Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating to the Option Floor Broker Subsidy and Other Clarifying Changes to the Fee Schedule, 45666-45668 [E9-21222]
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Federal Register / Vol. 74, No. 170 / Thursday, September 3, 2009 / Notices
19(b) of the Act 28 and the rules
thereunder, and that the Commission
has received and considered the
comments of those industry participants
that sought to provide input regarding
the proposal, including CBOE, a
competitor of the Exchange, as well as
SIG, a large participant in the options
market.
The Commission believes that the
Exchange’s proposed new Qualified
Contingent Cross Order is consistent
with the Act, and will allow Exchange
members to retain the flexibility needed
to utilize the Commission’s NMS QCT
Exemption for qualified stock-option
transactions that are not presented as a
package on an options exchange, but
instead where the options and stock
components are executed in separate
markets. As noted above, the
Commission believes that contingent
trades that meet the requirements of the
NMS QCT Exemption may be useful
trading tools for investors and other
market participants, and may be of
benefit to the market as a whole,
contributing to the efficient functioning
of the securities markets and the price
discovery process.29 The Commission
believes that, given the NMS QCT
Exemption, the Exchange’s proposal is
consistent with the Act in that it seeks
to address the execution of stock-option
orders whose legs are executed
separately rather than as a package
while limiting such orders to QCTs with
a size of at least 500 contracts that are
executed at or between the NBBO.30
In approving the proposed rule
change, the Commission notes the
Exchange’s representation that it will
adopt policies and procedures to ensure
that its members use the proposed order
type properly, including requiring
members to mark all Qualified
Contingent Cross Orders as such. In
addition, ISE has represented that it will
implement surveillance procedures to
identify that the member executed the
stock leg of the stock-option transaction
at or near the same time as the options
leg. The Commission emphasizes that
these are important measures that
should help ensure that the proposed
order type is employed properly.
pwalker on DSK8KYBLC1PROD with NOTICES
28 15
U.S.C. 78s(b).
29 See QCT Release, supra note 11 and
accompanying text.
30 The Commission notes that an original singlesided customer order would not otherwise
constitute a multi-component, fully hedged trade
for purposes of ISE’s proposed Qualified Contingent
Cross Order solely by virtue of being hedged by the
member representing the order. In such a case, the
Commission does not believe that the execution of
the options leg would qualify for the proposed
Qualified Contingent Cross Order.
VerDate Nov<24>2008
16:27 Sep 02, 2009
Jkt 217001
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,31 that the
proposed rule changes (SR–ISE–2009–
35) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–21223 Filed 9–2–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60578; File No. SR–Phlx–
2009–72]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NASDAQ
OMX PHLX, Inc. Relating to the Option
Floor Broker Subsidy and Other
Clarifying Changes to the Fee
Schedule
August 27, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934,1 notice
is hereby given that on August 25, 2009,
NASDAQ OMX PHLX, Inc. (‘‘Phlx’’ or
the ‘‘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 Phlx. The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested parties.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
calculation for the Options Floor Broker
Subsidy with respect to waiver of
transaction fees for firm facilitation
transactions.
Additionally, the Exchange proposes
to make other clarifying changes to the
fee schedule.
