Document ID: SEC-2012-0069-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2012-01-17T05:00Z

[Federal Register Volume 77, Number 10 (Tuesday, January 17, 2012)]
[Notices]
[Pages 2328-2329]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-637]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66122; File No. SR-Phlx-2011-186]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
Fees Applicable to the Trading of NMS Stocks Through NASDAQ OMX PSX

January 10, 2012.
    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 December 28, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify the fees applicable to trading on 
the NASDAQ OMX PSX system (``PSX''). The text of the proposed rule 
change is available on the Exchange's Web site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/Filings/, at the 
principal office of the Exchange, on the Commission's Web site at 
http://www.sec.gov, 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to modify order routing fees applicable 
to the use of PSX's PMOP routing strategy. PMOP is a routing option 
under which an incoming order routes only to Protected Quotations (as 
defined in SEC Rule 600 under Regulation NMS),\3\ and only for the 
displayed size of such quotes. If shares remain unexecuted after 
routing, they are posted to the PSX book and do not route out again. 
Currently, the Exchange charges $0.0025 per share executed with respect 
to PMOP orders that execute at the New York Stock Exchange (``NYSE'') 
and $0.0035 per

[[Page 2329]]

share executed with respect to PMOP orders that execute at other 
trading venues. The Exchange is proposing to reduce the fee for PMOP 
orders that execute at other venues to $0.0031 per share executed.
---------------------------------------------------------------------------

    \3\ 17 CFR 242.600.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\4\ in general, and with 
Sections 6(b)(4) of the Act,\5\ in particular, in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among members and issuers and other persons using any facility or 
system which Phlx operates or controls. In general, routing fees are 
reasonable because they seek to recoup the cost of the execution on the 
other venue, which is generally borne by the order router and, 
ultimately, the routing exchange. The proposed change reflects a 
reduction in fees in order to make the routing services of PSX more 
attractive to potential customers.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange also believes that the proposed change is equitable. 
All similarly situated members are subject to the same fee structure, 
and access to Phlx is offered on fair and non-discriminatory terms; 
specifically, the same routing fee, credit or pass through fee applies 
to any participant and does not differ based on user type (e.g., 
customer or broker-dealer). The Exchange further believes that the fee 
for the PMOP routing strategy is equitable because PMOP is a complex 
routing strategy that it involves ascertaining all venues displaying a 
protected quote and the simultaneous routing of orders to the displayed 
size of such quotes; accordingly, the Exchange believes that charging a 
higher fee with respect to the strategy as compared with other 
strategies is equitable. Nevertheless, the change will reduce the 
difference between PMOP fees and fees for the use of other strategies, 
thereby enhancing the competiveness of the Exchange's routing services.
    Furthermore, the new routing fees are reasonable and equitable in 
that the decision to send routable orders and to use PHLX as a router 
is entirely voluntarily; members can avail themselves of numerous other 
means of directing orders to other venues, including becoming members 
of those markets or using any of a number of competitive routing 
services offered by other exchanges and brokers.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. 
Because the market for order execution and routing is extremely 
competitive, members may readily favor the Exchange's competitors in 
making order routing decisions to the extent that they deem PSX's fees 
to be excessive. Moreover, the Exchange believes that the proposal will 
enhance competition through its use of reduced fees to draw greater 
order flow to PSX.

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.\6\ 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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 No. SR-Phlx-2011-186 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 No. SR-Phlx-2011-186. 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 
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 available publicly. All 
submissions should refer to File No. SR-Phlx-2011-186 and should be 
submitted on or before February 7, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-637 Filed 1-13-12; 8:45 am]
BILLING CODE 8011-01-P