side Fees 
for Removing Liquidity for Directed Participants and Market Makers by 
$0.01 per contract is equitable and not unfairly discriminatory because 
both Directed Participants and Market Makers will continue to be 
assessed the lowest Fees for Removing Liquidity as compared to other 
market participants. Market Makers \14\ have quoting obligations to the 
market which do not apply to Firms, Professionals and Broker-Dealers. 
Also, Directed Participants \15\ have higher quoting obligations as 
compared to other Market Makers and therefore are assessed a lower fee 
as compared to Market Makers.
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    \14\ See Exchange Rule 1014 titled ``Obligations and 
Restrictions Applicable to Specialists and Registered Options 
Traders.''
    \15\ See Exchange Rule 1014 titled ``Obligations and 
Restrictions Applicable to Specialists and Registered Options 
Traders.''
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    The Exchange believes that the proposed amendment to the title of 
Section I, Part A to remove the word ``order'' is reasonable, equitable 
and not unfairly discriminatory because the amendment would correct the 
rule text to accurately reflect fees and rebates for Single contra-side 
transactions by eliminating the characterization of the transactions as 
orders.

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

[[Page 13379]]

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.\16\ 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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    \16\ 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 No. SR-Phlx-2012-22 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 No. SR-Phlx-2012-22. 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 
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-2012-22 and should be 
submitted on or before March 27, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-5328 Filed 3-5-12; 8:45 am]
BILLING CODE 8011-01-P