While changes to the Exchange’s fee
schedule pursuant to this proposal are
effective upon filing, the Exchange has
designated this proposal to be effective
for trades settling on or after September
1, 2009.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxphlx.cchwallstreet.com/
NASDAQOMXPHLX/Filings/, at the
31 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
32 17
PO 00000
Frm 00061
Fmt 4703
Sfmt 4703
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,
Phlx 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 Phlx 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 attract additional order flow
to the Exchange. The Exchange proposes
to modify the Options Floor Broker
Subsidy calculation. The Exchange
currently pays an Options Floor Broker
Subsidy to member organizations with
Exchange registered floor brokers for
eligible contracts that are entered into
the Exchange’s Options Floor Broker
Management System (‘‘FBMS’’).2 To
qualify for the per contract subsidy, a
member organization with Exchange
registered floor brokers must have: (1)
More than an average of 100,000
executed contracts per day in the
applicable month; and (2) at least 40,000
executed contracts or more per day for
at least eight trading days during that
same month.3 Only the floor broker
volume from orders entered into FBMS
and subsequently executed on the
Exchange would be counted. The
100,000 contract and 40,000 contract
thresholds, as described above, would
be calculated per member organization
floor brokerage unit. In the event that
two or more member organizations with
Exchange registered floor brokers each
entered one side of a transaction into
FBMS, then the executed contracts
would be divided among each
2 FBMS is designed to enable floor brokers and/
or their employees to enter, route, and report
transactions stemming from options orders received
on the Exchange. FBMS also is designed to establish
an electronic audit trail for options orders
represented and executed by floor brokers on the
Exchange. See Exchange Rule 1080, commentary
.06.
3 For purposes of calculating the 100,000 and
40,000 thresholds, customer-to-customer
transactions, customer-to-non-customer
transactions, and non-customer-to-non-customer
transactions would be included.
E:\FR\FM\03SEN1.SGM
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Federal Register / Vol. 74, No. 170 / Thursday, September 3, 2009 / Notices
qualifying member organization that
participates in that transaction. In order
to be eligible for the Options Floor
Broker Subsidy, the member
organization must have an average daily
volume in a particular calendar month
as follows:
PER CONTRACT AVERAGE DAILY
VOLUME SUBSIDY PAYMENT
Tier I
Tier II
Tier III
100,001 to
200,000.
$0.04 per contract.
200,001 to
300,000.
$0.05 per contract.
300,001 and
greater.
$0.06 per
contract.
pwalker on DSK8KYBLC1PROD with NOTICES
Currently, the following types of
transactions apply to calculating the
Options Floor Broker Subsidy:
• Customer-to-customer executions
will count towards reaching the 100,000
contract and 40,000 contract thresholds,
but a per contract subsidy will not be
paid on any customer-to-customer
executions.
• Orders entered through FBMS but
executed away through Linkage, as well
as dividend, merger and short stock
interest strategies will not count
towards the 100,000 contract or the
40,000 contract thresholds nor will a per
contract subsidy be paid on these
transactions.
• Only the largest component of a
Complex Order (i.e., the component that
includes the greatest number of
contracts) will count towards the
100,000 contract and the 40,000 contract
thresholds. The Options Floor Broker
Subsidy does not apply to any contracts
that are executed as part of a Complex
Order.
For the purposes of calculating the
Options Floor Broker Subsidy, the
Exchange proposes to treat firm
facilitation transactions, executed
pursuant to Exchange Rule 1064,4 in the
4 A Floor Broker holding an options order for a
public customer and a contraside order may cross
such orders in accordance with paragraph (a) above
or may execute such orders as a facilitation cross
in the following manner: (i) The Floor Broker or his
employees must enter the appropriate notation onto
the Options Floor Broker Management System for
the public customer’s order, together with all of the
terms of the order, including any contingency
involving other options or the underlying or related
securities. (ii) The Floor Broker shall request
markets for the execution of all options components
of the order. After providing an opportunity for
such markets to be made, the Floor Broker shall
announce that he holds an order subject to
facilitation and shall bid (or offer) in between the
market for each options component and disclose all
terms and conditions of the order including all
securities which are components of the order. (iii)
After all market participants in the crowd are given
