Self-Regulatory Organizations; Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC Relating to PIXL Fees, 63878-63880 [2010-26175]
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Federal Register / Vol. 75, No. 200 / Monday, October 18, 2010 / Notices
receipt. This technology was not
previously available.
The Exchange proposes this
amendment to both Exchange Rule 1063
as well as OFPA C–2, which is part of
the minor rule plan.14
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 15 in general, and furthers the
objectives of Section 6(b)(5) of the Act 16
in particular, in that it is designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest, by
requiring a floor broker to enter more
specific information to identify trades.
This proposal would enhance the
Exchange’s audit trail.
Further, the Exchange believes that
amending the language concerning
clearing information related to the
contra-side of the trade to require the
information to be entered into FBMS
contemporaneously upon receipt on the
Exchange is consistent with the
language of other exchanges and still
allows for the timely entry of
information for clearing purposes.
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.
mstockstill on DSKH9S0YB1PROD with NOTICES
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 proposed rule
change: (i) Does not significantly affect
the protection of investors or the public
interest; (ii) does not impose any
significant burden on competition; and
(iii) by its terms, does not become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, if
consistent with the protection of
14 The
Exchange’s minor rule plan consists of
options floor procedure advices (‘‘OFPAs’’ or
‘‘Advices’’) with preset fines, pursuant to Rule 19d–
1(c) under the Act. 17 CFR 240.19d–1(c). Most
OFPAs have corresponding options rules.
15 15 U.S.C. 78f(b).
16 15 U.S.C. 78f(b)(5).
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investors and the public interest, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 17 and Rule 19b–
4(f)(6) thereunder.18
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.
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 rulecomments@sec.gov. Please include File
Number SR–Phlx–2010–139 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–2010–139. 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
17 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the self-regulatory organization
to submit to the Commission written notice of its
intent to file the proposed rule change, along with
a brief description and text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
18 17
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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
available publicly. All submissions
should refer to File Number SR–Phlx–
2010–139 and should be submitted on
or before November 8, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–26130 Filed 10–15–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63082; File No. SR–Phlx–
2010–130]
Self-Regulatory Organizations; SelfRegulatory Organizations; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change by NASDAQ
OMX PHLX LLC Relating to PIXL Fees
October 13, 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
September 29, 2010, NASDAQ OMX
PHLX LLC (‘‘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 Exchange.
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 to add pricing applicable
to members utilizing the Exchange’s
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 75, No. 200 / Monday, October 18, 2010 / Notices
price improvement mechanism known
as Price Improvement XL or (PIXLSM).
While changes to the Fee Schedule
pursuant to this proposal are effective
upon filing, the Exchange has
designated these changes to be operative
upon the approval and effectiveness of
SR–Phlx–2010–108.3
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, 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
mstockstill on DSKH9S0YB1PROD with NOTICES
1. Purpose
The purpose of the proposed rule
change is to assess fees for orders
known as PIXL Orders 4 and Initiating
Orders 5 according to the following
categories: Customers, Directed
Participants,6 Specialists,7 Streaming
Quote Traders (‘‘SQT’’),8 Remote
3 SR–Phlx–2010–108 is a proposal to adopt Rule
1080(n) to establish a price-improvement
mechanism.
4 ‘‘A member may electronically submit for
execution an order it represents as agent on behalf
of a public customer, broker-dealer, or any other
entity (‘‘PIXL Order’’) against principal interest or
against any other order (except as provided in subparagraph (n)(i)(E) below) it represents as agent
(‘‘Initiating Order’’) provided it submits the PIXL
order for electronic execution into the PIXL Auction
(‘‘Auction’’) pursuant to Rule 1080. See Exchange
Rule 1080(n) as proposed in SR–Phlx–2010–108.
5 See footnote 4.
6 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.
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
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Streaming Quote Traders (‘‘RSQT’’),9
Firms and Broker-Dealers. All options
traded on the Exchange are eligible for
PIXL.
