[Federal Register Volume 75, Number 45 (Tuesday, March 9, 2010)]
[Notices]
[Pages 10857-10858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-4913]
[[Page 10857]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61617; File No. SR-Phlx-2010-22]
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Linkage Pilot
March 1, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on February 24, 2010, NASDAQ OMX PHLX, Inc. (``Phlx'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. 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 discontinue its current pilot program (the
``pilot'') relating to fees applicable to Principal Acting as Agent
Orders (``P/A Orders'') \3\ and Principal Orders (``P Orders'').\4\ The
text of the proposed rule change is available on Phlx's Web site at
http://www.nasdaqtrader.com, on the Commission's Web site at http://www.sec.gov, at Phlx, and at the Commission's Public Reference Room.
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\3\ A P/A Order is an order for the principal account of a
specialist (or equivalent entity on another participant exchange
that is authorized to represent Public Customer orders), reflecting
the terms of a related unexecuted Public Customer order for which
the specialist is acting as agent. See Exchange Rule 1088, Phase Out
of Intermarket Linkage Rules.
\4\ A Principal Order is an order for the principal account of
an Eligible Market Maker and is not a P/A Order. See Exchange Rule
1088, Phase Out of Intermarket Linkage Rules.
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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 self-regulatory organization
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 those 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 parts 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 discontinue the
current pilot program related to transaction fees for P/A Orders and P
Orders sent to the Exchange via the Intermarket Option Linkage
(``Linkage'') under the former Plan for the Purpose of Creating and
Operating an Intermarket Linkage (``Linkage Plan'').\5\ The current
pilot is set to expire July 31, 2010.\6\
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\5\ See Securities Exchange Act Release No. 60363 (July 22,
2009), 74 FR 37270 (July 28, 2009) (SR-Phlx-2009-61). Linkage was
governed by the Options Linkage Authority under the conditions set
forth under the Plan for the Purpose of Creating and Operating an
Intermarket Option Linkage approved by the Commission. The
registered U.S. options markets are linked together on a real-time
basis through a network capable of transporting orders and messages
to and from each market.
\6\ See Securities Exchange Act Release No. 60210 (July 1,
2009), 74 FR 32989 (July 9, 2009) (SR-Phlx-2009-53).
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On June 17, 2008, the Exchange filed an executed copy of the
Options Order Protection and Locked/Crossed Market Plan (``Plan''),
joining all other approved options markets in adopting the Plan.\7\ The
Plan requires each options exchange to adopt rules implementing various
requirements specified in the Plan.\8\
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\7\ See Securities Exchange Act Release Nos. 60405 (July 20,
2009) (National Market System Plan Relating to Options Order
Protection and Locked/Crossed Markets). The Plan is a national
market system plan proposed by the seven existing options exchanges
and approved by the Commission. See Securities Exchange Act Release
No. 59647 (March 30, 2009), 74 FR 15010 (April 2, 2009) (File No. 4-
546) (``Plan Notice'') and 60405 (July 30, 2009), 74 FR 39362
(August 6, 2009) (File No. 4-546) (``Plan Approval''). The seven
options exchanges are: Chicago Board Options Exchange, Incorporated
(``CBOE''); International Securities Exchange LLC (``ISE''); NASDAQ
OMX BX, Inc. (``BOX''); The NASDAQ Stock Market LLC (``Nasdaq'');
NYSE Amex LLC (``NYSE Amex''); NYSE Arca, Inc. (``NYSE Arca''); and
Phlx (each exchange individually a ``Participant'' and, together,
the ``Participating Options Exchanges'').
\8\ See Securities Exchange Act Release No. 60363 (July 22,
2009), 74 FR 37270 (July 28, 2009) (SR-Phlx-2009-61). Linkage was
governed by the Options Linkage Authority under the conditions set
forth under the Plan for the Purpose of Creating and Operating an
Intermarket Option Linkage approved by the Commission. The
registered U.S. options markets are linked together on a real-time
basis through a network capable of transporting orders and messages
to and from each market.
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The Plan replaces the Linkage Plan. The Linkage Plan required
Participating Options Exchanges to operate a stand-alone system or
``Linkage'' for sending order-flow between exchanges to limit trade-
throughs.\9\ The Options Clearing Corporation (``OCC'') operated the
Linkage system (the ``System'').\10\ The Exchange adopted various new
rules in connection with the Plan to avoid trade-throughs and locked
markets, among other things.\11\ The Exchange currently offers private
routing directly to away markets.\12\
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\9\ See footnote 7.
\10\ See footnote 7.
\11\ See footnote 7.
\12\ See Exchange Rule 1080(m).
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The pilot, which is set to expire on July 31, 2010, relates to fees
charged by the Exchange for both P/A and P Orders. The Exchange
currently charges $.45 per option contract for P Orders sent to the
Exchange and $0.30 per option contract for P/A Orders. The current
pilot program has been renewed periodically over several years.\13\
Because there are no longer any participant exchanges to the Linkage
Plan who send Linkage P or P/A Orders, the Exchange proposes to
discontinue the pilot.
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\13\ See Securities Exchange Act Release Nos. 60210 (July 1,
2009), 74 FR 32989 (July 9, 2009) (SR-Phlx-2009-53); 58144 (July 11,
2008), 73 FR 41394 (July 18, 2008) (SR-Phlx-2008-49); 56166 (July
30, 2007), 72 FR 43312 (August 3, 2007) (SR-Phlx-2007-52); 54233
(July 27, 2006), 71 FR 44070 (August 3, 2006) (SR-Phlx-2006-44);
51257 (February 25, 2005), 70 FR 10736 (March 4, 2005) (SR-Phlx-
2005-10); 50125 (July 30, 2004), 69 FR 47479 (August 5, 2004) (SR-
Phlx-2004-44); 49163 (January 30, 2004), 69 FR 5885 (February 6,
2004) (SR-Phlx-2003-89); and 47953 (May 30, 2003), 68 FR 34027 (June
6, 2003) (SR-Phlx-2003-16).
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The Exchange also proposes to amend its Fee Schedule to remove all
references to Linkage fees.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \14\ in general, and furthers the objectives of Section
6(b)(5) of the Act \15\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest, by removing all references to Linkage in the Fee Schedule and
to clarify that Linkage fees are no longer applicable.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
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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.
[[Page 10858]]
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
Because the foregoing proposed rule change: (i) Does not
significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) by its terms, does not become operative for 30 days from the
date on which it was filed, or such shorter time as the Commission may
designate, if consistent with the protection of investors and the
public interest, it has become effective pursuant to Section
19(b)(3)(A) of the Act \16\ and Rule 19b-4(f)(6) thereunder.\17\
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the self-regulatory organization to submit to the
Commission written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as designated by the
Commission. The Exchange has satisfied this requirement.
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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.
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-2010-22 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-2010-22. 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 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 Number SR-
Phlx-2010-22 and should be submitted on or before March 30, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-4913 Filed 3-8-10; 8:45 am]
BILLING CODE 8011-01-P