a reasonable opportunity to accept all terms and
conditions made on behalf of the public customer
whose order is subject to facilitation, the Floor
Broker may immediately thereafter cross all or any
VerDate Nov<24>2008
16:27 Sep 02, 2009
Jkt 217001
same manner as fees are assessed for
customer-to-customer executions. The
Exchange believes that this amendment
to the Options Floor Broker subsidy
calculation is consistent with the recent
waiver of the Firm Proprietary Options
Transaction Charge on firm facilitation
transactions.5 The volume for firm
facilitation transactions would count
toward reaching the 100,000 and 40,000
contract thresholds, but a per contract
subsidy will not be paid on any firm
facilitation transaction. A facilitation
occurs when a floor broker holds an
options order for a public customer and
a contra-side order for the same option
series and, after providing an
opportunity for all persons in the
trading crowd to participate in the
transaction, executes both orders as a
facilitation cross.6
The Exchange also proposes other
clarifying technical amendments to the
fee schedule. The Exchange recently
updated the fee schedule 7 and amended
certain footnotes in the fee schedule and
replaced them with endnotes. It was
previously noted in the fee schedule
that payment for order flow fees would
be assessed on transactions resulting
from customer orders and are available
to be disbursed by the Exchange
according to the instructions of the
specialist units/specialists or Directed
ROTs to order flow providers who are
members or member organizations, who
submit, as agent, customer orders to the
Exchange or non-members or nonmember organizations who submit, as
agent, customer orders to the Exchange
through a member or member
organization who is acting as agent for
those customer orders. This language
was inadvertently removed from the
previous fee schedule when the fee
schedule was reformatted,8 however,
payment for order flow fees have and
continue to be assessed on transactions
resulting from customer orders.9 The
remaining part of such order and the facilitation
order at each customer’s bid or offer by announcing
by public outcry that he is crossing and by stating
the quantity and price(s). Once a Floor Broker has
announced an order as subject to facilitation and
has established a bid (or offer) in between the
market for the option(s) to be facilitated, the order
cannot be broken up by a subsequent superior bid
or offer for just one component to the facilitated
order. See Exchange Rule 1064(b).
5 See Securities Exchange Act Release No. 60477
(August 11, 2009), 74 FR 41777 (August 18, 2009)
(SR–Phlx–2009–67).
6 See Exchange Rule 1064.
7 See Securities Exchange Act Release No. 59402
(February 13, 2009), 74 FR 8134 (February 23, 2009)
(SR–Phlx–2009–08) (amending and reformatting the
existing NASDAQ OMX PHLX Fee Schedule).
8 See Securities Exchange Act Release No. 59402
(February 13, 2009), 74 FR 8134 (February 23, 2009)
(SR–Phlx–2009–08).
9 The program took effect on July 1, 2005. See e.g.,
Securities Exchange Act Release Nos.; 57851 (May
PO 00000
Frm 00062
Fmt 4703
Sfmt 4703
45667
Exchange proposes adding the following
language back into the fee schedule to
further clarify the payment for order
flow fees: ‘‘Payment for order flow fees
will be assessed on transactions
resulting from customer orders.’’ Also,
for purposes of consistency, the
Exchange proposes amending all
references to Phlx in the fee schedule to
be ‘‘PHLX’’ and adding appropriate
trademark references.
2. Statutory Basis
The Exchange believes that its
proposal to amend its schedule of fees
is consistent with Section 6(b) of the
Act 10 in general, and furthers the
objectives of Section 6(b)(4) of the Act 11
in particular, in that it is an equitable
allocation of reasonable fees and other
charges among Exchange members.
Pursuant to this proposal, all member
organizations registered as floor brokers
are offered the continued opportunity to
receive a subsidy. By allowing for a
subsidy, the Exchange believes that
floor brokers will be encouraged to send
additional orders to the Exchange for
execution. The Exchange also proposes
a few technical changes to clarify the
language in 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
Because the foregoing rule change
establishes or changes a due, fee, or
other charge imposed by the Exchange,
it has become effective pursuant to
Section 19(b)(3)(A) of the Act 12 and
subparagraph (f)(2) of Rule 19b–4 13
22, 2008), 73 FR 31177 (May 30, 2008) (SR–Phlx–
2008–38); 55891 (June 11, 2007), 72 FR 333271
(June 15, 2007) (SR–Phlx–2007–39); 53754 (May 3,
2006), 71 FR 27301 (May 10, 2006) (SR–Phlx–2006–
25); 53078 (January 9, 2006), 71 FR 2289 (January
13, 2006) (SR–Phlx–2005–88); 52568 (October 6,
2005), 70 FR 60120 (October 14, 2005) (SR–Phlx–
2005–58); and 52114 (July 22, 2005), 70 FR 44138
(August 1, 2005) (SR–Phlx–2005–44).