Initiating Order Trades Against the PIXL
Order
The Exchange proposes to assess a fee
of $0.05 per contract when an Initiating
Order executes against a PIXL Order in
the symbols listed in Section I, the Fees
and Rebates for Adding and Removing
Liquidity in Select Symbols 10 (known
as ‘‘Select Symbols’’), and the symbols
defined in Section II 11 (‘‘Section II
Symbols’’). The Exchange proposes to
only assess the fees listed in Section II
of the Fee Schedule for the PIXL Order
when the PIXL Order trades against the
Initiating Order in Section II Symbols
and the Select Symbols. For example, a
member or member organization would
be assessed $0.00 for Customer
transactions.
For the symbols assessed according to
Section III 12 of the Fee Schedule, titled
Sector Index Options Fees and U.S
Dollar-Settled Foreign Currency
(‘‘WCO’’) Options Fees, the transaction
fees described in Section III would
apply to both the Initiating Order and
the PIXL Order for all executions.
PIXL Order Fees When the PIXL Order
Does Not Trade Against the Initiating
Order Select Symbols
Select Symbols: Section I
With respect to executions in Select
Symbols, where the PIXL Order is not
trading against the Initiating Order, the
PIXL Order would be assessed the Fee
for Removing Liquidity when that order
is executed against a resting contra-side
order or quote that was present upon
initial receipt of the PIXL Order. The
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 The Fees and Rebates for Adding and
Removing Liquidity in Select Symbols are listed in
Section I of the Fee Schedule.
11 An equity option includes exchange-traded
fund share (‘‘ETF’’), Holding Company Depositary
Receipt (‘‘HOLDR’’), Russell 2000(R) Index (the ‘‘Full
Value Russell Index’’ or ‘‘RUT’’), options on the onetenth value Russell 2000® Index (the ‘‘Reduced
Value Russell Index’’ or ‘‘RMN’’), options on the
Nasdaq 100 Index traded under the symbol NDX
(‘‘NDX’’) and options on the one-tenth value of the
Nasdaq 100 Index traded under the symbol MNX
(‘‘MNX’’).
12 The symbols assessed fees according to Section
III are BKX, FPX, HGX, OSX, SOX, UTY, and XAU
(‘‘Sector Index Options’’) and U.S. Dollar-Settled
Foreign Currency Options (‘‘WCOs’’).
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63879
resting contra-side order or quote would
receive the Rebate for Adding Liquidity.
Additionally, the PIXL Order would
receive the Rebate for Adding Liquidity
when that order is executed against
contra-side order(s) that respond to the
PIXL auction broadcast message, as well
as when executed against contra-side
quotes and unrelated orders on the
PHLX book that arrived after the PIXL
auction was initiated. The PIXL auction
responders, contra-side order(s) and
quote(s) would be assessed the Fee for
Removing Liquidity.
For the symbols assessed according to
Section III of the Fee Schedule, titled
Sector Index Options Fees and U.S
Dollar-Settled Foreign Currency
(‘‘WCO’’) Options Fees, the transaction
fees described in Section III would
apply to both the Initiating Order and
the PIXL Order for all executions.
Equity Options: Section II
With respect to executions in Section
II Equity Options,13 the PIXL Order
would be assessed the appropriate
Equity Option Fee in Section II of the
Fee Schedule. The contra-side order or
quote would be assessed the appropriate
Equity Option Fee listed on the Fee
Schedule as well. All other Equity
Options Fees in Section II would apply
as appropriate, including but not
limited to Payment for Order Flow.
Finally, the Exchange is proposing to
relocate the Flex Equity Option Fees
from Section IV, FLEX Equity Options,
of the Fee Schedule to Section II, Equity
Options, and consolidate those fee with
other Equity Option Fees for the sake of
clarity. Section IV will now contain the
proposed PIXL fees and is proposed to
be titled ‘‘PIXL Pricing.’’
