Document ID: SEC-2012-0791-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2012-05-18T04:00Z

[Federal Register Volume 77, Number 97 (Friday, May 18, 2012)]
[Notices]
[Pages 29726-29730]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12036]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66985; File No. SR-Phlx-2012-61]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Rebates and Fees for Adding and Removing Liquidity in Select Symbols 
and Equity Options Fees

May 14, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given 
that, on May 1, 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.
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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 Section I, entitled ``Rebates and 
Fees for Adding and Removing Liquidity in Select Symbols'' and Section 
II, entitled ``Equity Options Fees'' \3\ to amend various fees and 
rebates within those sections.
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    \3\ Equity options fees include options overlying equities, 
ETFs, ETNs, indexes and HOLDRS which are Multiply Listed, except 
SOX, HGX and OSX.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.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 Exchange proposes changes to Sections I and II of the 
Exchange's Pricing Schedule to: (1) Amend the Monthly Firm Fee Cap; (2) 
eliminate a Service Fee applicable to Firms who have reached the 
Monthly Firm Fee Cap; and (3) amend Qualified Contingent Cross fees and 
rebates. The Exchange also proposes to amend Section II to: (1) Adopt a 
fee reduction for Firm electronic orders in Penny and non-Penny Pilot 
Options; \4\ and (2) amend the Customer rebate paid for certain 
electronically-delivered Customer orders. The Exchange believes that 
the amendments described above would incentivize Firms to transact a 
greater number of orders at the Exchange by eliminating the Service Fee 
applicable to Firms, reducing the QCC Service Fee and providing an 
opportunity to reduce Section II fees in lieu of the elimination of 
electronic orders from the Monthly Firm Fee Cap. The Exchange believes 
that the amended rebates applicable to QCC Orders would continue to 
incentivize members to transact QCC Orders. Finally, the Exchange is 
amending the Customer rebates on certain Penny Pilot and non-Penny 
Pilot Orders to attract additional Customer order flow, which should 
benefit all market participants.
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    \4\ Non-Penny refers to options classes not in the Penny Pilot. 
The Penny Pilot was established in January 2007; and in October 
2009, it was expanded and extended through June 30, 2012. See 
Securities Exchange Act Release Nos. 55153 (January 23, 2007), 72 FR 
4553 (January 31, 2007) (SR-Phlx-2006-74) (notice of filing and 
approval order establishing Penny Pilot); 60873 (October 23, 2009), 
74 FR 56675 (November 2, 2009) (SR-Phlx-2009-91) (notice of filing 
and immediate effectiveness expanding and extending Penny Pilot); 
60966 (November 9, 2009), 74 FR 59331 (November 17, 2009) (SR-Phlx-
2009-94) (notice of filing and immediate effectiveness adding 
seventy-five classes to Penny Pilot); 61454 (February 1, 2010), 75 
FR 6233 (February 8, 2010) (SR-Phlx-2010-12) (notice of filing and 
immediate effectiveness adding seventy-five classes to Penny Pilot); 
62028 (May 4, 2010), 75 FR 25890 (May 10, 2010) (SR-Phlx-2010-65) 
(notice of filing and immediate effectiveness adding seventy-five 
classes to Penny Pilot); 62616 (July 30, 2010), 75 FR 47664 (August 
6, 2010) (SR-Phlx-2010-103) (notice of filing and immediate 
effectiveness adding seventy-five classes to Penny Pilot); 63395 
(November 30, 2010), 75 FR 76062 (December 7, 2010) (SR-Phlx-2010-
167) (notice of filing and immediate effectiveness extending the 
Penny Pilot); and 65976 (December 15, 2011), 76 FR 79247 (December 
21, 2011) (SR-Phlx-2011-172) (notice of filing and immediate 
effectiveness extending the Penny Pilot). See also Exchange Rule 
1034.
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Monthly Firm Fee Cap and Service Fee