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(4).
12 15 U.S.C. 78s(b)(3)(A).
13 17 CFR 240.19b–4(f)(2).
E:\FR\FM\03SEN1.SGM
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45668
Federal Register / Vol. 74, No. 170 / Thursday, September 3, 2009 / Notices
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.
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:
pwalker on DSK8KYBLC1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml ); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Phlx–2009–72 on the
subject line.
should refer to File Number SR–Phlx–
2009–72 and should be submitted on or
before September 24, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–21222 Filed 9–2–09; 8:45 am]
16:27 Sep 02, 2009
Jkt 217001
BILLING CODE 4710–05–P
DEPARTMENT OF STATE
BILLING CODE 8010–01–P
[Public Notice 6754]
DEPARTMENT OF STATE
[Public Notice 6756]
Culturally Significant Objects Imported
for Exhibition Determinations: ‘‘Sacred
Spain: Art and Belief in the Spanish
World’’
SUMMARY: Notice is hereby given of the
following determinations: Pursuant to
the authority vested in me by the Act of
October 19, 1965 (79 Stat. 985; 22 U.S.C.
Paper Comments
2459), Executive Order 12047 of March
• Send paper comments in triplicate
27, 1978, the Foreign Affairs Reform and
to Elizabeth M. Murphy, Secretary,
Restructuring Act of 1998 (112 Stat.
Securities and Exchange Commission,
2681, et seq.; 22 U.S.C. 6501 note, et
100 F Street, NE., Washington, DC
seq.), Delegation of Authority No. 234 of
20549–1090.
October 1, 1999, Delegation of Authority
All submissions should refer to File
No. 236 of October 19, 1999, as
Number SR–Phlx–2009–72. This file
amended, and Delegation of Authority
number should be included on the
No. 257 of April 15, 2003 [68 FR 19875],
subject line if e-mail is used. To help the
I hereby determine that the objects to be
Commission process and review your
included in the exhibition ‘‘Sacred
comments more efficiently, please use
only one method. The Commission will Spain: Art and Belief in the Spanish
post all comments on the Commission’s World,’’ imported from abroad for
temporary exhibition within the United
Internet Web site (https://www.sec.gov/
States, are of cultural significance. The
rules/sro.shtml ). Copies of the
objects are imported pursuant to loan
submission, all subsequent
agreements with the foreign owners or
amendments, all written statements
custodians. I also determine that the
with respect to the proposed rule
exhibition or display of the exhibit
change that are filed with the
objects at the Indianapolis Museum of
Commission, and all written
Art, Indianapolis, IN, from on or about
communications relating to the
October 11, 2009, until on or about
proposed rule change between the
Commission and any person, other than January 3, 2010, and at possible
those that may be withheld from the
additional exhibitions or venues yet to
public in accordance with the
be determined, is in the national
provisions of 5 U.S.C. 552, will be
interest. Public Notice of these
available for inspection and copying in
Determinations is ordered to be
the Commission’s Public Reference
published in the Federal Register.
Room, 100 F Street, NE., Washington,
FOR FURTHER INFORMATION CONTACT: For
DC 20549, on official business days
further information, including a list of
between the hours of 10 a.m. and 3 p.m.
Copies of the filing also will be available the exhibit objects, contact Carol B.
Epstein, Attorney-Adviser, Office of the
for inspection and copying at the
Legal Adviser, U.S. Department of State
principal office of Phlx. All comments
received will be posted without change; (telephone: 202/632–6473). The address
is U.S. Department of State, SA–5, L/PD,
the Commission does not edit personal
Fifth Floor, Washington, DC 20522–
identifying information from
0505.
submissions. You should submit only
information that you wish to make
14 17 CFR 200.30–3(a)(12).
available publicly. All submissions
VerDate Nov<24>2008
Dated: August 27, 2009.