While changes to the Fee Schedule
pursuant to this proposal are effective
upon filing, the Exchange has
designated these changes to be operative
upon the approval and effectiveness of
SR–Phlx–2010–108.14
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 15
in general, and furthers the objectives of
Section 6(b)(4) of the Act 16 in
particular, in that it is an equitable
allocation of reasonable fees and other
charges among Exchange members. The
Exchange believes that the fee proposal
13 This includes all Symbols that are not
specifically Select Symbols as listed in Section I of
the Fee Schedule.
14 SR–Phlx–2010–108 is a proposal to adopt Rule
1080(n) to establish a price-improvement
mechanism.
15 15 U.S.C. 78f(b).
16 15 U.S.C. 78f(b)(4).
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Federal Register / Vol. 75, No. 200 / Monday, October 18, 2010 / Notices
is both equitable and reasonable for the
reasons listed hereafter.
The proposed fees are consistent with
the equitable price differentials that
exist today at all option exchanges. For
example, the fees and rebates assessed
by the Exchange are similar, and in
some cases less than, the fees and
rebates assessed by the Boston Options
Exchange Group, LLC (‘‘BOX’’) 17 and the
International Securities Exchange
(‘‘ISE’’) 18 for orders executed in a price
improvement mechanism. For example
a BOX participant could be assessed
total fees of $0.35 per contract as the
price improvement period (‘‘PIP’’)
initiator and receive a rebate for their
customer PIP order of $0.25 per contract
(in this example the net fee charged the
BOX participant would be $0.10),
whereas the PIP responder could be
assessed a fee of $0.50 per contract. This
is a differential of $0.40 per contract
between two BOX participants for
participating in the PIP auction, which
is equal to or less than the differentials
that exist in the Exchange’s proposal.
With respect to ISE, the Exchange pays
a rebate for certain PIXL executions,
which is similar to the $0.15 rebate ISE
pays for its price improvement
mechanism.
The Exchange operates in a fiercely
competitive market place in which
Exchange members and member
organizations are highly sophisticated
and highly knowledgeable. As is the
case, members and member
organizations readily and swiftly direct
order flow or post liquidity to
competing venues if they deem fee
levels at a particular options exchange
to be excessive, unfair or unreasonable.
The Exchange believes the proposal is
an equitable allocation of fees and not
unfairly discriminatory for the reasons
stated above.
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.
mstockstill on DSKH9S0YB1PROD with NOTICES
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.
17 See Securities and Exchange Act Release No.
62632 (August 3, 2010), 75 FR 47869 (August 3,
2010) (SR–BX–2010–049).
18 See the ISE schedule of fee as of August 2,
2010.
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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.19 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.
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 rulecomments@sec.gov. Please include File
Number SR–Phlx–2010–130 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–2010–130. 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,20 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
19 15
U.S.C. 78s(b)(3)(A)(ii).
text of the proposed rule change is
available on the Commission’s Web site at
https://www.sec.gov/rules/sro.shtml.
20 The
PO 00000
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Fmt 4703
Sfmt 4703
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 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–2010–130 and should
be submitted on or before November 8,
2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–26175 Filed 10–15–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63085; File No. SR–BATS–
2010–026]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change, as Modified by
Amendment No. 1, Related to Fees for
Use of BATS Exchange, Inc.
October 13, 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
September 30, 2010, BATS Exchange,
Inc. (the ‘‘Exchange’’ or ‘‘BATS’’) 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.
On October 12, 2010, the Exchange filed
Amendment No. 1, which modified the
original filing.3 BATS has designated
the proposed rule change as one
establishing or changing a member due,
fee, or other charge imposed by the
Exchange under Section 19(b)(3)(A)(ii)
of the Act 4 and Rule 19b–4(f)(2)
thereunder,5 which renders the
21 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 In Amendment No. 1, the Exchange provided
additional basis for the proposed rule change in the
Statutory Basis section.
4 15 U.S.C. 78s(b)(3)(A)(ii).
5 17 CFR 240.19b–4(f)(2).
