Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Singly Listed Options, 16646-16650 [2011-6908]

Download as PDF 16646 Federal Register / Vol. 76, No. 57 / Thursday, March 24, 2011 / Notices At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551–5400. Dated: March 22, 2011. Elizabeth M. Murphy, Secretary. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meeting Federal Register citation of previous announcement: [76 FR 15352, March 21, 2011] PLACE: Closed Meeting. 100 F Street, NE., Washington, DC. DATE AND TIME OF PREVIOUSLY ANNOUNCED MEETING: March 24, 2011 at 2 p.m. Additional Item. The following matter will also be considered during the 2 p.m. Closed Meeting scheduled for Thursday, March 24, 2011: Consideration of amicus participation. Commissioner Casey, as duty officer, voted to consider the item listed for the Closed Meeting in closed session, and determined that no earlier notice thereof was possible. At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact the Office of the Secretary at (202) 551–5400. CHANGE IN THE MEETING: Dated: March 22, 2011. Elizabeth M. Murphy, Secretary. [FR Doc. 2011–7143 Filed 3–22–11; 4:15 pm] BILLING CODE 8011–01–P emcdonald on DSK2BSOYB1PROD with NOTICES SECURITIES AND EXCHANGE COMMISSION [File No. 500–1] [Release No. 34–64096; File No. SR–Phlx– 2011–34] Circadian, Inc., Clean Energy Combustion, Inc. (n/k/a Clean Energy Combustion Systems, Inc.), Collectible Concepts Group, Inc., Communitronics of America, Inc. (n/k/a RPM Advantage, Inc.), and ConSyGen, Inc., Order of Suspension of Trading Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Singly Listed Options March 22, 2011. [FR Doc. 2011–7145 Filed 3–22–11; 4:15 pm] STATUS: SECURITIES AND EXCHANGE COMMISSION It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Circadian, Inc. because it has not filed any periodic reports since the period ended September 30, 1995. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Clean Energy Combustion, Inc. (n/k/a Clean Energy Combustion Systems, Inc.) because it has not filed any periodic reports since the period ended September 30, 2004. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Collectible Concepts Group, Inc. because it has not filed any periodic reports since the period ended November 30, 2007. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Communitronics of America, Inc. (n/k/a RPM Advantage, Inc.) because it has not filed any periodic reports since the period ended June 30, 2006. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of ConSyGen, Inc. because it has not filed any periodic reports since the period ended November 30, 2001. The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed companies. Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the securities of the above-listed companies is suspended for the period from 9:30 a.m. EDT on March 22, 2011, through 11:59 p.m. EDT on April 4, 2011. By the Commission. Jill M. Peterson, Assistant Secretary. Jkt 223001 PO 00000 Frm 00050 Fmt 4703 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 replace its Sector Index Options Fees and U.S. Dollar-Settled Foreign Currency Option Fees, in Section III of the Fee Schedule, with Singly Listed Options 3 Fees. Also, the Exchange is proposing to create new fees for equities, exchange-traded funds (‘‘ETFs’’) and Holding Company Depository Receipts (‘‘HOLDRS’’) which are not listed on another exchange. While changes to the Fee Schedule pursuant to this proposal are effective upon filing, the Exchange has designated these changes to be operative on April 1, 2011. The text of the proposed rule change is available on the Exchange’s Web site at http://nasdaqtrader.com/ micro.aspx?id=PHLXfilings, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the U.S.C. 78s(b)(1). CFR 240.19b–4. 3 For purposes of this filing, a Singly Listed Option means an option that is only listed on the Exchange and is not listed by any other national securities exchange. 2 17 BILLING CODE 8011–01–P 16:17 Mar 23, 2011 Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 15, 2011, NASDAQ OMX PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 [FR Doc. 2011–7069 Filed 3–22–11; 11:15 am] VerDate Mar<15>2010 March 18, 2011. Sfmt 4703 E:\FR\FM\24MRN1.SGM 24MRN1 16647 Federal Register / Vol. 76, No. 57 / Thursday, March 24, 2011 / Notices 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 create new fees titled ‘‘Singly Listed Options’’ to recoup the increased costs associated with Singly Listed options as compared with Multiply Listed options. The Exchange currently assesses fees for equity options as specified in Section II of the Fee Schedule titled ‘‘Equity Options Fees.’’ Section II includes options overlying equities, ETFs HOLDRS, BKX 4, RUT 5, RMN 6, MNX 7 and NDX 8. The Exchange currently assesses fees for sector index options and U.S. Dollar-Settled foreign currency options as specified in Section III of the Exchange’s Fee Schedule titled Customer Options Transaction Charge .................................................................... The Exchange would remove the Sector Index Option Fees and the U.S. Dollar-Settled Foreign Currency Options Fees from Section III of the Exchange’s Customer Options Transaction Charge .................................................................... In addition, the Exchange proposes to assess Singly Listed equities, ETFs and HOLDRS the proposed fees in Section III.12 Singly listed equities, ETFs and represents the KBW Bank Index. represents the options on the Russell 2000® Index (the ‘‘Full Value Russell Index’’ or ‘‘RUT’’). 6 RMN represents options on the one-tenth value Russell 2000® Index 6 (the ‘‘Reduced Value Russell Index’’ or ‘‘RMN’’). 7 MNX represents options on the one-tenth value of the Nasdaq 100 Index traded under the symbol MNX (‘‘MNX’’). 8 NDX represents options on the Nasdaq 100 Index 8 traded under the symbol NDX (‘‘NDX’’). 9 The applicable U.S. dollar-settled foreign currency options include XDB, XDE, XDN, XDS, emcdonald on DSK2BSOYB1PROD with NOTICES 5 RUT VerDate Mar<15>2010 16:17 Mar 23, 2011 Jkt 223001 $.45 Brokerdealer $.45 the sector index options are assessed the following fees: Professional $.44 $.35 Firm Specialist, ROT, SQT and RSQT $.35 $.35 Firm $.30 Brokerdealer $.45 XDZ, XDC and XDV, are assessed the following fees: U.S. Dollar-Settled foreign currency options, which include XDB, XDE, XDN, XDS, XDA, XDM, XEH, XEV, 4 BKX Specialist, ROT, SQT and RSQT $.45 Fee Schedule. Sector index options and U.S. Dollar-Settled foreign currency options would be subject to the proposed fees in Section III.11 Currently, Options Transaction Charge .................................................................... The Exchange is proposing to rename Section III as ‘‘Singly Listed Options’’ and create fees, which would apply to options overlying currencies,9 equities, ETFs, indexes, and HOLDRS not listed on another exchange.10 The proposed fees are as follows: Professional $.35 Customer ‘‘Sector Index Options Fees and U.S. Dollar-Settled Foreign Currency Option Fees.’’ Professional $.44 Specialist, ROT, SQT and RSQT $.30 $.30 Firm $.30 Brokerdealer $.45 HOLDRS are currently subject to the fees in Section II.13 The Exchange currently assesses equity options, including options overlying equities, ETFs, HOLDRS, BKX, RUT, RMN, MNX and NDX, the following fees which are located in Section II of the Exchange’s Fee Schedule: XDA, XDM, XEH, XEV, XDZ, XDC and XDV (‘‘Currencies’’). 10 The Exchange receives an overnight file from The Options Clearing Corporation, the Data Distribution Service feed, which provides the Exchange a list of options which are Singly and Multiply Listed. The Exchange provides its members with a symbol directory that indicates whether a security is Singly or Multiply Listed. This information, which is available on the exchange’s Web site, is updated daily. In the event that a Singly Listed option becomes Multiply Listed, the option would be assessed the fees in Section II of the Fee Schedule. 11 The Exchange’s indexes and currencies, which are subject to the fees in Section III, are only listed on the Exchange and therefore Singly Listed. 12 This fee proposal would not impact any equity options transacted in any of the symbols which are listed in Section I of the Exchange’s Fee Schedule titled ‘‘Rebates and Fees for Adding and Removing Liquidity in Select Symbols.’’ The Exchange is not amending Section I. 13 Multiply Listed options overlying equities, ETFs, HOLDRS, BKX, RUT, RMN, MNX and NDX would continue to be subject to the fees in Section II. For purposes of this filing, a Multiply Listed security means an option that is listed on more than one exchange. PO 00000 Frm 00051 Fmt 4703 Sfmt 4703 E:\FR\FM\24MRN1.SGM 24MRN1 16648 Federal Register / Vol. 76, No. 57 / Thursday, March 24, 2011 / Notices Specialist, ROT, SQT and RSQT Customer Professional Electronic Options Transaction Charge (Penny Pilot) ..................................................... Options Transaction Charge (non-Penny Pilot) ..................................................... Options Surcharge in RUT, RMN, MNX and NDX ............................................... Options Surcharge in BKX ....................... emcdonald on DSK2BSOYB1PROD with NOTICES Nonelectronic Firm $.20 $.22 $.25 $.45 $.25 $.25 .20 .23 .25 .45 .25 .25 N/A N/A 14 The proposed fees in Section III would apply to Singly Listed options. 