Maura M. Pally,
Deputy Assistant Secretary for Professional
and Cultural Exchanges, Bureau of
Educational and Cultural Affairs, Department
of State.
[FR Doc. E9–21308 Filed 9–2–09; 8:45 am]
PO 00000
Frm 00063
Fmt 4703
Sfmt 4703
Culturally Significant Objects Imported
for Exhibition Determinations:
‘‘Playing With Pictures: The Art of
Victorian Photocollage’’
SUMMARY: Notice is hereby given of the
following determinations: Pursuant to
the authority vested in me by the Act of
October 19, 1965 (79 Stat. 985; 22 U.S.C.
2459), Executive Order 12047 of March
27, 1978, the Foreign Affairs Reform and
Restructuring Act of 1998 (112 Stat.
2681, et seq.; 22 U.S.C. 6501 note, et
seq.), Delegation of Authority No. 234 of
October 1, 1999, Delegation of Authority
No. 236 of October 19, 1999, as
amended, and Delegation of Authority
No. 257 of April 15, 2003 [68 FR 19875],
I hereby determine that the objects in
the exhibition: ‘‘Playing with Pictures:
The Art of Victorian Photocollage,’’
imported from abroad for temporary
exhibition within the United States, are
of cultural significance. The objects are
imported pursuant to loan agreements
with the foreign owners or custodians.
I also determine that the exhibition or
display of the exhibit objects at The Art
Institute of Chicago, Chicago, IL, from
on or about October 10, 2009, until on
or about January 3, 2010, The
Metropolitan Museum of Art, New York,
NY, from on or about February 2, 2010,
until on or about May 9, 2010, and at
possible additional exhibitions or
venues yet to be determined, is in the
national interest. Public Notice of these
Determinations is ordered to be
published in the Federal Register.
FOR FURTHER INFORMATION CONTACT: For
further information, including a list of
the exhibit objects, contact Julie
Simpson, Attorney-Adviser, Office of
the Legal Adviser, U.S. Department of
State (telephone: 202–632–6467). The
address is U.S. Department of State,
L/PD, SA–5, 2200 C Street, NW., Suite
5H03, Washington, DC 20522–0505.
E:\FR\FM\03SEN1.SGM
03SEN1
]]>Agencies
[Federal Register Volume 74, Number 170 (Thursday, September 3, 2009)]
[Notices]
[Pages 45666-45668]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-21222]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60578; File No. SR-Phlx-2009-72]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating
to the Option Floor Broker Subsidy and Other Clarifying Changes to the
Fee Schedule
August 27, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934,\1\ notice is hereby given that on August 25, 2009, NASDAQ OMX
PHLX, Inc. (``Phlx'' or the ``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 Phlx. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested parties.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the calculation for the Options
Floor Broker Subsidy with respect to waiver of transaction fees for
firm facilitation transactions.
Additionally, the Exchange proposes to make other clarifying
changes to the fee schedule.
While changes to the Exchange's fee schedule pursuant to this
proposal are effective upon filing, the Exchange has designated this
proposal to be effective for trades settling on or after September 1,
2009.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/Filings/, 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, Phlx 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 Phlx 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 attract additional
order flow to the Exchange. The Exchange proposes to modify the Options
Floor Broker Subsidy calculation. The Exchange currently pays an
Options Floor Broker Subsidy to member organizations with Exchange
registered floor brokers for eligible contracts that are entered into
the Exchange's Options Floor Broker Management System (``FBMS'').\2\ To
qualify for the per contract subsidy, a member organization with
Exchange registered floor brokers must have: (1) More than an average
of 100,000 executed contracts per day in the applicable month; and (2)
at least 40,000 executed contracts or more per day for at least eight
trading days during that same month.\3\ Only the floor broker volume
from orders entered into FBMS and subsequently executed on the Exchange
would be counted. The 100,000 contract and 40,000 contract thresholds,
as described above, would be calculated per member organization floor
brokerage unit. In the event that two or more member organizations with
Exchange registered floor brokers each entered one side of a
transaction into FBMS, then the executed contracts would be divided
among each
[[Page 45667]]
qualifying member organization that participates in that transaction.
