[Federal Register Volume 75, Number 66 (Wednesday, April 7, 2010)]
[Notices]
[Pages 17803-17805]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-7845]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61822; File No. SR-Phlx-2010-47]
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
to Amendment of the Fee Schedule
April 1, 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 22, 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 Exchange's Fee Schedule to: (i)
Increase the number of options to be included in the Exchange's current
schedule of transaction fees and rebates for adding and removing
liquidity; (ii) increase the Sector Index Options Fees assessed on
Registered Options Traders (on-floor) and Specialists from $.30 to $.35
and (iii) make other clarifying technical amendments to the Fee
Schedule.
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 April 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, 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
[[Page 17804]]
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 Exchange proposes to increase liquidity and to attract order
flow by increasing the number of options to be included in the
Exchange's current schedule of transaction fees and rebates for adding
and removing liquidity.
Specifically, the Exchange proposes to add the following options:
Alcoa, Inc. (``AA''); American International Group, Inc. (``AIG'');
Advanced Micro Devices, Inc. (``AMD''); AMR Corporation (``AMR'');
Caterpillar, Inc. (``CAT''); Cisco Systems, Inc. (``CSCO''); Ford Motor
Company (``F''); Direxion Daily Financial Bull 3X Shares (``FAS'');
Direxion Daily Financial Bear 3X Shares (``FAZ''); SPDR Gold Trust
(``GLD''); Intel Corporation (``INTC''); JPMorgan Chase & Co.
(``JPM''), Las Vegas Sands Corp. (``LVS''); MGM Mirage (``MGM'');
Micron Technology, Inc. (``MU''); Newmont Mining Corporation (``NEM'');
Palm, Inc. (``PALM''); Pfizer, Inc. (``PFE''); ''); Potash Corp./
Saskatchewan, Inc. (``POT''); SanDisk Corporation (``SNDK''); AT&T,
Inc. (``T''); UAL Corporation (``UAUA''); Verizon Communications, Inc.
(``VZ''), and United States Steel Corporation (``X'') collectively
(``the options''). The options would be subject to the fees and rebates
for adding and removing liquidity.
Currently, the Exchange assesses a per-contract transaction charge
in multiple options \5\ 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.\6\
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\5\ The options that are currently assessed the fees and rebates
for adding and removing liquidity are: Standard and Poor's
Depositary Receipts/SPDRs (``SPY''); the PowerShares QQQ Trust
(``QQQQ'')[reg]; Ishares Russell 2000 (``IWM''); Citigroup, Inc.
(``C''); Apple, Inc. (``AAPL''); Allstate Corp., (``ALL'');
Amazon.com, Inc. (``AMZN''); Bank of America Corporation (``BAC'');
Dell, Inc. (``DELL''); Diamonds Trust Series 1 (``DIA''); DryShips,
Inc. (``DRYS'';, Eastman Kodak, Co. (``EK''); Market Vectors Gold
Miners ETF (``GDX''); General Electric Company (``GE''); Goldman
Sachs Group, Inc. (``GS''); Microsoft Corporation (``MSFT'');
Qualcomm, Inc. (``QCOM''); Research In Motion Ltd. (``RIMM'');
Starbucks Corp. (``SBUX''); UltraShort Financials ProShares
(``SKF''); iShares Silver Trust (``SLV''); Semiconductor HOLDRs
(``SMH''); United States Natural Gas (``UNG''); United States Oil
Fund LP Units (``USO'';, Ultra Financials ProShares (``UYG'');
WynnResorts Ltd. (``WYNN''); and Financial Select Sector SPDR
(``XLF'').
\6\ See Securities Exchange Act Release No. 61684 (March 10,
2010), 75 FR 13189 (March 18, 2010) (SR-Phlx-2010-33).
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The market participants are as follows: (i) Specialists, Registered
Options Traders (``ROTs''), Streaming Quote Traders (``SQTs'') \7\ and
Remote Streaming Quote Traders (``RSQTs''); \8\ (ii) customers; \9\
(iii) specialists, SQTs and RSQTs that receive Directed Orders
(``Directed Participants'' \10\ or ``Directed Specialists, RSQTs, or
SQTs'' \11\); (iv) Firms; and (v) broker-dealers.
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\7\ 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).
\8\ 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).
\9\ This applies to all customer orders, directed and non-
directed.
\10\ 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.
\11\ 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.
The Exchange proposes to increase the options transactions charge
assessed on Registered Options Traders (on-floor) and Specialists in
Sector Index Options from $.30 to $.35. The Exchange believes that the
increases are necessary for the Exchange to continue to offset certain
costs associated with maintaining the Sector Index Options.
The Exchange also proposes to amend the Fee Schedule to make
technical amendments. Specifically, the Exchange proposes to amend a
reference in the Payment For Order Flow Fees. Currently, the Payment
For Order Flow Fee Schedule states that ``QQQQ and other options that
are trading in the Penny Pilot Program will be assessed a $.25 per
contract fee''. The Exchange recently filed a proposed rule change to
create transaction fees and rebates for adding and removing
liquidity.\12\ In that filing, the Exchanged stated that Payment for
Order Flow fees will not be collected on transactions for transaction
fees and rebates for adding and removing liquidity in certain named
symbols. The PowerShares QQQ Trust (``QQQQ'')[supreg] is among the
named symbols to which the transaction fees and rebates for adding and
removing liquidity in certain named symbols are applied. Therefore, the
Exchange proposes to remove the language referencing QQQQ from the
Payment for Order Flow section of the Fee Schedule as that language was
inadvertently not removed at the time of filing the aforementioned rule
change.
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\12\ See Securities Exchange Act Release No. 61684 (March 10,
2010), 75 FR 13189 (March 18, 2010) (SR-Phlx-2010-33).
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Additionally, the Exchange recently filed a proposed rule change,
which among other things, amended endnote 5 to create a reference to
the Monthly Firm Cap.\13\ That cap is actually referred to as the Firm
Related Equity Option Cap in the Equity Options Fees portion of the Fee
Schedule where the amount of such cap is defined. The Exchange proposes
to amend the Fee Schedule to conform the text in endnote 5 to the
remainder of the Fee Schedule by removing the term ``Monthly Firm Cap''
in endnote 5 and replacing the text with the following corrected text
``Firm Related Equity Option Cap''.
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\13\ See Securities Exchange Act Release No. 61685 (March 10,
2010), 75 FR 13187 (March 18, 2010) (SR-Phlx-2010-39).
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2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \14\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \15\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members. The Exchange believes that
the addition of the options to the fees and rebates for adding and
removing liquidity is equitable in that it will apply to all categories
of participants in the same
[[Page 17805]]
manner. The Exchange also believes that increasing the sector index
options fees for Registered Options Traders (on-floor) and Specialists
is equitable in that it is in the range of other sector index option
options transaction sector index fees.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(4).
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Additionally, the Exchange believes that the clarifying technical
amendments will provide further clarity to 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 \16\ and paragraph (f)(2) of Rule 19b-4 \17\
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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\16\ 15 U.S.C. 78s(b)(3)(A)(ii).
\17\ 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-2010-47 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, Station Place, 100 F Street, NE., Washington,
DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2010-47. 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-2010-47 and should be
submitted on or before April 28, 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. 2010-7845 Filed 4-6-10; 8:45 am]
BILLING CODE 8011-01-P