15 15 U.S.C. 78f(b). 16 15 U.S.C. 78f(b)(4). 17 By way of example, in analyzing an obvious error, the Exchange would have additional data points available in establishing a theoretical price for a Multiply Listed option as compared to a Singly Listed option, which requires additional analysis and administrative time to comply with Exchange rules to resolve an obvious error. Jkt 223001 Electronic .00 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 and other persons using its facilities. The Exchange believes that the proposed fees for Singly Listed Options are equitable because the Exchange is seeking to recoup the operational costs for Singly Listed options, which costs are higher than those for Multiply Listed options.17 In addition, the Exchange believes that the proposed fees for Singly Listed options are equitable for the reasons specified below. Customers currently pay: (i) No transaction fee for equity options; (ii) a $.44 per contract fee for sector index options; and (iii) a $.44 per contract fee for U.S. Dollar-Settled foreign currency 16:17 Mar 23, 2011 Nonelectronic $.00 The Exchange is proposing to amend the Equity Options Fees in Section II by adding the words ‘‘which are Multiply Listed’’ to the title of Section II to clarify that Section II fees apply to Multiply Listed options.14 The Exchange also proposes to amend this title consistently throughout the Fee Schedule. The Exchange also proposes to amend Section IV of the Exchange’s Fee Schedule, titled ‘‘PIXL Pricing,’’ to replace references to ‘‘Sector Index Options Fees and U.S. Dollar-Settled Foreign Currency Options’’ with the words ‘‘Singly Listed Options.’’ The Exchange is also proposing to amend the Table of Contents to reflect the proposed title for Section III, ‘‘Singly Listed Options.’’ VerDate Mar<15>2010 Broker-dealer N/A N/A .15 .10 .15 .10 .15 .10 .15 .10 .15 .10 options. The Exchange is proposing to assess a $.35 per contract fee to Customers trading Singly Listed options which includes Currencies, equities, ETFs, Indexes and HOLDRS. Customers transacting Multiply Listed equity options, ETFs or HOLDRS are currently assessed no transaction fee and this would not change with this proposal. Customers who currently transact Singly Listed equity options, ETFs or HOLDRS would now pay $.35 per contract.18 The Exchange believes that this fee increase is equitable because the Exchange incurs a higher operational cost on Singly Listed options as compared to Multiply Listed options as described above. The Exchange believes that it is equitable to assess Customers $.35 per contract to transact Currencies and indexes, because today Customers pay $.44 per contract to transact these products. Customers would benefit from the lower fee. The Exchange is able to lower the fee by offsetting the costs with the fee increase to Customers who transact Singly Listed equity options, ETFs and HOLDRS. The Exchange believes that it is equitable to assess Specialists,19 Registered Options Traders,20 SQTs,21 and RSQTs 22 a transaction fee of $.35 18 This excludes equity options which are subject to Section I of the Fee Schedule titled ‘‘Fees and Rebates for Adding and Removing Liquidity in Select Symbols.’’ 19 A Specialist is an Exchange member who is registered as an options specialist pursuant to Rule 1020(a). 20 A Registered Options Trader (‘‘ROT’’) includes a Streaming Quote Trader (‘‘SQT’’), a Remote Streaming Quote Trader (‘‘RSQT’’) and a Non-SQT ROT, which by definition is neither a SQT or a RSQT. A ROT 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. See Exchange Rule 1014(b)(i) and (ii). 21 An SQT 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 in options to which such SQT is assigned. 