In order to be eligible for the Options Floor Broker Subsidy, the
member organization must have an average daily volume in a particular
calendar month as follows:
---------------------------------------------------------------------------
\2\ FBMS is designed to enable floor brokers and/or their
employees to enter, route, and report transactions stemming from
options orders received on the Exchange. FBMS also is designed to
establish an electronic audit trail for options orders represented
and executed by floor brokers on the Exchange. See Exchange Rule
1080, commentary .06.
\3\ For purposes of calculating the 100,000 and 40,000
thresholds, customer-to-customer transactions, customer-to-non-
customer transactions, and non-customer-to-non-customer transactions
would be included.
Per Contract Average Daily Volume Subsidy Payment
------------------------------------------------------------------------
Tier I Tier II Tier III
------------------------------------------------------------------------
100,001 to 200,000.............. 200,001 to 300,000 300,001 and
greater.
$0.04 per contract.............. $0.05 per contract $0.06 per
contract.
------------------------------------------------------------------------
Currently, the following types of transactions apply to calculating
the Options Floor Broker Subsidy:
Customer-to-customer executions will count towards
reaching the 100,000 contract and 40,000 contract thresholds, but a per
contract subsidy will not be paid on any customer-to-customer
executions.
Orders entered through FBMS but executed away through
Linkage, as well as dividend, merger and short stock interest
strategies will not count towards the 100,000 contract or the 40,000
contract thresholds nor will a per contract subsidy be paid on these
transactions.
Only the largest component of a Complex Order (i.e., the
component that includes the greatest number of contracts) will count
towards the 100,000 contract and the 40,000 contract thresholds. The
Options Floor Broker Subsidy does not apply to any contracts that are
executed as part of a Complex Order.
For the purposes of calculating the Options Floor Broker Subsidy,
the Exchange proposes to treat firm facilitation transactions, executed
pursuant to Exchange Rule 1064,\4\ in the same manner as fees are
assessed for customer-to-customer executions. The Exchange believes
that this amendment to the Options Floor Broker subsidy calculation is
consistent with the recent waiver of the Firm Proprietary Options
Transaction Charge on firm facilitation transactions.\5\ The volume for
firm facilitation transactions would count toward reaching the 100,000
and 40,000 contract thresholds, but a per contract subsidy will not be
paid on any firm facilitation transaction. A facilitation occurs when a
floor broker holds an options order for a public customer and a contra-
side order for the same option series and, after providing an
opportunity for all persons in the trading crowd to participate in the
transaction, executes both orders as a facilitation cross.\6\
---------------------------------------------------------------------------
\4\ A Floor Broker holding an options order for a public
customer and a contraside order may cross such orders in accordance
with paragraph (a) above or may execute such orders as a
facilitation cross in the following manner: (i) The Floor Broker or
his employees must enter the appropriate notation onto the Options
Floor Broker Management System for the public customer's order,
together with all of the terms of the order, including any
contingency involving other options or the underlying or related
securities. (ii) The Floor Broker shall request markets for the
execution of all options components of the order. After providing an
opportunity for such markets to be made, the Floor Broker shall
announce that he holds an order subject to facilitation and shall
bid (or offer) in between the market for each options component and
disclose all terms and conditions of the order including all
securities which are components of the order. (iii) After all market
participants in the crowd are given a reasonable opportunity to
accept all terms and conditions made on behalf of the public
customer whose order is subject to facilitation, the Floor Broker
may immediately thereafter cross all or any remaining part of such
order and the facilitation order at each customer's bid or offer by
announcing by public outcry that he is crossing and by stating the
quantity and price(s). Once a Floor Broker has announced an order as
subject to facilitation and has established a bid (or offer) in
between the market for the option(s) to be facilitated, the order
cannot be broken up by a subsequent superior bid or offer for just
one component to the facilitated order. See Exchange Rule 1064(b).
