Document ID: SEC-2011-0557-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2011-04-14T04:00Z

[Federal Register Volume 76, Number 72 (Thursday, April 14, 2011)]
[Notices]
[Pages 21080-21081]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-8924]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64265; File No. SR-Phlx-2011-43]

 Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC Relating 
to Permit Fees

April 8, 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 April 1, 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 the Exchange's Fee Schedule to waive 
Permit Fees for existing Exchange members or member organizations that 
cease to conduct an options business, but continue to conduct an 
equities business.
    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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to extend the waiver of 
Permit Fees to existing members or member organizations that cease to 
conduct an options business on Phlx XL II,\3\ but continue to conduct 
business on NASDAQ OMX PSX (``PSX'') \4\ under a market participant 
identifier (``MPID'') \5\ registered to the member or member 
organization. The Exchange is proposing this waiver to incentivize 
existing members and member organizations to continue to transact an 
equities business at the Exchange.
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    \3\ Phlx XL II is the Exchange's electronic options trading 
platform.
    \4\ PSX is the Exchange's cash equities market electronic 
trading platform.
    \5\ An MPID is a four-letter code used by a member to categorize 
its trading activity for a specific purpose.
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    The Exchange currently assesses members and member organizations 
who are transacting business on the Exchange a Permit Fee of $1,100 per 
month. The Exchange assesses members and member organizations who are 
not transacting business on the Exchange a Permit Fee of $7,500 per 
month. A member or member organization would not be assessed the $7,500 
Permit Fee for not transacting business on the Exchange if that member 
is either: (i) Solely a PSX Participant or (ii) engaged in any options 
business at the Exchange in a particular month. If the Exchange member 
or member organization meets the exemption criteria related to the 
$7,500 Permit Fee, the member or member organization would be assessed 
the $1,100 Permit Fee. In addition, a member or member organization 
that sponsors an options participant \6\ would pay an additional Permit 
Fee for each sponsored options participant.\7\
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    \6\ See Exchange Rule 1094 titled Sponsored Participants. A 
Sponsored Participant may obtain authorized access to the Exchange 
only if such access is authorized in advance by one or more 
Sponsoring Member Organizations. Sponsored Participants must enter 
into and maintain participant agreements with one or more Sponsoring 
Member Organizations establishing a proper relationship(s) and 
account(s) through which the Sponsored Participant may trade on the 
Exchange.
    \7\ See Securities Exchange Act Release No. 63569 (December 17, 
2010), 75 FR 81323 (December 27, 2010) (SR-Phlx-2010-178).
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    At the time PSX began operations in October 2010, the Exchange 
filed a rule change to waive the Application Fee, Initiation Fee, 
Permit Fee and Account Fee for applicants applying to participate in 
PSX (``October 2010 Rule Change'').\8\ The October 2010 Rule Change 
applied the waivers to new Exchange members applying solely to 
participate in PSX.\9\ Also, the October 2010 Rule Change did not apply 
the waivers to an applicant seeking approval to participate solely in 
the options market, or to an applicant seeking to participate in both 
the equities and the options markets.\10\ Finally, the October 2010 
Rule Change did not apply the waivers to members or member 
organizations that ceased their options operations, but remained solely 
as PSX Participants.
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    \8\ See Securities Exchange Act Release No. 63351 (November 19, 
2010), 75 FR 73140 (November 29, 2010) (SR-Phlx-2010-54).
    \9\ See Securities Exchange Act Release No. 63351 (November 19, 
2010), 75 FR 73140 (November 29, 2010) (SR-Phlx-2010-54).
    \10\ See Securities Exchange Act Release No. 63351 (November 19, 
2010), 75 FR 73140 (November 29, 2010) (SR-Phlx-2010-54).
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    This filing proposes to extend the October 2010 Rule Change waiver 
of the Permit Fee to those Exchange members and member organizations 
that cease an options business, but continue to conduct an equities 
business.\11\
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    \11\ These members and member organizations would not be 
assessed an Application Fee or Initiation Fee because they are 
already Exchange members or member organizations and have previously 
paid those fees. In addition, the monthly Account Fee would not be 
applicable to PSX Participants as MPIDs are used to identify member 
firms' participation, not account numbers.

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[[Page 21081]]

2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \12\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \13\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members and other persons using its 
facilities.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable to lower fees as an 
incentive for existing Exchange members and member organizations to 
continue to transact business on PSX, even after closing their options 
operations.
    The Exchange believes that the proposal is equitable because the 
waiver applies uniformly to any existing members and member 
organizations that cease options trading on the Exchange, but determine 
to remain active PSX Participants.

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.\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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2011-43 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-2011-43. 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 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-2011-43 and should be 
submitted on or before May 5, 2011.

    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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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-8924 Filed 4-13-11; 8:45 am]
BILLING CODE 8011-01-P