1 15
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Agencies
[Federal Register Volume 75, Number 200 (Monday, October 18, 2010)]
[Notices]
[Pages 63878-63880]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-26175]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63082; File No. SR-Phlx-2010-130]
Self-Regulatory Organizations; Self-Regulatory Organizations;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change by
NASDAQ OMX PHLX LLC Relating to PIXL Fees
October 13, 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 September 29, 2010, NASDAQ OMX PHLX LLC (``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 Exchange. 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Fee Schedule to add pricing
applicable to members utilizing the Exchange's
[[Page 63879]]
price improvement mechanism known as Price Improvement XL or
(PIXL\SM\).
While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative upon the approval and effectiveness of SR-Phlx-2010-108.\3\
---------------------------------------------------------------------------
\3\ SR-Phlx-2010-108 is a proposal to adopt Rule 1080(n) to
establish a price-improvement mechanism.
---------------------------------------------------------------------------
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, 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 assess fees for
orders known as PIXL Orders \4\ and Initiating Orders \5\ according to
the following categories: Customers, Directed Participants,\6\
Specialists,\7\ Streaming Quote Traders (``SQT''),\8\ Remote Streaming
Quote Traders (``RSQT''),\9\ Firms and Broker-Dealers. All options
traded on the Exchange are eligible for PIXL.
---------------------------------------------------------------------------
\4\ ``A member may electronically submit for execution an order
it represents as agent on behalf of a public customer, broker-
dealer, or any other entity (``PIXL Order'') against principal
interest or against any other order (except as provided in sub-
paragraph (n)(i)(E) below) it represents as agent (``Initiating
Order'') provided it submits the PIXL order for electronic execution
into the PIXL Auction (``Auction'') pursuant to Rule 1080. See
Exchange Rule 1080(n) as proposed in SR-Phlx-2010-108.
\5\ See footnote 4.
\6\ 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.
\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.
---------------------------------------------------------------------------
Initiating Order Trades Against the PIXL Order
The Exchange proposes to assess a fee of $0.05 per contract when an
Initiating Order executes against a PIXL Order in the symbols listed in
Section I, the Fees and Rebates for Adding and Removing Liquidity in
Select Symbols \10\ (known as ``Select Symbols''), and the symbols
defined in Section II \11\ (``Section II Symbols''). The Exchange
proposes to only assess the fees listed in Section II of the Fee
Schedule for the PIXL Order when the PIXL Order trades against the
Initiating Order in Section II Symbols and the Select Symbols. For
example, a member or member organization would be assessed $0.00 for
Customer transactions.
---------------------------------------------------------------------------
\10\ The Fees and Rebates for Adding and Removing Liquidity in
Select Symbols are listed in Section I of the Fee Schedule.
\11\ An equity option includes exchange-traded fund share
(``ETF''), Holding Company Depositary Receipt (``HOLDR''), Russell
2000(R) Index (the ``Full Value Russell Index'' or ``RUT''), options
on the one-tenth value Russell 2000[supreg] Index (the ``Reduced
Value Russell Index'' or ``RMN''), options on the Nasdaq 100 Index
traded under the symbol NDX (``NDX'') and options on the one-tenth
value of the Nasdaq 100 Index traded under the symbol MNX (``MNX'').
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For the symbols assessed according to Section III \12\ of the Fee
Schedule, titled Sector Index Options Fees and U.S Dollar-Settled
Foreign Currency (``WCO'') Options Fees, the transaction fees described
in Section III would apply to both the Initiating Order and the PIXL
Order for all executions.
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\12\ The symbols assessed fees according to Section III are BKX,
FPX, HGX, OSX, SOX, UTY, and XAU (``Sector Index Options'') and U.S.
Dollar-Settled Foreign Currency Options (``WCOs'').