    Currently, Firms are subject to a maximum fee of $75,000 (``Monthly 
Firm Fee Cap''). Firm equity option transaction fees and QCC 
Transaction Fees, in the aggregate, for one billing month may not 
exceed the Monthly Firm Fee Cap per member organization when such 
members are trading in their own proprietary account. All dividend,\5\ 
merger \6\ or short stock interest strategy \7\ and executions subject 
to the Reversal and Conversion Cap \8\ are excluded from the Monthly 
Firm Fee Cap.\9\ The Firm equity options transaction fees are waived 
for members executing facilitation orders pursuant to Exchange Rule 
1064 when such members are trading in their own proprietary account 
(including FLEX and Cabinet equity options transaction fees).\10\ QCC 
Transaction Fees are included in the calculation of the Monthly Firm 
Fee Cap.
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    \5\ A dividend strategy is defined as transactions done to 
achieve a dividend arbitrage involving the purchase, sale and 
exercise of in-the-money options of the same class, executed the 
first business day prior to the date on which the underlying stock 
goes ex-dividend. See Section II of the Pricing Schedule.
    \6\ A merger strategy is defined as transactions done to achieve 
a merger arbitrage involving the purchase, sale and exercise of 
options of the same class and expiration date, executed the first 
business day prior to the date on which shareholders of record are 
required to elect their respective form of consideration, i.e., cash 
or stock. See Section II of the Pricing Schedule.
    \7\ A short stock interest strategy is defined as transactions 
done to achieve a short stock interest arbitrage involving the 
purchase, sale and exercise of in-the-money options of the same 
class. See Section II of the Pricing Schedule.
    \8\ Market Maker, Professional, Firm and Broker-Dealer equity 
options transaction fees are capped at $1,000 per day for reversal 
and conversion strategies executed on the same trading day in the 
same options class.
    \9\ The Monthly Firm Fee Cap is applicable to both Sections I 
and II of the Pricing Schedule.
    \10\ Member organizations must notify the Exchange in writing of 
all accounts in which the member is not trading in its own 
proprietary account.
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    The Exchange proposes to amend the Monthly Firm Fee Cap to exclude 
electronic orders. In other words, only Firm non-electronic equity 
option transaction fees and QCC Transaction Fees (electronic and non-
electronic) in the aggregate, for one billing month may not exceed the 
Monthly Firm Fee Cap per member organization when such members are 
trading in their own proprietary account. The exclusions and waivers 
currently noted in the Pricing

[[Page 29727]]

Schedule related to the Monthly Firm Fee Cap would remain without 
change.
    Additionally, the Exchange currently assesses Firms that (i) are on 
the contra-side of an electronically-delivered and executed Customer 
order; and (ii) have reached the Monthly Firm Fee Cap a $0.07 per 
contract fee, excluding PIXL Orders.\11\ The Exchange proposes to 
eliminate this $0.07 per contract Service Fee as applicable to the 
Monthly Firm Fee Cap.
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    \11\ ``A member may electronically submit for execution an order 
it represents as agent on behalf of a public customer, broker-
dealer, or any other entity (``PIXL Order'') against principal 
interest or against any other order (except as provided in Rule 
1080(n)(i)(E)) it represents as agent (``Initiating Order'') 
provided it submits the PIXL order for electronic execution into the 
PIXL Auction (``Auction'') pursuant to Rule 1080. See Exchange Rule 
1080(n).
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Qualified Contingent Cross Orders