\5\ See Securities Exchange Act Release No. 60477 (August 11,
2009), 74 FR 41777 (August 18, 2009) (SR-Phlx-2009-67).
\6\ See Exchange Rule 1064.
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The Exchange also proposes other clarifying technical amendments to
the fee schedule. The Exchange recently updated the fee schedule \7\
and amended certain footnotes in the fee schedule and replaced them
with endnotes. It was previously noted in the fee schedule that payment
for order flow fees would be assessed on transactions resulting from
customer orders and are available to be disbursed by the Exchange
according to the instructions of the specialist units/specialists or
Directed ROTs to order flow providers who are members or member
organizations, who submit, as agent, customer orders to the Exchange or
non-members or non-member organizations who submit, as agent, customer
orders to the Exchange through a member or member organization who is
acting as agent for those customer orders. This language was
inadvertently removed from the previous fee schedule when the fee
schedule was reformatted,\8\ however, payment for order flow fees have
and continue to be assessed on transactions resulting from customer
orders.\9\ The Exchange proposes adding the following language back
into the fee schedule to further clarify the payment for order flow
fees: ``Payment for order flow fees will be assessed on transactions
resulting from customer orders.'' Also, for purposes of consistency,
the Exchange proposes amending all references to Phlx in the fee
schedule to be ``PHLX'' and adding appropriate trademark references.
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\7\ See Securities Exchange Act Release No. 59402 (February 13,
2009), 74 FR 8134 (February 23, 2009) (SR-Phlx-2009-08) (amending
and reformatting the existing NASDAQ OMX PHLX Fee Schedule).
\8\ See Securities Exchange Act Release No. 59402 (February 13,
2009), 74 FR 8134 (February 23, 2009) (SR-Phlx-2009-08).
\9\ The program took effect on July 1, 2005. See e.g.,
Securities Exchange Act Release Nos.; 57851 (May 22, 2008), 73 FR
31177 (May 30, 2008) (SR-Phlx-2008-38); 55891 (June 11, 2007), 72 FR
333271 (June 15, 2007) (SR-Phlx-2007-39); 53754 (May 3, 2006), 71 FR
27301 (May 10, 2006) (SR-Phlx-2006-25); 53078 (January 9, 2006), 71
FR 2289 (January 13, 2006) (SR-Phlx-2005-88); 52568 (October 6,
2005), 70 FR 60120 (October 14, 2005) (SR-Phlx-2005-58); and 52114
(July 22, 2005), 70 FR 44138 (August 1, 2005) (SR-Phlx-2005-44).
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2. Statutory Basis
The Exchange believes that its proposal to amend its schedule of
fees is consistent with Section 6(b) of the Act \10\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \11\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members. Pursuant to this proposal,
all member organizations registered as floor brokers are offered the
continued opportunity to receive a subsidy. By allowing for a subsidy,
the Exchange believes that floor brokers will be encouraged to send
additional orders to the Exchange for execution. The Exchange also
proposes a few technical changes to clarify the language in the fee
schedule.
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\10\ 15 U.S.C. 78f(b).
\11\ 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
Because the foregoing rule change establishes or changes a due,
fee, or other charge imposed by the Exchange, it has become effective
pursuant to Section 19(b)(3)(A) of the Act \12\ and subparagraph (f)(2)
of Rule 19b-4 \13\
[[Page 45668]]
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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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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 (https://www.sec.gov/rules/sro.shtml ); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Phlx-2009-72 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-2009-72. 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 (https://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 inspection and copying 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 Phlx. 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-2009-72 and should be submitted on
or before September 24, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-21222 Filed 9-2-09; 8:45 am]
BILLING CODE 8010-01-P
