[Federal Register Volume 75, Number 54 (Monday, March 22, 2010)]
[Notices]
[Pages 13618-13620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-6115]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61699; File No. SR-Phlx-2010-42]
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
March 12, 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 (``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 applicability of Complex Orders
to fees and rebates for adding and removing 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 March 1, 2010.\5\
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\5\ The Commission notes that the fees in this proposed rule
change were effective upon filing on March 1, 2010 and apply solely
to trades effected on or after that date.
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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.
[[Page 13619]]
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 amend the
applicability of Complex Orders to remain competitive.
The Exchange proposes modifying the applicability of Complex Orders
to the fees and rebates for adding and removing liquidity. Currently,
single contra-side orders that are executed against the individual
components of Complex Orders will be charged under the proposed Fee
Schedule. The individual components of such a Complex Order will not be
charged. The Exchange proposes amending this exception to state that
individual components of such a Complex Order will be charged according
to the fees and rebates for adding and removing liquidity. The Exchange
is amending the applicability of Complex Orders to the fees described
herein because the Exchange no longer believes that this incentive is
necessary.
Currently, the Exchange assesses a per-contract transaction charge
in Standard and Poor's Depositary Receipts/SPDRs (``SPY'') \6\, the
PowerShares QQQ Trust (``QQQQ'')[reg]; Ishares Russell 2000 (``IWM'')
and Citigroup Inc. (``C'')options on five different categories of
market participants that submit orders and/or quotes that remove, or
``take,'' liquidity from the Exchange. The per-contract transaction
charge depends on the category of market participant submitting an
order or quote to the Exchange that removes liquidity.\7\
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\6\ SPY options are based on the SPDR exchange-traded fund
(``ETF''), which is designed to track the performance of the S&P 500
Index.
\7\ See SR-Phlx-2010-33.
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The market participants are as follows: (i) Specialists, Registered
Options Traders (``ROTs''), Streaming Quote Traders (``SQTs'') \8\ and
Remote Streaming Quote Traders (``RSQTs''); \9\ (ii) customers; \10\
(iii) specialists, ROTs, SQTs and RSQTs that receive Directed Orders
(``Directed Participants'' \11\ or ``Directed Specialists, RSQTs, or
SQTs'' \12\); (iv) Firms; and (v) broker-dealers.
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\8\ 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).
\9\ 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).
\10\ This applies to all customer orders, directed and non-
directed.
\11\ For purposes of this fee, 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 the Exchange's electronic trading platform for
options, PHLX XL II.
\12\ 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.
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The per-contract transaction charges are assessed on participants
who submit proprietary quotes and/or orders that remove liquidity from
the Exchange's market in options listed on the Fee Schedule. The
Exchange also assesses a transaction charge to Firms and broker-dealers
that add liquidity.
Additionally, the Exchange has in place a per-contract rebate
relating to transaction charges for orders or quotations that add
liquidity to the Exchange's market in options listed on the fee
schedule. The amount of the rebate depends on the category of
participant whose order or quote was executed as part of the Phlx
disseminated Best Bid and/or Offer.
2. Statutory Basis
The Exchange believes that its proposal to amend its schedule of
fees is consistent with Section 6(b) of the Act \13\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \14\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members. 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). The rate increase to Firms for
adding liquidity in the various symbols including the additional
Symbols is the same rate that is currently being assessed on Broker-
Dealers.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4).
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Specifically, the Exchange believes that amending the applicability
of the complex orders to these fees is equitable as that will apply
equally to all participants.
Accordingly, the Exchange also believes that the addition of the
options to this portion of the Fee Schedule is equitable in that it
will apply to all categories of participants in the same manner.
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
[[Page 13620]]
Number SR-Phlx-2010-42 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2010-42. 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-2010-42 and should be
submitted on or before April 12, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-6115 Filed 3-19-10; 8:45 am]
BILLING CODE 8011-01-P