    Currently, the Exchange assesses Market Makers,\12\ 
Professionals,\13\ Firms and Broker-Dealers a QCC Transaction Fee of 
$0.20 per contract. QCC Transaction Fees apply to both electronic QCC 
Orders (``eQCC'') \14\ and Floor QCC Orders \15\ (collectively ``QCC 
Orders''). Today, the Exchange offers a rebate of $0.07 per contract on 
all qualifying executed QCC orders up to 1,000,000 contracts in a 
month, except where the transaction is either: (i) Customer-to-
Customer; or (ii) a dividend, merger or short stock interest strategy 
and executions subject to the Reversal and Conversion Cap. If a member 
exceeds 1,000,000 contracts in a month of qualifying executed QCC 
Orders, a $0.11 rebate is paid on all qualifying executed QCC Orders, 
as defined in Exchange Rule 1080(o) and Floor QCC Orders, as defined in 
1064(e), in that month.
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    \12\ A ``Market Maker'' includes Specialists (see Rule 1020) and 
Registered Options Traders (``ROTs'') (Rule 1014(b)(i) and (ii), 
which includes Streaming Quote Traders (``SQTs'') (see Rule 
1014(b)(ii)(A)) and Remote Streaming Quote Traders (``RSQTs'') (see 
Rule 1014(b)(ii)(B). Directed Participants are also Market Makers.
    \13\ 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). See Rule 
1000(b)(14).
    \14\ A QCC Order is comprised of an order to buy or sell at 
least 1000 contracts that is identified as being part of a qualified 
contingent trade, as that term is defined in Rule 1080(o)(3), 
coupled with a contra-side order to buy or sell an equal number of 
contracts. The QCC Order must be executed at a price at or between 
the National Best Bid and Offer and be rejected if a Customer order 
is resting on the Exchange book at the same price. A QCC Order shall 
only be submitted electronically from off the floor to the PHLX XL 
II System. See Rule 1080(o). See also Securities Exchange Act 
Release No. 64249 (April 7, 2011), 76 FR 20773 (April 13, 2011) (SR-
Phlx-2011-47) (a rule change to establish a QCC Order to facilitate 
the execution of stock/option Qualified Contingent Trades (``QCTs'') 
that satisfy the requirements of the trade through exemption in 
connection with Rule 611(d) of Regulation NMS).
    \15\ A Floor QCC Order must: (i) Be for at least 1,000 
contracts, (ii) meet the six requirements of Rule 1080(o)(3) which 
are modeled on the QCT Exemption, (iii) be executed at a price at or 
between the National Best Bid and Offer (``NBBO''); and (iv) be 
rejected if a Customer order is resting on the Exchange book at the 
same price. In order to satisfy the 1,000-contract requirement, a 
Floor QCC Order must be for 1,000 contracts and could not be, for 
example, two 500-contract orders or two 500-contract legs. See Rule 
1064(e). See also Securities Exchange Act Release No. 64688 (June 
16, 2011), 76 FR 36606 (June 22, 2011) (SR-Phlx-2011-56).
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    The Exchange proposes to amend the current QCC Order rebates of 
$0.07 per contract and $0.11 per contract by eliminating those rebates 
and replacing those rebates with a tiered rebate schedule as follows:

------------------------------------------------------------------------
                                                              Rebate per
                         Threshold                             contract
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0 to 199,999 contracts in a month..........................        $0.00
200,000 to 499,999 contracts in a month....................         0.01
500,000 to 699,999 contracts in a month....................         0.05
700,000 to 999,999 contracts in a month....................         0.07
Over 1,000,000 contracts in a month........................         0.11
------------------------------------------------------------------------

    The exclusions noted in the Pricing Schedule applicable to QCC 
rebates would continue to apply.
    Additionally, the Exchange proposes to amend the current QCC 
Service Fee applicable to the Monthly Firm Fee Cap. Currently, a 
Service Fee of $0.07 per side is assessed once a Firm has reached the 
Monthly Market Maker Cap. This $0.07 Service Fee will apply once a Firm 
has reached the Monthly Firm Fee Cap. This $0.07 Service Fee will apply 
to every contract side of the QCC Order, as defined in Exchange Rule 
1080(o) and Floor QCC Order, as defined in Exchange Rule 1064(e), after 
a Firm has reached the Monthly Firm Fee Cap.\16\ The Exchange proposes 
to decrease this Service Fee from $0.07 per side to $0.01 per side.
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    \16\ The Service Fee is not assessed to a Firm that does not 
reach the Monthly Firm Fee Cap in a particular calendar month.
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Firm Electronic Options Transaction Charges in Penny Pilot and Non-
Penny Pilot Options

    The Exchange proposes to decrease the Firm electronic Options 
Transaction Charges in Penny Pilot and non-Penny Pilot Options by 
reducing the applicable Options Transactions Charges to $.11 per 
contract if a Firm executed greater than 750,000 electronically-
delivered contracts a month in Penny Pilot or non-Penny Pilot Options, 
excluding Select Symbols. Currently Firms are assessed an electronic 
Options Transaction Charge for Penny Pilot options of $.25 per contract 
and an electronic Options Transaction Charge for non-Penny Pilot 
options of $.40 per contract. For example, if a Firm transacted greater 
than 750,000 contracts a month in Penny Pilot or non-Penny Pilot 
Options, then the Firm would be assessed an Options Transaction Charge 
of $.11 per contract for all Penny Pilot and non-Penny Pilot Options in 
that given month.

