Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Applicability of Fees, 29788-29790 [2010-12694]
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29788
Federal Register / Vol. 75, No. 102 / Thursday, May 27, 2010 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62140; File No. SR–Phlx–
2010–69]
Self-Regulatory Organizations;
NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change Relating to
the Applicability of Fees
May 20, 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 April 30,
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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Fee Schedule by adding language at the
beginning of the Fee Schedule to
describe with more specificity the
applicability of fees to transactions. It is
also making certain additional wording
changes to the Fee Schedule for
purposes of clarity and to conform the
Fee Schedule to the Exchange’s current
billing practices.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://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
https://www.sec.gov.
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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
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
18:50 May 26, 2010
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange currently charges its
members certain transaction-related fees
for options trades. These fees are
assessed at differing rates that depend
on the option contract and on the
characteristics of the particular trade.
Category I of the Fee Schedule sets forth
fees assessed in connection with rebates
for adding and fees for removing
liquidity in certain specific option
contracts identified in the first bullet
point of Category I.5 Category II
identifies fees assessed with respect to
transactions in the other equity options
traded on the Exchange as well as ETFs,
HOLDRS, RUT, RMN, MNX and NDX
(together, these Category II fees are the
‘‘Equity Options Fees’’). Categories III
and IV set forth fees assessed with
respect to transactions in the Exchange’s
sector index options and U.S. dollarsettled foreign currency options,
respectively.
The six subcategories of transaction
fees within Category I, the rebates for
adding and fees for removing liquidity
are (1) Customer, (2) Directed
Participant, (3) Specialist, ROT, SQT
and RSQT, (4) Firm, (5) Professional and
(6) Broker-Dealer. Within Category II,
there are five fee subcategories,
identified as (1) Customer Executions,
(2) Professional (3) Registered Options
Traders (on-floor) and Specialists, (4)
Firm, and (5) Broker-Dealer. Categories
III and IV each contain the following six
subcategories: (1) Customer Executions,
(2) Professional (3) Registered Options
Traders (on-floor), (4) Specialist, (5)
Firm, and (6) Broker-Dealer.
As a preliminary matter, the Exchange
is deleting the word ‘‘Executions’’ from
the caption of the ‘‘Customer
Executions’’ subcategory within
Categories II, III and IV of the Fee
Schedule as unnecessary and
potentially confusing. Hereafter, this
proposed rule change will refer to the
‘‘Customer Executions’’ subcategories as
simply the ‘‘Customer’’ subcategories.
5 Category I also sets forth certain rebates for
adding liquidity. The rebates apply as set forth
within the various subcategories that also apply to
fees within Category I.
2 17
VerDate Mar<15>2010
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.
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Similarly, the Exchange is proposing to
delete references to the term ‘‘Firm
Proprietary’’ wherever they appear in
Categories II, III and IV. Currently, the
Fee Schedule uses the terms ‘‘Firm’’ and
‘‘Firm Proprietary’’ to refer to the same
types of transactions. The Exchange is
proposing to delete the words ‘‘Firm
Proprietary’’ and instead use the term
‘‘Firm’’ consistently in the Fee Schedule.
A conforming change is also made to
endnote 5.
The Exchange proposes to add
language to the beginning of the Fee
Schedule in a preface immediately
preceding Category I to address the
applicability of its fees to certain
transactions. The Exchange is proposing
to add this text to the Fee Schedule to
clarify the below terms for purposes of
assessing fees.
The term ‘‘Customer’’ applies to any
transaction that is identified by a
member or member organization for
clearing in the Customer range at The
Options Clearing Corporation (‘‘OCC’’)
which is not for the account of broker
or dealer or for the account of a
‘‘Professional’’ (as that term is defined in
Rule 1000(b)(14)).6
The term ‘‘Directed Participant’’
applies to transactions for the account of
a Specialist, 7 Streaming Quote Trader 8
(an ‘‘SQT’’) or Remote Streaming Quote
Trader 9 (an ‘‘RSQT’’) resulting from a
Customer order that is (1) directed to it
by an order flow provider, 10 and (2)
executed by it electronically on Phlx XL
II.11
The term ‘‘Specialist, ROT, SQT and
RSQT’’ applies to transactions for the
accounts of Specialists, Registered
6 Rule 1000(b)(14) provides in relevant part: ‘‘The
term ‘‘professional’’ means any person or entity that
(i) is not a broker or dealer in securities, and (ii)
places more than 390 orders in listed options per
day on average during a calendar month for its own
beneficial account(s).
