[Federal Register Volume 75, Number 235 (Wednesday, December 8, 2010)]
[Notices]
[Pages 76500-76502]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30830]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63412; File No. SR-Phlx-2010-164]
Self-Regulatory Organizations; NASDAQ OMX PHLX, LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Routing Fees
December 2, 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 November 24, 2010, 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 [sic] to amend its fees governing pricing for Exchange
members using the Phlx XL II system,\3\ for routing certain equity and
index option Customer orders to away markets for execution.
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\3\ For a complete description of Phlx XL II, see Securities
Exchange Act Release No. 59995 (May 28, 2009), 74 FR 26750 (June 3,
2009) (SR-Phlx-2009-32). The instant proposed fees will apply only
to option orders entered into, and routed by, the Phlx XL II system.
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While fee changes pursuant to this proposal are effective upon
filing, the Exchange has designated these changes to be operative for
trades settling on or after December 1, 2010.
The text of the proposed rule change is available on the Exchange's
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings,
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 purpose of the proposed rule change is to recoup costs that the
Exchange incurs for routing and executing certain Customer orders in
equity and index options to away markets.
In May 2009, the Exchange adopted Rule 1080(m)(iii)(A) to establish
Nasdaq Options Services LLC (``NOS''), a member of the Exchange, as the
Exchange's exclusive order router.\4\ NOS is currently utilized by the
Phlx XL II system solely to route orders in options listed and open for
trading on the Phlx XL II system to destination markets.
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\4\ See Securities Exchange Act Release No. 59995 (May 28,
2009), 74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32).
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Currently, the Exchange's Fee Schedule includes Routing Fees for
both Customer and Professional orders. The Exchange proposes to
establish a Routing Fee of $0.24 per contract in Customer option orders
that are routed to the Chicago Board Options Exchange, Incorporated
(``CBOE''). This would apply to orders greater than 99 contracts
[[Page 76501]]
in options on the Russell 2000[supreg] Index (the ``Full Value Russell
Index'' or ``RUT''), options on the one-tenth value Russell
2000[supreg] Index \5\ (the ``Reduced Value Russell Index'' or
``RMN''), options on the Nasdaq 100 Index \6\ traded under the symbol
NDX (``NDX'') and options on the one-tenth value of the Nasdaq 100
Index traded under the symbol MNX (``MNX'') as well as exchange-traded
funds (``ETFs''), exchange-traded notes (``ETNs'') and Holding Company
Depositary Receipts (``HOLDRs''). The Exchange is proposing to caption
these proposed fees ``CBOE orders greater than 99 contracts in RUT,
RMN, NDX, MNX, ETFs, ETNs and HOLDRs.'' The CBOE routing fee of $0.26
per contract for Professional orders, which is assessed today, would
apply to CBOE orders greater than 99 contracts in RUT, RMN, NDX, MNX,
ETFs, ETNs and HOLDRs as well.
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\5\ Russell 2000[supreg] is a trademark and service mark of the
Frank Russell Company, used under license. Neither Frank Russell
Company's publication of the Russell Indexes nor its licensing of
its trademarks for use in connection with securities or other
financial products derived from a Russell Index in any way suggests
or implies a representation or opinion by Frank Russell Company as
to the attractiveness of investment in any securities or other
financial products based upon or derived from any Russell Index.
Frank Russell Company is not the issuer of any such securities or
other financial products and makes no express or implied warranties
of merchantability or fitness for any particular purpose with
respect to any Russell Index or any data included or reflected
therein, nor as to results to be obtained by any person or any
entity from the use of the Russell Index or any data included or
reflected therein.
\6\ NASDAQ[supreg], NASDAQ-100[supreg] and NASDAQ-100
Index[supreg] are registered trademarks of The NASDAQ OMX Group,
Inc. (which with its affiliates are the ``Corporations'') and are
licensed for use by NASDAQ OMX PHLX, Inc. [sic] in connection with
the trading of options products based on the NASDAQ-100
Index[supreg]. The options products have not been passed on by the
Corporations as to their legality or suitability. The options
products are not issued, endorsed, sold, or promoted by the
Corporations. The Corporations make no warranties and bear no
liability with respect to the options products.
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The Exchange believes that the routing fees proposed will enable
the Exchange to recover the transaction fees assessed by away markets,
where applicable, plus clearing fees for the execution of Customer
orders routed from the Phlx XL II system. Specifically, the Exchange
seeks to recoup transaction and clearing fees assessed by CBOE in the
above listed categories for orders greater than 99 contracts.\7\
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\7\ See Securities Exchange Act Release No. 62902 (September 14,
2010), 75 FR 57313 (September 20, 2010) (SR-CBOE-2010-081) (a rule
change to assess a transaction fee of $.18 per contract on public
customer orders in options on Standard & Poor's Depositary Receipts,
except for orders of 99 contracts or less).
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As with all fees, the Exchange may adjust these Routing Fees in
response to competitive conditions by filing a new proposed rule
change. While fee changes pursuant to this proposal are effective upon
filing, the Exchange has designated these changes to be operative for
trades settling on or after December 1, 2010.
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 these fees are
reasonable because they seek to recoup costs that are incurred by the
Exchange when routing Customer orders to CBOE for orders greater than
99 contracts in the following symbols RUT, RMN, NDX and MNX as well as
ETFs, ETNs and HOLDRs, on behalf of its members. The Exchange also
believes that the proposed fees will be uniformly applied to all
Customers orders.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
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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 paragraph (f)(2) of Rule 19b-4 \11\
thereunder. At any time within 60 days of the filing of such 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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\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:
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-2010-164 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-2010-164. 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 available publicly. All
submissions should refer to File No. SR-Phlx-2010-164 and should be
submitted on or before December 29, 2010.
[[Page 76502]]
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. 2010-30830 Filed 12-7-10; 8:45 am]
BILLING CODE 8011-01-P