Customer Rebate

    The Exchange proposes to amend the applicability of a Customer 
rebate which is offered today for members executing electronically-
delivered Customer orders in Section II of the Pricing Schedule. 
Currently when a member transacts an average daily volume of 50,000 
Customer contracts or greater in a given month the member is entitled 
to a rebate of $0.07 per contract. If the member qualified for the 
$0.07 rebate and added liquidity in a non-Penny Pilot Option the member 
would be eligible for an additional $0.03 per contract rebate for all 
qualifying Customer orders in a given month.\17\
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    \17\ PIXL Orders and QCC Orders are not eligible for the rebate 
and are excluded from the calculation of the average daily volume.
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    The Exchange proposes to continue to offer a rebate of $.07 per 
contract for members executing electronically-delivered Customer orders 
when a member transacts an average daily volume of 50,000 Customer 
contracts or greater in a given month. The Exchange is proposing to 
amend the applicability of the additional rebate of $0.03 per contract. 
The Exchange proposes to pay the additional rebate of $0.03 per 
contract to members for those electronically-delivered Customer orders 
that qualified for the $0.07 rebate; and added liquidity in a Simple 
order in a non-Penny Pilot Option or added or removed liquidity, 
including auctions, in a Complex Order in a Penny Pilot Option.\18\
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    \18\ Section II rebates and fees apply to both Simple and 
Complex Orders. A Complex Order is any order involving the 
simultaneous purchase and/or sale of two or more different options 
series in the same underlying security, priced at a net debit or 
credit based on the relative prices of the individual components, 
for the same account, for the purpose of executing a particular 
investment strategy. Furthermore, a Complex Order can also be a 
stock-option order, which is an order to buy or sell a stated number 
of units of an underlying stock or exchange-traded fund (``ETF'') 
coupled with the purchase or sale of options contract(s). See 
Exchange Rule 1080, Commentary .08(a)(i).

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[[Page 29728]]

Conforming Amendments

    The Exchange also proposes to amend the Pricing Schedule at Section 
I to amend text related to the Monthly Firm Fee Cap to correspond to 
the amended language in Section II by qualifying that the Monthly Firm 
Fee Cap will apply to non-electronic equity option transactions for 
Section I and Section II symbols as well as QCC electronic and non-
electronic transactions. The Exchange is proposing to delete repetitive 
text in Section II \19\ and simply state that the QCC Transaction fees 
and rebates, defined in Section II, are applicable to Section I.
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    \19\ The Commission notes that the deleted text appeared in 
Section I.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its Pricing 
Schedule is consistent with Section 6(b) of the Act \20\ in general, 
and furthers the objectives of Section 6(b)(4) of the Act \21\ 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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    \20\ 15 U.S.C. 78f(b).
    \21\ 15 U.S.C. 78f(b)(4).
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Monthly Firm Fee Cap, Firm Volume Discount and Service Fees