7 A Specialist is an Exchange member who is
registered as an options specialist pursuant to Rule
1020(a).
8 A Streaming Quote Trader is defined in
Exchange Rule 1014(b)(ii)(A) as an ROT who has
received permission from the Exchange to generate
and submit option quotations electronically through
AUTOM in eligible options to which such SQT is
assigned.
9 A Remote Streaming Quote Trader is defined
Exchange Rule in 1014(b)(ii)(B) as 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.
10 An Order Flow Provider is defined in Exchange
Rule 1080(l)(1)(B) as ‘‘any member or member
organization that submits, as agent, customer orders
to the Exchange.’’
11 A ROT includes a SQT, a RSQT and a NonSQT, which by definition is neither a SQT nor a
RSQT. See Exchange Rule 1014 (b)(i) and (ii).
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Federal Register / Vol. 75, No. 102 / Thursday, May 27, 2010 / Notices
Option Traders 12 (‘‘ROTs’’), Streaming
Quote Traders, and Remote Streaming
Quote Traders, unless the Directed
Participant transaction fee applies.
The term ‘‘Firm’’ applies to any
transaction that is identified by a
member or member organization for
clearing in the Firm range at OCC. For
purposes of clarity, these trades are
received by the Exchange with an origin
type of ‘‘F’’ and are billed the Firm rate.
The term ‘‘Professional’’ applies to
transactions for the accounts of
Professionals (as defined in Exchange
Rule 1000(b)(14)).
The term ‘‘Broker-Dealer’’ applies to
any transaction which is not subject to
any of the other transaction fees
applicable within a particular category.
Thus, for example, ‘‘Broker-Dealer’’
transaction fees do not apply to rebates
and fees for adding and removing
liquidity which are subject to
‘‘Customer’’, ‘‘Directed Participant’’,
‘‘Specialist, ROT, SQT and RSQT’’,
‘‘Firm’’, or ‘‘Professional’’ transaction
fees. For example, the Broker-Dealer fee
would be applicable to transactions by
away market makers or broker dealers
clearing in the customer range.
The Fee Schedule currently refers to
‘‘Registered Options Traders (on floor)
and Specialists’’ in Category II, the
equity option fees. These fees, which are
referred to as ‘‘Registered Options
Traders (on floor) and Specialists’’,
apply only to transactions for the
accounts of ROTs and Specialists.
Likewise the Fee Schedule refers to
‘‘Registered Options Traders (on-floor)’’
in Categories III and IV, sector index
options and U.S. dollar-settled options.
These fees, which are referred to as
‘‘Registered Options Traders (on-floor)’’,
apply only to transactions for the
accounts of ROTs. Finally the Fee
Schedule refers to ‘‘Specialist’’ in
Categories III and IV, sector index
options and U.S. dollar-settled options.
These fees, which are referred to as
‘‘Specialist’’, apply only to transactions
for the accounts of Specialists. The
Exchange proposes to replace these
three fee terms with the broader term
‘‘Specialist, ROT, SQT and RSQT’’ for
clarity. The Exchange defines a ROT as
a SQT, a RSQT and a non-SQT. The
Exchange is proposing to change the
title of certain fees for ease of reference.
This category is the Exchange’s market
maker category and will not impact the
fees as Specialists, ROTs, SQTs and
RSQTs are charged the same rate.
12 A Registered Option Trader is defined in
Exchange Rule 1014(b) as a regular member or a
foreign currency options participant of the
Exchange located on the trading floor who has
received permission from the Exchange to trade in
options for his own account.
