Document ID: SEC-2010-0411-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2010-03-18T04:00Z

[Federal Register: March 18, 2010 (Volume 75, Number 52)]
[Notices]               
[Page 13187-13189]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18mr10-116]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61685; File No. SR-Phlx-2010-39]

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

March 10, 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 March 1, 2010, NASDAQ OMX PHLX, Inc. (``Phlx'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II and III below, which 
Items have been prepared by the Exchange. Phlx has designated this 
proposal as one establishing or changing a member due, fee, or other 
charge imposed under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 
19b-4(f)(2) thereunder,\4\ which renders the proposal effective upon 
filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to: (i) Increase the options transaction 
charge for Registered Options Traders (``ROTs'') and Specialists to 
$.22; (ii) increase the Options Surcharge in options on the Russell 
2000[reg] Index (the ``Full Value Russell Index'' or ``RUT''), options 
on the one-tenth value Russell 2000[reg] Index \5\

[[Page 13188]]

(the ``Reduced Value Russell Index'' or ``RMN''), options on the Nasdaq 
100 Index \6\ traded under the symbol NDX (``NDX'') and options on the 
one-tenth value of the Nasdaq 100 Index traded under the symbol MNX 
(``MNX'') to $.15 for ROTs, Specialists, Firms and Broker-Dealers; 
(iii) amend its Monthly Cap on equity options transaction fees to 
$650,000; (iv) amend the Firm Related Equity Option Cap to $75,000; (v) 
increase the U.S. Dollar-Settled Foreign Currency Options transaction 
charges to $.30 per contract; and (vi) increase the Real-Time Risk 
Management Fee to $.003 per contract.
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    \5\ Russell 2000[supreg] is a trademark and service mark of the 
Frank Russell Company, used under license. Neither Frank Russell 
Company's publication of the Russell Indexes nor its licensing of 
its trademarks for use in connection with securities or other 
financial products derived from a Russell Index in any way suggests 
or implies a representation or opinion by Frank Russell Company as 
to the attractiveness of investment in any securities or other 
financial products based upon or derived from any Russell Index. 
Frank Russell Company is not the issuer of any such securities or 
other financial products and makes no express or implied warranties 
of merchantability or fitness for any particular purpose with 
respect to any Russell Index or any data included or reflected 
therein, nor as to results to be obtained by any person or any 
entity from the use of the Russell Index or any data included or 
reflected therein.
    \6\ NASDAQ(R), NASDAQ-100(R) and NASDAQ-100 Index(R) are 
registered trademarks of The NASDAQ OMX Group, Inc. (which with its 
affiliates are the ``Corporations'') and are licensed for use by 
NASDAQ OMX PHLX, Inc. in connection with the trading of options 
products based on the NASDAQ-100 Index(R). The options products have 
not been passed on by the Corporations as to their legality or 
suitability. The options products are not issued, endorsed, sold, or 
promoted by the Corporations. The Corporations make no warranties 
and bear no liability with respect to the options products.
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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 operative for trades settling on or after March 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
    Generally, the purpose of the proposed rule change is to update the 
Exchange's Fee Schedule by amending existing fees. The Exchange 
believes that the increases are necessary for the Exchange to remain 
competitive.
Equity Options Fees
    The Exchange proposes increasing the options transaction charge for 
Registered Options Traders (``ROTs'') and specialists to $.22. 
Currently, the Exchange assesses a per contract fee of $.21 on ROTs 
(on-floor) and specialists.\7\ The Exchange also proposes amending the 
Options Surcharge in RUT, RMN, MNX and NDX to increase the current fee 
of $.10 per contract to $.15 per contract for ROTs (on-floor), 
specialists, Firms and Broker-Dealers.
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    \7\ This fee is subject to a Monthly Cap of $750,000.
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    The Exchange proposes to decrease the current Monthly Cap on equity 
options transactions from $750,000 to $650,000. The Monthly Cap is 
currently applicable to ROTs \8\ and specialists.\9\ The Exchange 
believes that by reducing the Monthly Cap, a greater number of members 
may benefit from the Monthly Cap and the Exchange will attract 
additional order flow.\10\
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    \8\ A ROT is 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.
    \9\ This Monthly Cap is not applicable to electronic trading in 
Standard and Poor's Depositary Receipts/SPDRs (``SPY''), PowerShares 
QQQ Trust (``QQQQ'')[reg]; Ishares Russell 2000 (``IWM'') and 
Citigroup Inc. (``C'').
    \10\ The Exchange recently amended the calculation of the 
Monthly Cap by aggregating the trading activity of separate ROTs and 
specialist member organizations if there is at least 75% common 
ownership between the member organizations as reflected on each 
member organizations' Form BD, Schedule A. See Securities Exchange 
Act Release N. 61558 (February 22, 2010) (SR-Phlx-2010-16).
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    The Exchange also proposes to decrease the Firm Related Equity 
Option Cap from $85,000 to $75,000 per month. The Exchange recently 
increased the Firm Related Equity Option Cap.\11\ Similarly, the 
Exchange believes that by reducing the Firm Related Equity Option Cap 
additional members will benefit from the cap.\12\
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    \11\ See SR-Phlx-2010-25.
    \12\ This Firm Related Equity Option Cap is not applicable to 
electronic trading in Standard and Poor's Depositary Receipts/SPDRs 
(``SPY''), PowerShares QQQ Trust (``QQQQ'')[reg]; Ishares Russell 
2000 (``IWM'') and Citigroup Inc. (``C'').
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U.S. Dollar-Settled Foreign Currency Option Fees
    The Exchange proposes to increase the Options Transaction Charge in 
U.S. Dollar-Settled Foreign Currency Options Fees for ROTs (on-floor), 
specialists and Firms from $.24 to $.30.
Real-Time Risk Management Fee
    The Exchange proposes to increase the Real-Time Risk Management Fee 
to $.003 per contract. The current fee is $.0025 per contract. This fee 
is assessed on members who receive information on a real-time basis.
    The proposed changes to the Fee Schedule will be effective for 
transactions settling on or after March 1, 2010.
2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of 
fees is consistent with Section 6(b) of the Act \13\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \14\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members. The Exchange believes the 
increases to the Equity Options Fees are equitable in that ROTs, 
specialists, Firms and Broker Dealers will be charged the same rate 
with respect to the Options Surcharge. The increase to the Options 
Transaction Charge for ROTs and specialists is offset by other 
amendments to reduce caps. The Exchange believes that members will 
benefit from the reduced Monthly Cap and Firm Related Equity Option 
Cap. The amendments to the U.S. Dollar-Settled Foreign Currency Options 
Fees are consistent for ROTs (on-floor), Specialists and Firms. Also, 
the Real-Time Risk Management fee will apply to all members alike.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4).
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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.

[[Page 13189]]

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 \15\ and paragraph (f)(2) of Rule 19b-4 \16\ 
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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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 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-2010-39 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2010-39. 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-2010-39 and should be 
submitted on or before April 8, 2010.

    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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5910 Filed 3-17-10; 8:45 am]
BILLING CODE 8011-01-P