    The Exchange believes that the proposal to amend the Monthly Firm 
Fee Cap to exclude electronic equity option transactions is reasonable 
because the Exchange seeks to incentivize Firms in other ways that it 
believes would encourage Firms to transact more volume on the Exchange. 
In lieu of offering Firms a cap on electronic equity option transaction 
fees the Exchange is seeking to remain competitive with other options 
exchanges by amending the application of the Monthly Firm Fee Cap and 
reducing the QCC Service Fee \22\ from $0.07 to $0.01 per side. The 
Exchange desires to continue to incentivize Firms to transact 
electronic orders, by providing Firms with an opportunity to pay lower 
fees in Section II of the Pricing Schedule by offering a reduction of 
Firm electronic Options Transaction Charges in Penny Pilot and non-
Penny Pilot Options, provided the Firm has volume greater than 750,000 
electronically-delivered contracts in a month.
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    \22\ The QCC Service Fee is applicable once the Firm has reached 
the Monthly Firm Fee Cap.
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    The Exchange believes that it is equitable and not unfairly 
discriminatory to offer lower transaction fees in Section II of the 
Pricing Schedule, in lieu of a cap on electronic equity option 
transactions, and to continue to offer the cap for non-electronic 
transactions, including electronic and non-electronic QCC Transactions. 
Firms will continue to be rewarded in terms of a cap on non-electronic 
equity option transactions and QCC Transactions, which represents the 
majority of Firm executions and would be able to achieve potentially 
greater per contract discounts from the proposed incentive offered for 
equity option transactions in Section II. Further, the Exchange 
believes that it is equitable and not unfairly discriminatory to 
exclude Firm electronic equity option transactions from the Monthly 
Firm Fee Cap, because a Firm transacting electronic orders would still 
be able to include electronic (and non-electronic) QCC transactions in 
the Monthly Firm Fee Cap and would also have the opportunity to reduce 
Section II Firm electronic Options Transaction Charges in Penny Pilot 
and non-Penny Pilot Options if the Firm achieved a certain volume in a 
month.
    The Exchange believes that its proposal to reduce the QCC Service 
Fee applicable to the Monthly Firm Fee Cap, once a Firm has reached the 
Monthly Firm Fee Cap, from $0.07 per side to $0.01 per contract side is 
reasonable because the Exchange will no longer apply the Monthly Firm 
Fee Cap as broadly, including both electronic and non-electronic equity 
option orders, but rather will only apply the Cap to non-electronic 
equity option transactions and QCC Transactions. The Exchange does not 
believe it is necessary to assess a $0.07 per side Service Fee on QCC 
Transactions at this time to recoup costs, but instead believes it is 
reasonable to assess Firms a $0.01 per contract QCC Service Fee, once 
Firms have reach the Monthly Firm Fee Cap, in order to recoup costs. 
This fee is comparable to the QCC Service Fee assessed by the 
International Securities Exchange, LLC (``ISE'').\23\
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    \23\ See ISE's Fee Schedule.
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    Further, the Exchange believes that its proposal to reduce the QCC 
Service Fee applicable to the Monthly Firm Fee Cap from $0.07 per side 
to $0.01 per contract side, once a Firm has reached the Monthly Firm 
Fee Cap, is equitable and not unfairly discriminatory because the 
reduction will be uniformly applied to all Firms transacting QCC Orders 
and exceeding the Monthly Firm Fee Cap. The QCC Service Fee of $0.01 
per side is proposed to recoup costs incurred by the Exchange to offer 
this capability including trade matching and processing, post trade 
allocation, submission for clearing and customer service activities 
related to trading activity on the Exchange.
    The Exchange believes that reducing the QCC Service Fee applicable 
to the Monthly Firm Fee Cap from $0.07 per side to $0.01 per side, once 
the Firm has reached the Monthly Firm fee Cap is equitable and not 
unfairly discriminatory when compared to the Monthly Market Maker Cap 
because the Monthly Market Maker Cap is applicable to all equity 
options transaction fees and QCC Transaction Fees while the Monthly 
Firm Fee Cap would apply to non-electronic equity option transaction 
fees and QCC Transaction Fees. The corresponding reduction to the QCC 
Service Fee is related to the proposed amendment which would not 
include electronic equity option transaction fees in the Monthly Firm 
Fee Cap.
    Additionally, the Exchange is eliminating the $0.07 Service Fee for 
Firms that are on the contra-side of an electronically-delivered and 
executed Customer order. The Exchange believes that its proposal to 
eliminate the $0.07 Service Fee for Firms that are on the contra-side 
of an electronically-delivered and executed Customer order and have 
reached the Monthly Firm Fee Cap is reasonable because the Exchange is 
amending the applicability of the Monthly Firm Fee Cap to apply to non-
electronic transactions and QCC Transactions, excluding electronic 
equity option transactions.\24\ The Exchange believes that its proposal 
to eliminate the $0.07 Service Fee for Firms that are on the contra-
side of an electronically-delivered and executed Customer order and 
have reached the Monthly Firm Fee Cap is equitable and not unfairly 
discriminatory because it will be uniformly applied to all participants 
that qualify for the Service Fee. Further, the elimination of the 
Service Fee is related to the proposed amendment to exclude electronic 
equity option transaction fees from the Monthly Firm Fee Cap. The 
Exchange believes that eliminating the Service Fee is consistent with 
the proposed amendment to the Monthly Firm Fee Cap and its 
applicability to electronically-delivered orders.
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    \24\ The Commission notes that both electronic and manual QCC 
Transactions are included in the Monthly Firm Fee Cap.
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Qualified Contingent Cross Orders Rebate Program

