Document ID: SEC-2010-0973-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2010-07-01T04:00Z

[Federal Register: July 1, 2010 (Volume 75, Number 126)]
[Notices]               
[Page 38163-38164]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jy10-127]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62379; File No. SR-Phlx-2010-87]

 
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Relating 
to Fees for FLEX Equity Options

June 25, 2010.
    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 June 21, 2010, NASDAQ OMX PHLX, Inc. (``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 assess a transaction charge for members 
trading Flexible Exchange[reg] Options (``FLEX Options'').\3\
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    \3\ A FLEX option is a customized option that provides parties 
to the transaction with the ability to fix terms including the 
exercise style, expiration date, and certain exercise prices. See 
Exchange Rule 1079. FLEX Options are a trademark of the Chicago 
Board Options Exchange.
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    While changes to the Exchange's Fee Schedule pursuant to this 
proposal are effective upon filing, the Exchange has designated this 
proposal to be effective for trades settling on or after July 1, 2010.
    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, 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 establish a new fee 
for equity options transactions executed pursuant to Exchange Rule 1079 
(``FLEX equity options''). The Exchange believes that the proposed fee 
reduction for trading FLEX equity options will encourage members to 
trade additional FLEX equity options contracts on the Exchange, 
resulting in additional order flow to the Exchange. Currently, the fees 
which members are assessed when trading FLEX equity options are the 
standard equity option fees.
    Currently, members who trade FLEX equity options are assessed the 
standard equity options fees delineated in Section II of the Fee 
Schedule. The Exchange is proposing to reduce transaction fees to $0.10 
per contract side for FLEX equity options for all participants, except 
Customers.\4\ Specifically, the Exchange proposes to assess a $.10 
transaction charge on Professionals \5\, Specialists \6\, Registered 
Options Traders \7\, Streaming Quote

[[Page 38164]]

Traders (``SQT'') \8\, Remote Streaming Quote Traders (``RSQT'') \9\, 
Broker-Dealers and Firms. Customers would continue to remain free in 
FLEX equity options as they currently are in equity option products.
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    \4\ At this time the Exchange is not proposing to otherwise 
amend its equity option fees.
    \5\ Rule 1000(b)(14) provides in relevant part: ``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).
    \6\ A Specialist is an Exchange member who is registered as an 
options specialist pursuant to Rule 1020(a).
    \7\ A Registered Option Trader is defined in Exchange Rule 
1014(b) as a regular member or a foreign currency options 
participant 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 a SQT, a RSQT and a Non-SQT, which by 
definition is neither a SQT or a RSQT. See Exchange Rule 1014 (b)(i) 
and (ii).
    \8\ An SQT is an Exchange Registered Options Trader (``ROT'') 
who has received permission from the Exchange to generate and submit 
option quotations electronically through an electronic interface 
with AUTOM via an Exchange approved proprietary electronic quoting 
device in eligible options to which such SQT is assigned. See 
Exchange Rule 1014(b)(ii)(A).
    \9\ An RSQT is 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 through AUTOM in eligible options to which such RSQT 
has been assigned. An RSQT may only submit such quotations 
electronically from off the floor of the Exchange. See Exchange Rule 
1014(b)(ii)(B).
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    The Exchange currently waives the Firm equity options transaction 
fees for members executing facilitation orders pursuant to Exchange 
Rule 1064 when such members are trading in their own proprietary 
account.\10\ Similar to the equity option fees, which are currently 
subject to the aforementioned waiver, the Exchange would continue to 
apply the waiver to members executing facilitation orders pursuant to 
Exchange Rule 1064 to FLEX equity option transactions.
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    \10\ The waiver does not apply to orders where a member is 
acting as agent on behalf of a non-member. See Securities Exchange 
Act Release No. 60477 (August 11, 2009), 74 FR 41777 (August 18, 
2009) (SR-Phlx-2009-67).
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    While changes to the Exchange's Fee Schedule pursuant to this 
proposal are effective upon filing, the Exchange has designated this 
proposal to be effective for trades settling on or after July 1, 2010.
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. The Exchange believes that 
the proposed fees for FLEX options are equitable and reasonable because 
all participants will equally be assessed $.10 per contract and 
Customers will continue to remain free for equity options transactions 
executed pursuant to Exchange Rule 1079.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
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    Additionally, the Exchange's proposal to extend the current waiver 
for members executing facilitation orders pursuant to Exchange Rule 
1064 to FLEX equity options is reasonable and equitable because it 
would continue to allow members the benefit of a waiver they receive 
today.

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 \13\ and paragraph (f)(2) of Rule 19b-4 \14\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission may summarily abrogate 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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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 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-2010-87 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2010-87. 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 publicly available. All 
submissions should refer to File Number SR-Phlx-2010-87 and should be 
submitted on or before July 22, 2010.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-15996 Filed 6-30-10; 8:45 am]
BILLING CODE 8010-01-P