Document ID: SEC-2010-0610-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Fees and Rebates for Adding and Removing Liquidity
Posted Date: 2010-04-23T04:00Z

[Federal Register Volume 75, Number 78 (Friday, April 23, 2010)]
[Notices]
[Pages 21382-21384]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-9398]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61933; File No. SR-Phlx-2010-56]

Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Fees and Rebates for Adding and Removing Liquidity

April 16, 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 April 1, 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 amend its fees and rebates for adding and 
removing liquidity by establishing that professional orders will not be 
assessed a charge for electronic auctions.
    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 at the Commission's Public

[[Page 21383]]

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 amend the fees and 
rebates for adding and removing liquidity to clarify the applicability 
of these fees to Professionals in an electronic auction.
    The Exchange recently amended its rules to give certain non-broker-
dealer orders the same priority as broker-dealer orders.\3\ Also, the 
Exchange recently filed a proposed rule change to amend its Fee 
Schedule to adopt a new category of fees, ``professional.'' \4\
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    \3\ See Securities Exchange Act Release No. 61802 (March 30, 
2010) (SR-Phlx-2010-05).
    \4\ See SR-Phlx-2010-51 and SR-Phlx-2010-55.
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    The Exchange defines a ``professional'' as 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) (hereinafter 
``Professional'').\5\
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    \5\ A Professional will be treated in the same manner as an off-
floor broker-dealer for purposes of Rules 1014(g)(except with 
respect to all-or-none orders, which will be treated like customer 
orders), 1033(e), 1064.02 (except professional orders will be 
considered customer orders subject to facilitation), and 1080.08 as 
well as Options Floor Procedure Advices B-6, B-11 and F-5. Member 
organizations must indicate whether orders are for professionals.
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    The Exchange proposes to amend its fees and rebates for adding and 
removing liquidity, known as a ``maker/taker'' model in order that 
Professionals will not be assessed a charge for electronic auctions 
which include, without limitation, the Complex Order Live Auction 
(``COLA''), and Quote and Market Exhaust auctions. Currently, 
electronic auctions are free to Customers, Directed Participants, 
Specialists, ROTs, SQTs and RSQTs. Firms and broker-dealers are 
assessed the appropriate charge for removing liquidity.
2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of 
fees is consistent with Section 6(b) of the Act \6\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \7\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members. The Exchange believes that 
Professionals should not be assessed the fees and rebates for adding 
and removing liquidity in electronic auctions as Specialists, ROTs, 
SQTs and RSQTs are not assessed such fees in electronic auctions.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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    The impact of the proposal upon the net fees paid by a particular 
market participant will depend on a number of variables, most important 
of which will be its propensity to add or remove liquidity in the 
underlying symbols. The Exchange operates in a highly competitive 
market in which market participants can readily direct order flow to 
another exchange if they deem fee levels at a particular exchange to be 
excessive. The Exchange believes that the proposed fees it charges for 
options overlying the various symbols remain competitive with fees 
charged by other exchanges and, therefore, continue to be reasonable 
and equitably allocated to those members that opt to direct orders to 
the Exchange rather than to a competing exchange.

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 \8\ and paragraph (f)(2) of Rule 19b-4 \9\ 
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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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 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-2010-56 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-2010-56. 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

[[Page 21384]]

should refer to File Number SR-Phlx-2010-56 and should be submitted on 
or before May 14, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-9398 Filed 4-22-10; 8:45 am]
BILLING CODE 8011-01-P