VerDate Mar<15>2010
15:26 May 26, 2010
Jkt 220001
The Exchange is deleting the second
bullet point under Category I as
unnecessary and duplicative of language
in the new Preface. Clarifying changes
are made to the seventh and eight bullet
points in Category I, the rebates for
adding and fees for removing
liquidity.13
Endnote (C) is proposed to be
amended to more clearly identify the
transaction charges that are subject to
the cap described in that endnote. No
change in meaning is intended.
Additionally, the Exchange proposes
to delete endnote (15) from the Fee
Schedule. Currently, endnote (15) states
that the Broker-Dealer ‘‘charge applies to
members for transactions, received from
other than the floor of the Exchange for
any account (i) in which the holder of
beneficial interest is a member or nonmember broker-dealer or (ii) in which
the holder of beneficial interest is a
person associated with or employed by
a member or non-member broker-dealer.
This includes transactions for the
account of an ROT entered from off the
floor. The Exchange proposes to delete
endnote (15) and instead clarify what
fees will be assessed to a broker-dealer
utilizing the proposed new term
‘‘Broker-Dealer’’ as set forth in the
preface. The Exchange will continue to
assess members as defined in (i) and (ii)
of current endnote (15) fees applicable
to a broker-dealer.14
With respect to the last sentence of
endnote (15), the Exchange notes that
ROTs entering into transactions from
off-floor include RSQTs because RSQTs
are a subset of ROTs by definition.15
The Exchange proposes to assess
transactions for the account of a ROT
entered from off-floor the fees
applicable to Specialists, ROTs, SQTs
and RSQTs, as to the rebates and fees for
adding and removing liquidity. With
13 In addition, the current Fee Schedule states
that ‘‘Customer, Professional, Directed Participant
and Specialist, ROT, SQT and RSQT fees for
removing liquidity will not apply to transactions
resulting from electronic auctions. Electronic
auctions include, without limitation, the Complex
Order Live Auction (‘‘COLA’’), and Quote and
Market Exhaust auctions. Firm and Broker-Dealer
fees for removing liquidity will, however apply to
transactions resulting from electronic auctions.’’
The Exchange proposes to make clear that a
Specialist, ROT, SQT and RSQT do not receive a
rebate for adding liquidity in an electronic auction.
The Exchange proposes to file a separate 19b–4 to
that effect shortly. See E-mail from Angela S. Dunn,
Assistant General Counsel, Phlx, to Johnna B.
Dumler, Special Counsel, Commission, and Andrew
Madar, Special Counsel, Commission, dated May
17, 2010. The exchange also requested that
paragraph 17 of the 19b–4 and exhibit 1 to the 19b–
4 be deleted because it was inadvertently included
in the filing and was not applicable. See id.
14 Id.
15 A ROT includes a SQT, a RSQT and a NonSQT, which by definition is neither a SQT or a
RSQT. See Exchange Rule 1014 (b)(i) and (ii).
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29789
respect to the equity options, RSQTs are
currently assessed at the ‘‘Registered
Options Traders (on-floor) and
Specialists’’ rate. With respect to sector
index options and U.S. dollar-settled
index options, RSQTs are currently
assessed at the ‘‘Registered Options
Traders (on-floor)’’ rate. These fee
subcategories apply to ROTs generally,
regardless of whether they are RSQTs
and therefore are streaming quotes from
off the trading floor. An off-floor ROT
will be assessed fees applicable to the
newly termed Specialist, ROT, SQT and
RSQT category as opposed to the broker
dealer category as is currently stated in
endnote (15). The elimination of
endnote (15) and adoption of the
language explaining how a Specialist,
ROT, SQT and RSQT are billed will
conform the text of the Fee Schedule to
the current billing practice.
Additionally, the Exchange proposes
to amend endnote 5. The proposed
language discussed above to be added as
a preface to the Fee Schedule will
supersede the first sentence of endnote
5, which will therefore be deleted. The
Exchange is also amending endnote 5 to
replace current references to ‘‘Firm
Proprietary Options Transaction Charge’’
with references to ‘‘Firm equity options
charges’’. This change will not result in
new or changed fees but is intended
only to simplify the fee schedule by
eliminating inconsistent references to
the same fee.
