[Federal Register Volume 75, Number 83 (Friday, April 30, 2010)]
[Notices]
[Pages 22881-22882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-10029]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61961; File No. SR-Phlx-2010-61]
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
to Fees and Rebates for Adding and Removing Liquidity
April 22, 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 22, 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 amend the fees and rebates for adding and
removing liquidity for options overlying various select symbols.
While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative for transactions settling on or after May 3, 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
The Exchange proposes to amend its current fees and rebates for
adding and removing liquidity by eliminating the fees for adding
liquidity. Specifically, the Exchange proposes to eliminate the current
$0.45 Firm and $0.45 Broker-Dealer per-contract fees for adding
liquidity.
The Exchange currently assesses a per-contract transaction charge
in various select symbols \5\ on six different categories of market
participants that submit orders and/or quotes that remove, or ``take,''
liquidity from the Exchange: (i) Specialists, Registered Options
Traders (``ROTs''), Streaming Quote Traders (``SQTs'') \6\ and Remote
Streaming Quote Traders (``RSQTs''); \7\ (ii) customers; \8\ (iii)
specialists, SQTs and RSQTs that receive Directed Orders (``Directed
Participants'' \9\ or ``Directed Specialists, RSQTs, or SQTs'' \10\);
(iv) Firms; (v) broker-dealers; and (vi) Professionals.\11\ The current
per-contract transaction charge depends on the category of market
participant submitting an order or quote to the Exchange that removes
liquidity.
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\5\ The fees and rebates for adding and removing liquidity are
applicable to executions in options overlying AA, AAPL, AIG, ALL,
AMD, AMR, AMZN, BAC, C, CAT, CSCO, DELL, DIA, DRYS, EK, F, FAS, FAZ,
GDX, GE, GLD, GS, INTC, IWM, JPM, LVS, MGM, MSFT, MU, NEM, PALM,
PFE, POT, QCOM, QQQQ, RIMM, SBUX, SKF, SLV, SMH, SNDK, SPY, T, UAUA,
UNG, USO, UYG, VZ, WYNN, X and XLF (``Symbols'').
\6\ An SQT is an Exchange Registered Options Trader (``ROT'')
who has received permission from the Exchange to generate and submit
option quotations electronically through an electronic interface
with AUTOM via an Exchange approved proprietary electronic quoting
device in eligible options to which such SQT is assigned. See
Exchange Rule 1014(b)(ii)(A).
\7\ An RSQT is an ROT that is a member or member organization
with no physical trading floor presence who has received permission
from the Exchange to generate and submit option quotations
electronically through AUTOM in eligible options to which such RSQT
has been assigned. An RSQT may only submit such quotations
electronically from off the floor of the Exchange. See Exchange Rule
1014(b)(ii)(B).
\8\ This applies to all customer orders, directed and non-
directed.
\9\ For purposes of the fees and rebates related to adding and
removing liquidity, A Directed Participant is a Specialist, SQT, or
RSQT that executes a customer order that is directed to them by an
Order Flow Provider and is executed electronically on PHLX XL II.
\10\ See Exchange Rule 1080(l), `` * * * The term `Directed
Specialist, RSQT, or SQT' means a specialist, RSQT, or SQT that
receives a Directed Order.'' A Directed Participant has a higher
quoting requirement as compared with a specialist, SQT or RSQT who
is not acting as a Directed Participant. See Exchange Rule 1014.
\11\ 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'').
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The per-contract transaction charges that are currently assessed on
participants who submit proprietary quotes and/or orders that remove
liquidity in the applicable Symbols are, by category:
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Charge (per
Category contract)
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Customer.............................................. $0.25
Directed Participants................................. 0.30
Specialist, ROT, SQT, RSQT............................ 0.32
Firms................................................. 0.45
Broker-Dealers........................................ 0.45
Professional.......................................... 0.40
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The Exchange also currently assesses a per-contract rebate relating
to transaction charges for orders or quotations that add liquidity in
the select Symbols. The amount of the rebate depends on the category of
participant whose order or quote was executed as part of the Phlx Best
Bid and Offer. Specifically, the per-contract rebates are, by category:
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Rebate (per
Category contract)
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Customer.............................................. $0.20
Directed Participants................................. 0.25
[[Page 22882]]
Specialist, ROT, SQT, RSQT............................ 0.23
Firms................................................. 0.00
Broker-Dealers........................................ 0.00
Professional.......................................... 0.20
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The Exchange also currently assesses a transaction charge of $0.45
per contract to Firms and $0.45 per contract to broker-dealers that add
liquidity, which this proposal seeks to eliminate.
The Exchange also proposes to amend the Fee Schedule to remove all
references to the fees for adding liquidity.
While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative for transactions settling on or after May 3, 2010.
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. The Exchange believes that
the elimination of the fees for adding liquidity is reasonable because
the proposal is consistent with the current Fee Schedule and industry
fee assessments of member firms that allow for different rates to be
charged for different order types originated by dissimilarly classified
market participants.\14\ Additionally, the impact of the proposal upon
the net fees paid by a particular market participant will depend on a
number of variables, including its monthly volumes, the order types it
uses, and the prices of its quotes and orders (i.e., its propensity to
add or remove liquidity).
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4).
\14\ See International Securities Exchange, LLC Schedule of
Fees.
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The Exchange operates in a highly competitive market in which
market participants can readily direct order flow to competing venues
if they deem fee levels at a particular venue to be excessive. The
Exchange believes that the fees it charges for options overlying the
various Symbols remain competitive with fees charged by other venues
and therefore 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 \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 [email protected]. Please include
File Number SR-Phlx-2010-61 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-2010-61. 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-2010-61 and should be
submitted on or before May 21, 2010.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-10029 Filed 4-29-10; 8:45 am]
BILLING CODE 8011-01-P