[Federal Register Volume 75, Number 156 (Friday, August 13, 2010)]
[Notices]
[Pages 49544-49546]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19971]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62661; File No. SR-Phlx-2010-110]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating
to Billing Policies
August 6, 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 August 4, 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 Fee Schedule to: (i) Require
members and member organizations to identify accounts to properly
identify joint back-office (``JBO'') participant transactions; (ii)
specify certain policies to dispute billing invoices; and (iii) amend
the index to rearrange the order of fees on the Fee Schedule.
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, 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to memorialize current
practices for the Exchange to clearly identify orders that are not
subject to the Firm Related Equity Option Cap in order to ensure that
members and member organizations are being properly billed the Exchange
fees and also to modify the time requirements to dispute Exchange dues
and fees to reduce the Exchange's operational costs. The Exchange
proposes to memorialize an existing process that requires members and
member organizations to identify certain trades which are not subject
to the Firm Related Equity Option Cap and to set concrete timelines to
dispute any assessed Exchange dues and fees.
Currently, the Firms are subject to a maximum fee of $75,000 also
known as the Firm Related Equity Option Cap. Firm equity option
transaction charges, in the aggregate, for one billing month cannot
exceed the Firm Related Equity
[[Page 49545]]
Option Cap per member organization, except for orders of JBO
Participants.\3\ Therefore, Exchange accounts used for JBO Participant
orders are not subject to the Firm Related Equity Option Cap. The
Exchange proposes to memorialize the current practice of requiring
members and member organizations to notify the Exchange in writing \4\
and indicate which accounts are used to segregate orders of JBO
participants from other Firm orders. The Exchange believes that
memorializing the policy within the Fee Schedule will eliminate any
confusion as to which orders are JBO Participant orders and not subject
to the Firm Related Equity Option Cap. Further the Exchange proposes to
create a new billing practice with respect to JBO transactions. The
Exchange proposes to indicate on the Fee Schedule that the Exchange
will not make any adjustments to billing invoices where JBO
transactions are commingled with other Firm orders in Exchange
accounts, which are designated by the member organization as not
subject to the Firm Related Equity Option Cap. The Exchange believes
that this practice would not create an undue burden on its members and/
or member organizations and would ensure a more efficient billing
process.
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\3\ A JBO participant is a Member, Member Organization or non-
member organization that maintains a JBO arrangement with a clearing
broker-dealer (``JBO Broker'') subject to the requirements of
Regulation T Section 220.7 of the Federal Reserve System. See also
Exchange Rule 703. JBO participant orders are not subject to the
Firm Related Equity Option Cap because the Exchange is unable to
differentiate orders of a JBO participant from orders of its JBO
Broker and therefore is unable to aggregate the JBO participant's
orders. JBO participant orders may employ the F-account type and
qualify for the Firm charge, but are not eligible for the Monthly
Firm Cap.
\4\ The Exchange will issue an Options Regulatory Alert to
specify the proper Exchange contacts to notify the Exchange.
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The Exchange also proposes to establish a billing practice to
prevent members and member organizations from disputing billing
invoices after sixty (60) days. The Exchange proposes to state on its
Fee Schedule that all billing disputes must be submitted to the
Exchange in writing \5\ and must be accompanied by supporting
documentation. All disputes must be submitted no later than sixty (60)
days after receipt of an Exchange invoice. The Exchange proposes to
exclude the following types of fee disputes: NASDAQ OMX PSX Fees,
Proprietary Data Feed Fees and Co-Location Services Fees.\6\ The
Exchange is excluding these types of fees because these fees are billed
separately to Exchange members and Exchange members do not have the
same type of notice as all other fees on the Fee Schedule, as they do
not receive reports for certain fees. The Exchange believes that
members and member organizations should be aware of any billing errors
within two months of receiving an invoice.\7\ The Exchange further
believes that this practice will conserve Exchange resources which are
expended when untimely billing disputes require staff to research
applicable fees and order information beyond two months after the
transaction occurred.
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\5\ The Exchange invoice specifies the Exchange contact persons
with whom to dispute the invoice.
\6\ These fees are not included in the reports described in
footnote 7.
\7\ The Exchange provides members and member organizations the
ability to sign-up to receive certain daily reports (i.e. daily
traded against report, daily cancel fees, etc. * * *), which
provides the members and member organizations with trade data to
determine fees prior to receiving a billing invoice. In addition,
members and member organizations have access to myphlx.com, a
password protected Web site, which provides members an electronic
copy of current and historical invoices, as well as the supporting
details for assessed charges. Members will have the ability to
retrieve trade information from this Web site on a T +1 basis no
later than September 30, 2010 This new enhancement will provide
members and member organizations the ability to see information
about their trades and billing information prior to receiving the
final month-end invoice.
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Finally, the Exchange proposes to rearrange its Fee Schedule to
relocate the Routing Fees and PSX Fees in the Fee Schedule to eliminate
sequential numbering discrepancies in the Index which arose when the
Fee Schedule was reformatted.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \8\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \9\ in particular, in that
it is an equitable allocation of reasonable fees and other charges
among Exchange members. The Exchange believes that the proposal to
memorialize the current practice concerning JBO accounts is reasonable
to ensure that the Firm Related Equity Option Cap is properly applied
in billing members and member organizations. The Exchange believes that
the proposal is equitable because the process of notifying the Exchange
of accounts used for JBO orders is currently being employed and would
therefore not create an undue burden.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed amendment to billing
practices, the proposal to not adjust commingled JBO orders, is
reasonable because members and member organizations are currently
required to properly account for these type of orders. The proposal is
equitable because this practice will apply to all members and member
organizations transacting JBO business.
Additionally, the Exchange believes the requirement that all
billing disputes must be submitted within 60 days from receipt of the
invoice, with the exception of certain fees, is reasonable because the
Exchange provides ample tools to properly and swiftly monitor and
account for various charges incurred in a given month. Also, the
proposal is equitable because it equally applies to all members and
member organizations. The Exchange's administrative costs would also be
lowered as a result of this policy. Finally the Exchange believes that
the proposal to rearrange the Fee Schedule is both reasonable and
equitable because it clarifies the Fee Schedule.
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 \10\ and subparagraph (f) of Rule 19b-4 \11\
thereunder. 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.
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 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:
[[Page 49546]]
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-2010-110 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-2010-110. 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 should refer to File Number SR-Phlx-2010-110 and should be
submitted on or before September 3, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19971 Filed 8-12-10; 8:45 am]
BILLING CODE 8010-01-P