    The Exchange believes that its proposal to amend the current 
rebates applicable to QCC Orders by replacing the current $0.07 rebate 
for all

[[Page 29729]]

qualifying executed QCC Orders up to 1,000,000 contracts in a month 
with certain exceptions or the $0.11 per contract rebate for all 
qualifying executed QCC Orders over 1,000,000 with a tiered rebate 
schedule for QCC Orders is reasonable because the Exchange believes 
that the tiered schedule would continue to incentivize members. Also, 
the rebate structure for QCC Orders is similar to rebates at ISE.\25\
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    \25\ See ISE's Fee Schedule.
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    The Exchange believes that its proposal to amend the current 
rebates applicable to QCC Orders by replacing the current $0.07 rebate 
for all qualifying executed QCC Orders up to 1,000,000 contracts in a 
month with certain exceptions or the $0.11 per contract rebate for all 
qualifying executed QCC Orders over 1,000,000 with a tiered rebate 
schedule for QCC Orders is equitable and not unfairly discriminatory 
because all market participants transacting QCC Orders would be subject 
to the same rebate schedule.

Customer Rebate

    The Exchange's proposal to amend the applicability of the Section 
II Customer rebate of $0.03 for all orders in that month if the member 
qualified for the $0.07 rebate and also added liquidity in a Simple 
non-Penny Pilot Option or added or removed liquidity in a Complex Order 
Penny Pilot Option (including auctions) is reasonable because this 
proposed amendment broadens the types of Customer orders that are 
potentially eligible for the increased rebate and encourages members to 
transact a greater number of Customer orders, which Customer order flow 
benefits all market participants. Specifically, creating incentives and 
attracting Customer orders to the Exchange benefits all market 
participants through increased liquidity at the Exchange.
    The Exchange's proposal to amend the applicability of the Section 
II Customer rebate of $0.07 for all orders in that month if the member 
qualified for the $0.03 rebate and also added liquidity in a Simple 
non-Penny Pilot Option or added or removed liquidity in a Complex Order 
Penny Pilot Option (including auctions) is equitable and not unfairly 
discriminatory because the rebates would uniformly apply to all 
Customer transactions that meet the criteria for the rebate. Further, 
all market participants may equally qualify for the rebate.

Conforming Amendments

    The Exchange's proposal to conform the text of Section I of the 
Pricing Schedule to reflect amendments to text in Section II of the 
Pricing Schedule is reasonable, equitable and not unfairly 
discriminatory because the amended text would clearly indicate what 
types of fees are included in the Monthly Firm Fee Cap and the 
applicability of the QCC Transaction fees and rebates. The Exchange 
believes that the proposed text clarifies the text of the Pricing 
Schedule.
    The Exchange operates in a highly competitive market, comprised of 
nine exchanges, in which market participants can easily and readily 
direct order flow to competing venues if they deem fee and rebate 
levels at a particular venue to be excessive. Accordingly, the fees 
that are assessed and the rebates paid by the Exchange must remain 
competitive with fees charged and rebates paid by other venues and 
therefore must continue to be reasonable and equitably allocated to 
those members that opt to direct orders to the Exchange rather than 
competing venues.

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.\26\ 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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    \26\ 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 Number SR-Phlx-2012-61 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-2012-61. 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 
10:00 a.m. and 3:00 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-2012-61 and should be 
submitted on or before June 8, 2012.

[[Page 29730]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-12036 Filed 5-17-12; 8:45 am]
BILLING CODE 8011-01-P