Document ID: SEC-2011-1805-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2011-11-23T05:00Z

[Federal Register Volume 76, Number 226 (Wednesday, November 23, 2011)]
[Notices]
[Pages 72480-72482]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-30201]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65777; File No. SR-Phlx-2011-151]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
the Professional Routing Fee to the BATS Exchange, Inc.

November 17, 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 November 8, 2011, 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 its Professional Routing Fee 
governing pricing for Exchange members using the Phlx XL II system,\3\ 
for routing standardized equity and index option Professional orders to 
the BATS Exchange, Inc. (``BATS'') 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 changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative on December 1, 2011.
    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, on the Commission's Web site at 
http://www.sec.gov/, 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

[[Page 72481]]

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 recoup costs that the 
Exchange incurs for routing and executing Professional orders in equity 
and index options to BATS. The Exchange's Fee Schedule includes Routing 
Fees for routing and executing Customer and Professional orders to away 
markets. The Exchange currently assesses a Professional Routing Fee of 
$0.36 per contract for option orders that are routed to BATS.\4\ BATS 
recently adopted a definition for a professional and amended its Fee 
Schedule to assess a fee of $.42 for professionals that remove 
liquidity from BATS Options.\5\ The Exchange is proposing to amend its 
Professional Routing Fee to BATS to recoup this fee.
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    \4\ The Exchange currently assesses a Customer Routing Fee of 
$0.36 per contract for option orders that are routed to BATS. This 
fee will remain the same.
    \5\ See Securities Exchange Act Release No. 65694 (November 4, 
2011) (SR-BATS-2011-046).
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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. Each time NOS routes to 
away markets NOS is charged a $0.06 clearing fee 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 is 
proposing this amendment in order to recoup clearing and transaction 
charges incurred by the Exchange when Professional orders are routed to 
BATS.\7\ The Exchange proposes to recoup the $.42 per contract 
professional taker fee for option orders that are routed to BATS along 
with the $0.06 clearing fee which is incurred by the Exchange, as 
explained herein.
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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).
    \7\ The Exchange is proposing to recoup the $.42 per contract 
professional transaction fee for orders routed to BATS along with 
the $0.06 clearing fee which is incurred by the Exchange, as 
explained above. See BATS Fees Schedule.
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    As with all fees, the Exchange may adjust these Routing Fees in 
response to competitive conditions by filing a new proposed rule 
change.
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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that this fee is reasonable because it seeks 
to recoup costs that are incurred by the Exchange when routing 
Professional orders to BATS on behalf of its members. Each destination 
market's transaction charge varies and there is a standard clearing 
charge for each transaction incurred by the Exchange. The Exchange 
believes that the proposed Routing Fee would enable the Exchange to 
recover the professional taker fee assessed by BATS, plus clearing fees 
for the execution of Professional orders. The Exchange also believes 
that the proposed Routing Fee is equitable and not unfairly 
discriminatory because it would be uniformly applied to all 
Professionals.

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.
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    \10\ 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-2011-151 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-2011-151. 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-2011-151 and should be 
submitted on or before December 14, 2011.

[[Page 72482]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-30201 Filed 11-22-11; 8:45 am]
BILLING CODE 8011-01-P