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 16
in general, and furthers the objectives of
Section 6(b)(4) of the Act 17 in
particular, in that it is an equitable
allocation of reasonable fees and other
charges among Exchange members and
because it clarifies the applicability of
various Exchange fees, to the benefit of
market participants. Specifically, the
Exchange believes that the added
preface will provide its members
guidance in understanding how the
Exchange assesses fees.
The Exchange is amending its
assessment of fees to broker dealer
transactions. Specifically, the Exchange
believes that it is reasonable to assess
off-floor ROTs in the newly termed
Specialist, ROT, SQT, RSQT category
because the Exchange is proposing to
assess all ROTs, on-floor and off-floor,
the same rate. The Exchange believes
that it is equitable to assess all
Specialists, ROTs, SQT and RSQTs the
same rate.
16 15
17 15
E:\FR\FM\27MYN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
27MYN1
29790
Federal Register / Vol. 75, No. 102 / Thursday, May 27, 2010 / Notices
Finally, the Exchange has made
clarifying amendments to its
terminology throughout the Fee
Schedule to eliminate extraneous terms
and outdated language. The Exchange
believes that these amendments should
simplify the Fee Schedule to the benefit
of its members.
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 18 and
paragraph (f)(2) of Rule 19b–4 19
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:
wwoods2 on DSK1DXX6B1PROD 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–2010–69 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–2010–69. 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 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–
2010–69 and should be submitted on or
before June 17, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–12694 Filed 5–26–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62143; File No. SR–
NYSEAMEX–2010–45]
Self-Regulatory Organizations; NYSE
Amex LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Deleting Rule 413—NYSE Amex
Equities To Correspond With Rule
Changes Filed by the Financial
Industry Regulatory Authority, Inc.
May 20, 2010.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on May 12,
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
U.S.C. 78s(b)(3)(A)(ii).
19 17 CFR 240.19b–4(f)(2).
VerDate Mar<15>2010
15:26 May 26, 2010
Jkt 220001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to delete Rule
413—NYSE Amex Equities to
correspond with rule changes filed by
the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) and approved
by the Commission.4 The text of the
proposed rule change is available at the
Exchange, the Commission’s Public
Reference Room, and https://
www.nyse.com.
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
self-regulatory organization 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 those 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
changes is to delete Rule 413—NYSE
Amex Equities (Uniform Forms) to
correspond with rule changes filed by
FINRA and approved by the
Commission.
Background
On July 30, 2007, FINRA’s
predecessor, the National Association of
Securities Dealers, Inc. (‘‘NASD’’), and
NYSE Regulation, Inc. (‘‘NYSER’’)
consolidated their member firm
regulation operations into a combined
organization, FINRA. Pursuant to Rule
17d–2 under the Act, the New York
Stock Exchange LLC (‘‘NYSE’’), NYSER
and FINRA entered into an agreement
20 17
1 15
18 15
2010, NYSE Amex LLC (the ‘‘Exchange’’
or ‘‘NYSE Amex’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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4 See Securities Exchange Act Release No. 61542
(February 18, 2010), 75 FR 8768 (February 25, 2010)
(order approving SR–FINRA–2009–093).
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Agencies
[Federal Register Volume 75, Number 102 (Thursday, May 27, 2010)]
[Notices]
[Pages 29788-29790]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-12694]
[[Page 29788]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62140; File No. SR-Phlx-2010-69]
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
to the Applicability of Fees
May 20, 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 April 30, 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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Fee Schedule by adding language
at the beginning of the Fee Schedule to describe with more specificity
the applicability of fees to transactions. It is also making certain
additional wording changes to the Fee Schedule for purposes of clarity
and to conform the Fee Schedule to the Exchange's current billing
practices.
