[Federal Register Volume 75, Number 48 (Friday, March 12, 2010)]
[Notices]
[Pages 11957-11958]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-5316]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61664; File No. SR-Phlx-2010-32]
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Routing Fees
March 5, 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 March 1, 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 fees governing pricing for
Exchange members using the Phlx XL II system,\3\ for routing
standardized 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 changes to the Exchange's Fee Schedule pursuant to this
proposal are effective upon filing, the Exchange has designated this
proposal to be operative for trades settling on or after March 1, 2010.
The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqtrader.com/micro.aspx?id=PHLXfilings, on the
Commission's Web site at http://www.sec.gov, at the principal office of
the Exchange, 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 recoup costs that the
Exchange incurs for routing and executing customer orders in equity and
index options to certain better-priced 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 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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The Exchange proposes adding the following Routing Fees: (i) A
$0.06 per contract side fee for customer orders routed to NYSE Amex LLC
(``NYSE Amex'') in all options; (ii) a $0.36 per contract side fee for
customer orders routed to BATS Exchange, Inc. (``BATS'') in all
options; (iii) a $.06 per contract side fee for customer orders routed
to the Boston Options Exchange Group LLC (``BOX'') in all options; (iv)
a $0.06 per contract fee for customer orders route to the Chicago Board
of Options Exchange, Inc. (``CBOE'') in all options; (v) a $.06 per
contract side fee for customer orders routed to International
Securities Exchange, LLC (``ISE'') in all options; and (vi) a $0.06 per
customer side fee for customer orders routed to NYSE Arca, Inc.
(``NYSEArca'') in non-penny options. The Exchange is proposing a $.06
transaction fee on NYSE AMEX, BOX, CBOE, ISE and NYSEArca in order to
recoup clearing charges which are incurred by the Exchange when orders
are routed to these away markets. The Exchange is proposing a $.36
transaction fee on BATS in order to recoup most clearing charges which
are incurred by the Exchange when orders are routed to these away
markets as well as a transaction charge which is assessed by BATS.
Currently, the Exchange's Fee Schedule includes a Routing Fee of
$0.50 per contract side for customer orders routed to NYSEArca in penny
options for execution\5\ and a Routing Fee of $0.40 per contract side
for customer orders routed to the NASDAQ Options Market (``NOM'') in
penny options for execution. Also, the Exchange assesses a Routing Fee
of $.56 per contract side for customer orders routed to NOM in the
NASDAQ 100 Index Option (``NDX'') and the mini NASDAQ 100 Index Option
(``MNX'').\6\ The Exchange is currently only assessing the Routing Fee
in NDX and MNX for orders routed to NOM. There are currently no Routing
Fees for orders routed to away markets other than NYSEArca and NOM in
penny options. Also, currently, except for NDX and MNX, there are no
transaction fees for executing customer orders at away markets in non-
penny classes.
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\5\ See Securities Exchange Act Release No. 61374 (January 19,
2010), 75 FR 4123 (January 26, 2010) (SR-PHLX-2010-01).
\6\ See SR-NASDAQ-2010-016. The NASDAQ Stock Market LLC
(``NASDAQ'') recently established pricing for NDX and MNX.
Specifically, NASDAQ established a fee of $.50 per executed contract
for Customers, Firms, and Non-NOM Market Makers to remove liquidity
in NDX and MNX Options and a $.40 per executed contract for NOM
Market Makers to remove liquidity in NDX and MNX.
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The Exchange is proposing these fees to recoup the majority of
transaction and clearing costs associated with routing customer orders
to each destination market. 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. As with
all fees, the Exchange may adjust these Routing Fees in response to
competitive conditions by filing a new proposed rule change.
The Exchange also proposes reformatting the Routing Fee table for
purposes of clarity. The Exchange proposes eliminating the penny and
non-penny columns and only specifying such a distinction, where
applicable.
While changes to the Exchange's Fee Schedule pursuant to this
proposal are effective upon filing, the Exchange has designated this
proposal to be operative
[[Page 11958]]
for trades settling on or after March 1, 2010.
2. Statutory Basis
The Exchange believes that its proposal to amend its schedule of
fees is consistent with Section 6(b) of the Act \7\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \8\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members because Exchange members would
equally be assessed the costs incurred by the Exchange to route
customer orders to away markets on behalf of its members.
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\7\ 15 U.S.C. 78f(b).
\8\ 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 \9\ and paragraph (f)(2) of Rule 19b-4 \10\
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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\9\ 15 U.S.C. 78s(b)(3)(A)(ii).
\10\ 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-2010-32 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-2010-32. 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 Number SR-Phlx-2010-32 and should be
submitted on or before April 2, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5316 Filed 3-11-10; 8:45 am]
BILLING CODE 8011-01-P