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PIXL Order Fees When the PIXL Order Does Not Trade Against the
Initiating Order Select Symbols
Select Symbols: Section I
With respect to executions in Select Symbols, where the PIXL Order
is not trading against the Initiating Order, the PIXL Order would be
assessed the Fee for Removing Liquidity when that order is executed
against a resting contra-side order or quote that was present upon
initial receipt of the PIXL Order. The resting contra-side order or
quote would receive the Rebate for Adding Liquidity. Additionally, the
PIXL Order would receive the Rebate for Adding Liquidity when that
order is executed against contra-side order(s) that respond to the PIXL
auction broadcast message, as well as when executed against contra-side
quotes and unrelated orders on the PHLX book that arrived after the
PIXL auction was initiated. The PIXL auction responders, contra-side
order(s) and quote(s) would be assessed the Fee for Removing Liquidity.
For the symbols assessed according to Section III of the Fee
Schedule, titled Sector Index Options Fees and U.S Dollar-Settled
Foreign Currency (``WCO'') Options Fees, the transaction fees described
in Section III would apply to both the Initiating Order and the PIXL
Order for all executions.
Equity Options: Section II
With respect to executions in Section II Equity Options,\13\ the
PIXL Order would be assessed the appropriate Equity Option Fee in
Section II of the Fee Schedule. The contra-side order or quote would be
assessed the appropriate Equity Option Fee listed on the Fee Schedule
as well. All other Equity Options Fees in Section II would apply as
appropriate, including but not limited to Payment for Order Flow.
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\13\ This includes all Symbols that are not specifically Select
Symbols as listed in Section I of the Fee Schedule.
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Finally, the Exchange is proposing to relocate the Flex Equity
Option Fees from Section IV, FLEX Equity Options, of the Fee Schedule
to Section II, Equity Options, and consolidate those fee with other
Equity Option Fees for the sake of clarity. Section IV will now contain
the proposed PIXL fees and is proposed to be titled ``PIXL Pricing.''
While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative upon the approval and effectiveness of SR-Phlx-2010-108.\14\
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\14\ SR-Phlx-2010-108 is a proposal to adopt Rule 1080(n) to
establish a price-improvement mechanism.
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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 \15\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \16\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members. The Exchange believes that
the fee proposal
[[Page 63880]]
is both equitable and reasonable for the reasons listed hereafter.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4).
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The proposed fees are consistent with the equitable price
differentials that exist today at all option exchanges. For example,
the fees and rebates assessed by the Exchange are similar, and in some
cases less than, the fees and rebates assessed by the Boston Options
Exchange Group, LLC (``BOX'') \17\ and the International Securities
Exchange (``ISE'') \18\ for orders executed in a price improvement
mechanism. For example a BOX participant could be assessed total fees
of $0.35 per contract as the price improvement period (``PIP'')
initiator and receive a rebate for their customer PIP order of $0.25
per contract (in this example the net fee charged the BOX participant
would be $0.10), whereas the PIP responder could be assessed a fee of
$0.50 per contract. This is a differential of $0.40 per contract
between two BOX participants for participating in the PIP auction,
which is equal to or less than the differentials that exist in the
Exchange's proposal. With respect to ISE, the Exchange pays a rebate
for certain PIXL executions, which is similar to the $0.15 rebate ISE
pays for its price improvement mechanism.
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\17\ See Securities and Exchange Act Release No. 62632 (August
3, 2010), 75 FR 47869 (August 3, 2010) (SR-BX-2010-049).
\18\ See the ISE schedule of fee as of August 2, 2010.
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The Exchange operates in a fiercely competitive market place in
which Exchange members and member organizations are highly
sophisticated and highly knowledgeable. As is the case, members and
member organizations readily and swiftly direct order flow or post
liquidity to competing venues if they deem fee levels at a particular
options exchange to be excessive, unfair or unreasonable. The Exchange
believes the proposal is an equitable allocation of fees and not
unfairly discriminatory for the reasons stated above.
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.\19\ 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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\19\ 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 (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Phlx-2010-130 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-2010-130. 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,\20\ 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, 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-2010-130 and should be submitted on or before
November 8, 2010.
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\20\ The text of the proposed rule change is available on the
Commission's Web site at https://www.sec.gov/rules/sro.shtml.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-26175 Filed 10-15-10; 8:45 am]
BILLING CODE 8011-01-P