The text of the proposed rule change is available on the Exchange's
Web site at https://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 https://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 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 currently charges its members certain transaction-
related fees for options trades. These fees are assessed at differing
rates that depend on the option contract and on the characteristics of
the particular trade. Category I of the Fee Schedule sets forth fees
assessed in connection with rebates for adding and fees for removing
liquidity in certain specific option contracts identified in the first
bullet point of Category I.\5\ Category II identifies fees assessed
with respect to transactions in the other equity options traded on the
Exchange as well as ETFs, HOLDRS, RUT, RMN, MNX and NDX (together,
these Category II fees are the ``Equity Options Fees''). Categories III
and IV set forth fees assessed with respect to transactions in the
Exchange's sector index options and U.S. dollar-settled foreign
currency options, respectively.
---------------------------------------------------------------------------
\5\ Category I also sets forth certain rebates for adding
liquidity. The rebates apply as set forth within the various
subcategories that also apply to fees within Category I.
---------------------------------------------------------------------------
The six subcategories of transaction fees within Category I, the
rebates for adding and fees for removing liquidity are (1) Customer,
(2) Directed Participant, (3) Specialist, ROT, SQT and RSQT, (4) Firm,
(5) Professional and (6) Broker-Dealer. Within Category II, there are
five fee subcategories, identified as (1) Customer Executions, (2)
Professional (3) Registered Options Traders (on-floor) and Specialists,
(4) Firm, and (5) Broker-Dealer. Categories III and IV each contain the
following six subcategories: (1) Customer Executions, (2) Professional
(3) Registered Options Traders (on-floor), (4) Specialist, (5) Firm,
and (6) Broker-Dealer.
As a preliminary matter, the Exchange is deleting the word
``Executions'' from the caption of the ``Customer Executions''
subcategory within Categories II, III and IV of the Fee Schedule as
unnecessary and potentially confusing. Hereafter, this proposed rule
change will refer to the ``Customer Executions'' subcategories as
simply the ``Customer'' subcategories. Similarly, the Exchange is
proposing to delete references to the term ``Firm Proprietary''
wherever they appear in Categories II, III and IV. Currently, the Fee
Schedule uses the terms ``Firm'' and ``Firm Proprietary'' to refer to
the same types of transactions. The Exchange is proposing to delete the
words ``Firm Proprietary'' and instead use the term ``Firm''
consistently in the Fee Schedule. A conforming change is also made to
endnote 5.
The Exchange proposes to add language to the beginning of the Fee
Schedule in a preface immediately preceding Category I to address the
applicability of its fees to certain transactions. The Exchange is
proposing to add this text to the Fee Schedule to clarify the below
terms for purposes of assessing fees.
The term ``Customer'' applies to any transaction that is identified
by a member or member organization for clearing in the Customer range
at The Options Clearing Corporation (``OCC'') which is not for the
account of broker or dealer or for the account of a ``Professional''
(as that term is defined in Rule 1000(b)(14)).\6\
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\6\ Rule 1000(b)(14) provides in relevant part: ``The term
``professional'' means any person or entity that (i) is not a broker
or dealer in securities, and (ii) places more than 390 orders in
listed options per day on average during a calendar month for its
own beneficial account(s).
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The term ``Directed Participant'' applies to transactions for the
account of a Specialist, \7\ Streaming Quote Trader \8\ (an ``SQT'') or
Remote Streaming Quote Trader \9\ (an ``RSQT'') resulting from a
Customer order that is (1) directed to it by an order flow provider,
\10\ and (2) executed by it electronically on Phlx XL II.\11\
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\7\ A Specialist is an Exchange member who is registered as an
options specialist pursuant to Rule 1020(a).
\8\ A Streaming Quote Trader is defined in Exchange Rule
1014(b)(ii)(A) as an ROT who has received permission from the
Exchange to generate and submit option quotations electronically
through AUTOM in eligible options to which such SQT is assigned.
\9\ A Remote Streaming Quote Trader is defined Exchange Rule in
1014(b)(ii)(B) as 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.
\10\ An Order Flow Provider is defined in Exchange Rule
1080(l)(1)(B) as ``any member or member organization that submits,
as agent, customer orders to the Exchange.''
