[Federal Register Volume 76, Number 65 (Tuesday, April 5, 2011)]
[Notices]
[Pages 18813-18814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-7978]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64150; File No. SR-Phlx-2011-38]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
ETNs
March 30, 2011.
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, 2011, 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 proposes to amend the Exchange's Fee Schedule to
codify the Exchange's existing practice of assessing fees for
transactions in exchange-traded note (``ETN'') \3\ options at the same
rates for exchange-traded fund (``ETF'') options.\4\
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\3\ ETNs are also known as ``Index-Linked Securities,'' which
are designed for investors who desire to participate in a specific
market segment by providing exposure to one or more identifiable
underlying securities, commodities, currencies, derivative
instruments or market indexes of the foregoing. Index-Linked
Securities are the non-convertible debt of an issuer that have a
term of at least one (1) year but not greater than thirty (30)
years. Despite the fact that Index-Linked Securities are linked to
an underlying index, each trade as a single, exchange-listed
security. Accordingly, rules pertaining to the listing and trading
of standard equity options apply to Index-Linked Securities.
\4\ An ETF is an open-ended registered investment company under
the Investment Company Act of 1940 that has received certain
exemptive relief from the Commission to allow secondary market
trading in the ETF shares. ETFs are generally index-based products,
in that each ETF holds a portfolio of securities that is intended to
provide investment results that, before fees and expenses, generally
correspond to the price and yield performance of the underlying
benchmark index.
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While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on April 1, 2011.
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, 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 codify the Exchange's
existing practice of assessing fees for transactions in ETN options at
the same rates for ETF options. Specifically, the Exchange is proposing
to amend Section II of the Exchange's Fee Schedule, titled Equity
Options Fees, and Section III, titled Singly Listed Options, by
including references to ETNs in those
[[Page 18814]]
sections. Section II of the Exchange's Fee Schedule currently states
that it includes options overlying equities, ETFs, HOLDRS,\5\ BKX,\6\
RUT,\7\ RMN,\8\ MNX \9\ and NDX.\10\ Section III of the Exchange's Fee
Schedule currently states that it includes options overlying
currencies, equities, ETFs, indexes and HOLDRS not listed on another
exchange. The Exchange is proposing to add ETNS to both Sections II and
III and assess the same rates that are currently assessed ETFs and
other equity options today.
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\5\ HOLDRS are Holding Company Depository Receipts.
\6\ BKX represents the KBW Bank Index.
\7\ RUT represents the options on the Russell 2000[reg] Index
(the ``Full Value Russell Index'' or ``RUT'').
\8\ RMN represents options on the one-tenth value Russell
2000[reg] Index \8\ (the ``Reduced Value Russell Index'' or
``RMN'').
\9\ MNX represents options on the one-tenth value of the Nasdaq
100 Index traded under the symbol MNX (``MNX'').
\10\ NDX represents options on the Nasdaq 100 Index \10\ traded
under the symbol NDX (``NDX'').
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The Exchange is not proposing to amend any fees.\11\ The Exchange
would apply the same rates that apply to ETFs today to ETNs. A similar
proposal was filed by the Chicago Board Options Exchange, Incorporated
(``CBOE'') to apply the ETF rates to ETNs and include references to
ETNs in the fee schedule.\12\
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\11\ This fee proposal would not impact any equity options
transacted in any of the symbols which are listed in Section I of
the Exchange's Fee Schedule titled ``Rebates and Fees for Adding and
Removing Liquidity in Select Symbols.''
\12\ See Securities Exchange Act Release No. 62579 (July 28,
2010), 75 FR 47329 (August 5, 2010) (SR-CBOE-2010-068).
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The Exchange is also proposing to make conforming amendments to the
Table of Contents and Section IV, titled PIXL Pricing, of the Fee
Schedule.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
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 and other persons using its
facilities.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that it is reasonable to add ETNs
specifically to Sections II and III because it would codify the
Exchange's existing practice of assessing fees for ETN options in a
manner similar to ETF options. This proposal would add clarity to the
Exchange's Fee Schedule.
The Exchange believes that it is equitable because the fees in
Sections II and III would be uniformly applied to all market
participants transacting equity options in symbols other than those
listed in Section I of 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.\15\ At any time within 60 days of the
filing of the 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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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-2011-38 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-2011-38. 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 the 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-2011-38 and
should be submitted on or before April 26, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-7978 Filed 4-4-11; 8:45 am]
BILLING CODE 8011-01-P