Document ID: SEC-2012-0325-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2012-02-27T05:00Z

[Federal Register Volume 77, Number 38 (Monday, February 27, 2012)]
[Notices]
[Pages 11615-11617]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-4400]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66426; File No. SR-Phlx-2012-17]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Amending the 
Fee Schedule to Define a Market Maker

February 21, 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 7, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Preface to its Fee Schedule to 
add a definition for a ``Market Maker.'' In addition, the Exchange 
proposes to delete outdated language in the Preface.
    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

[[Page 11616]]

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 this rule filing is to define the term ``Market 
Maker'' and utilize the term in describing certain market participants 
with respect to transaction fees. The Exchange believes that utilizing 
the term ``Market Maker'' as a category of market participant to 
describe transaction fees would further clarify the Fee Schedule.
    The Exchange proposes to amend the Preface to the Fee Schedule to 
add language to define a ``Market Maker'' as a Specialist,\3\ 
Registered Options Trader (``ROT''),\4\ Streaming Quote Trader 
(``SQT''),\5\ and Remote Streaming Quote Trader (``RSQT'').\6\ The 
Exchange proposes to also amend the Fee Schedule to replace the market 
participant category of ``Specialists, ROTs, SQTs and RSQTs'' with the 
term ``Market Maker'' where transaction fees are specified. As 
currently noted in the Preface, while Directed Participants are 
Specialists and ROTs, including SQTs and RSQTs, and therefore Market 
Makers, they are assessed different transaction fees and are therefore 
not included in the definition of ``Market Maker'' for purposes of 
defining categories of market participants.
---------------------------------------------------------------------------

    \3\ A Specialist is an Exchange member who is registered as an 
options specialist pursuant to Rule 1020(a).
    \4\ A Registered Option Trader is defined in Exchange Rule 
1014(b) as a regular member of the Exchange located on the trading 
floor who has received permission from the Exchange to trade in 
options for his own account. A ROT includes SQTs and RSQTs as well 
as on and off-floor ROTs.
    \5\ An SQT is defined in Exchange Rule 1014(b)(ii)(A) as an ROT 
who has received permission from the Exchange to generate and submit 
option quotations electronically in options to which such SQT is 
assigned.
    \6\ A RSQT is defined in Exchange Rule 1014(b)(ii)(B) as 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 in options to 
which such RSQT has been assigned.
---------------------------------------------------------------------------

    The Exchange also proposes to delete certain outdated language in 
the Preface which describes a ROT. The Exchange previously filed a rule 
change to eliminate a foreign currency options participant from the 
Exchange's Rules.\7\ The Exchange is proposing to update footnote 7 in 
the Preface of the Fee Schedule to reflect the current text of Rule 
1014 and eliminate the words ``or a foreign currency options 
participant.''
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 64338 (April 25, 
2011), 76 FR 24069 (April 25, 2011) (SR-Phlx-2011-13) (a rule 
change, which among other things, eliminates the foreign currency 
options participant from the Exchange's Rules).
---------------------------------------------------------------------------

    The Exchange also proposes to make other grammatical corrections to 
capitalize the word ``Specialist'' in the Fee Schedule.
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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that amending the Fee Schedule to describe 
Specialists, ROTs, SQTs and RSQTs as Market Makers is reasonable 
because other exchanges utilize the term Market Maker in their fee 
descriptions. Also, the Exchange believes that the proposal is 
equitable and not unfairly discriminatory because the Exchange is 
proposing to utilize a term that is known among its members to describe 
a fee category. Also, the Exchange's definition in the Preface provides 
guidance on how the term is being utilized in the Fee Schedule as are 
other market participant terms.
    The Exchange believes that deleting outdated language is 
reasonable, equitable and not unfairly discriminatory as the text of 
the Fee Schedule would be consistent with other Rules.

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\ 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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-2012-17 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-2012-17. 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

[[Page 11617]]

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-2012-17 and should be submitted on or 
before March 19, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-4400 Filed 2-24-12; 8:45 am]
BILLING CODE 8011-01-P