\11\ A ROT includes a SQT, a RSQT and a Non-SQT, which by
definition is neither a SQT nor a RSQT. See Exchange Rule 1014
(b)(i) and (ii).
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The term ``Specialist, ROT, SQT and RSQT'' applies to transactions
for the accounts of Specialists, Registered
[[Page 29789]]
Option Traders \12\ (``ROTs''), Streaming Quote Traders, and Remote
Streaming Quote Traders, unless the Directed Participant transaction
fee applies.
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\12\ A Registered Option Trader is defined in Exchange Rule
1014(b) as a regular member or a foreign currency options
participant of the Exchange located on the trading floor who has
received permission from the Exchange to trade in options for his
own account.
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The term ``Firm'' applies to any transaction that is identified by
a member or member organization for clearing in the Firm range at OCC.
For purposes of clarity, these trades are received by the Exchange with
an origin type of ``F'' and are billed the Firm rate.
The term ``Professional'' applies to transactions for the accounts
of Professionals (as defined in Exchange Rule 1000(b)(14)).
The term ``Broker-Dealer'' applies to any transaction which is not
subject to any of the other transaction fees applicable within a
particular category. Thus, for example, ``Broker-Dealer'' transaction
fees do not apply to rebates and fees for adding and removing liquidity
which are subject to ``Customer'', ``Directed Participant'',
``Specialist, ROT, SQT and RSQT'', ``Firm'', or ``Professional''
transaction fees. For example, the Broker-Dealer fee would be
applicable to transactions by away market makers or broker dealers
clearing in the customer range.
The Fee Schedule currently refers to ``Registered Options Traders
(on floor) and Specialists'' in Category II, the equity option fees.
These fees, which are referred to as ``Registered Options Traders (on
floor) and Specialists'', apply only to transactions for the accounts
of ROTs and Specialists. Likewise the Fee Schedule refers to
``Registered Options Traders (on-floor)'' in Categories III and IV,
sector index options and U.S. dollar-settled options. These fees, which
are referred to as ``Registered Options Traders (on-floor)'', apply
only to transactions for the accounts of ROTs. Finally the Fee Schedule
refers to ``Specialist'' in Categories III and IV, sector index options
and U.S. dollar-settled options. These fees, which are referred to as
``Specialist'', apply only to transactions for the accounts of
Specialists. The Exchange proposes to replace these three fee terms
with the broader term ``Specialist, ROT, SQT and RSQT'' for clarity.
The Exchange defines a ROT as a SQT, a RSQT and a non-SQT. The Exchange
is proposing to change the title of certain fees for ease of reference.
This category is the Exchange's market maker category and will not
impact the fees as Specialists, ROTs, SQTs and RSQTs are charged the
same rate.
The Exchange is deleting the second bullet point under Category I
as unnecessary and duplicative of language in the new Preface.
Clarifying changes are made to the seventh and eight bullet points in
Category I, the rebates for adding and fees for removing liquidity.\13\
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\13\ In addition, the current Fee Schedule states that
``Customer, Professional, Directed Participant and Specialist, ROT,
SQT and RSQT fees for removing liquidity will not apply to
transactions resulting from electronic auctions. Electronic auctions
include, without limitation, the Complex Order Live Auction
(``COLA''), and Quote and Market Exhaust auctions. Firm and Broker-
Dealer fees for removing liquidity will, however apply to
transactions resulting from electronic auctions.'' The Exchange
proposes to make clear that a Specialist, ROT, SQT and RSQT do not
receive a rebate for adding liquidity in an electronic auction. The
Exchange proposes to file a separate 19b-4 to that effect shortly.
See E-mail from Angela S. Dunn, Assistant General Counsel, Phlx, to
Johnna B. Dumler, Special Counsel, Commission, and Andrew Madar,
Special Counsel, Commission, dated May 17, 2010. The exchange also
requested that paragraph 17 of the 19b-4 and exhibit 1 to the 19b-4
be deleted because it was inadvertently included in the filing and
was not applicable. See id.
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Endnote (C) is proposed to be amended to more clearly identify the
transaction charges that are subject to the cap described in that
endnote. No change in meaning is intended.
Additionally, the Exchange proposes to delete endnote (15) from the
Fee Schedule. Currently, endnote (15) states that the Broker-Dealer
``charge applies to members for transactions, received from other than
the floor of the Exchange for any account (i) in which the holder of
beneficial interest is a member or non-member broker-dealer or (ii) in
which the holder of beneficial interest is a person associated with or
employed by a member or non-member broker-dealer. This includes
transactions for the account of an ROT entered from off the floor. The
Exchange proposes to delete endnote (15) and instead clarify what fees
will be assessed to a broker-dealer utilizing the proposed new term
``Broker-Dealer'' as set forth in the preface. The Exchange will
continue to assess members as defined in (i) and (ii) of current
endnote (15) fees applicable to a broker-dealer.\14\
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\14\ Id.
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With respect to the last sentence of endnote (15), the Exchange
notes that ROTs entering into transactions from off-floor include RSQTs
because RSQTs are a subset of ROTs by definition.\15\ The Exchange
proposes to assess transactions for the account of a ROT entered from
off-floor the fees applicable to Specialists, ROTs, SQTs and RSQTs, as
to the rebates and fees for adding and removing liquidity. With respect
to the equity options, RSQTs are currently assessed at the ``Registered
Options Traders (on-floor) and Specialists'' rate. With respect to
sector index options and U.S. dollar-settled index options, RSQTs are
currently assessed at the ``Registered Options Traders (on-floor)''
rate. These fee subcategories apply to ROTs generally, regardless of
whether they are RSQTs and therefore are streaming quotes from off the
trading floor. An off-floor ROT will be assessed fees applicable to the
newly termed Specialist, ROT, SQT and RSQT category as opposed to the
broker dealer category as is currently stated in endnote (15). The
elimination of endnote (15) and adoption of the language explaining how
a Specialist, ROT, SQT and RSQT are billed will conform the text of the
Fee Schedule to the current billing practice.
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\15\ A ROT includes a SQT, a RSQT and a Non-SQT, which by
definition is neither a SQT or a RSQT. See Exchange Rule 1014 (b)(i)
and (ii).
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Additionally, the Exchange proposes to amend endnote 5. The
proposed language discussed above to be added as a preface to the Fee
Schedule will supersede the first sentence of endnote 5, which will
therefore be deleted. The Exchange is also amending endnote 5 to
replace current references to ``Firm Proprietary Options Transaction
Charge'' with references to ``Firm equity options charges''. This
change will not result in new or changed fees but is intended only to
simplify the fee schedule by eliminating inconsistent references to the
same fee.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \16\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \17\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members and because it clarifies the
applicability of various Exchange fees, to the benefit of market
participants. Specifically, the Exchange believes that the added
preface will provide its members guidance in understanding how the
Exchange assesses fees.
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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(4).
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The Exchange is amending its assessment of fees to broker dealer
transactions. Specifically, the Exchange believes that it is reasonable
to assess off-floor ROTs in the newly termed Specialist, ROT, SQT, RSQT
category because the Exchange is proposing to assess all ROTs, on-floor
and off-floor, the same rate. The Exchange believes that it is
equitable to assess all Specialists, ROTs, SQT and RSQTs the same rate.
[[Page 29790]]
Finally, the Exchange has made clarifying amendments to its
terminology throughout the Fee Schedule to eliminate extraneous terms
and outdated language. The Exchange believes that these amendments
should simplify the Fee Schedule to the benefit of its members.
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 \18\ and paragraph (f)(2) of Rule 19b-4 \19\
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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\18\ 15 U.S.C. 78s(b)(3)(A)(ii).
\19\ 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-2010-69 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-2010-69. 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 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-2010-69 and should be
submitted on or before June 17, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
Florence E. Harmon,
Deputy Secretary.
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\20\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2010-12694 Filed 5-26-10; 8:45 am]
BILLING CODE 8010-01-P