22 A RSQT is defined in Exchange Rule 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 PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 per contract to transact Singly Listed Currencies, equities, ETFs, indexes and HOLDRS. Market makers 23 today are assessed Equity Options Fees for transacting equity options, ETFs or HOLDRS ranging from $.10–$.25 per contract depending on whether the transaction is electronic 24 or nonelectronic, a Penny Pilot 25 or a nonPenny Pilot option or an option overlying RUT, RMN, MNX, NDX or BKX.26 The Exchange believes that it is equitable to assess market makers $.35 per contract for transacting Singly Listed equities, ETFs and HOLDRs pursuant to the proposed fees in Section III, because such orders would not be subject to payment for order flow. Currently, equity option transactions, including options overlying equities, ETFs, HOLDRS, BKX, RUT, RMN, MNX and NDX, are subject to certain payment for order flow fees.27 The Exchange assesses Payment for Order Flow Fees of $.25 per contract for options trading in the Penny Pilot Program and $.70 per electronically in options to which such RSQT has been assigned. An RSQT may only submit such quotations electronically from off the floor of the Exchange. 23 The Exchange market maker category includes Specialists (see Rule 1020) and ROTs (Rule 1014(b)(i) and (ii), which includes SQTs (see Rule 1014(b)(ii)(A)) and RSQTs (see Rule 1014(b)(ii)(B)). 24 Electronically delivered orders do not include orders delivered through the Floor Broker Management System. 25 The Penny Pilot was established in January 2007; and in October 2009, it was expanded and extended through December 31, 2010. See Securities Exchange Act Release Nos. 55153 (January 23, 2007), 72 FR 4553 (January 31, 2007) (SR–Phlx–2006–74) (approval order establishing Penny Pilot); 60873 (October 23, 2009), 74 FR 56675 (November 2, 2009) (SR–Phlx–2009–91) (expanding and extending Penny Pilot); 60966 (November 9, 2009), 74 FR 59331 (November 17, 2009) (SR–Phlx– 2009–94) (adding seventy-five classes to Penny Pilot); and 61454 (February 1, 2010), 75 FR 6233 (February 8, 2010) (SR–Phlx–2010–12) (adding seventy-five options classes to the Penny Pilot). See also Exchange Rule 1034. 26 This excludes the symbols which are subject to Section I of the Fee Schedule, titled ‘‘Fees and Rebates for Adding and Removing Liquidity in Select Symbols.’’ 27 This excludes the symbols which are subject to Section I of the Fee Schedule, titled ‘‘Fees and Rebates for Adding and Removing Liquidity in Select Symbols.’’ E:\FR\FM\24MRN1.SGM 24MRN1 emcdonald on DSK2BSOYB1PROD with NOTICES Federal Register / Vol. 76, No. 57 / Thursday, March 24, 2011 / Notices contract for all other equity options.28 The Exchange believes that it is equitable to assess market makers a higher rate for transacting Singly Listed equities, ETFs or HOLDRS because market makers would not be subject to Payment for Order Fees, as they are today and would continue to be under this proposal, when transacting Multiply Listed equities, ETFs or HOLDRS. The Exchange believes that increasing the fee assessed for indexes and Currencies from $.30 to $.35 per contract is equitable because as stated previously, the Exchange is seeking to recoup costs with respect to Singly Listed products. Additionally, the Exchange would be assessing the same fee on indexes and Currencies. The Exchange believes that it is equitable to assess Professionals, Firms and Broker-Dealers $.45 per contract to transact Singly Listed options including Currencies, equities, ETFs, indexes and HOLDRS. Currently, Professionals pay $.20 per contract to transact equities, ETFs and HOLDRS, $.35 per contract to transact indexes and $.30 per contract to transact Currencies. The Exchange believes that the proposed $.45 per contract Professional fee would be equitable because of the increased costs associated with Singly Listed options as explained above. Broker-Dealers today are assessed Equity Options Fees for transacting equity options, ETFs or HOLDRS ranging from $.10–$.45 per contract depending on whether the transaction is electronic or non-electronic, a Penny Pilot or non-Penny Pilot option or an option overlying RUT, RMN, MNX, NDX or BKX. The Exchange believes that the proposed Broker-Dealer fee of $.45 per contract is equitable because it is similar to the Exchange’s fees for electronic transactions in Penny Pilot and non-Penny Pilot options.29 Additionally, the Exchange believes that the proposed fee for both indexes and Currencies is equitable because the rates would remain the same as today. Finally, Firms today are assessed fees for transacting equities, ETFs and HOLDRS which range from $.10–$.25 per contract. The Exchange believes that the proposed Firm fee of $.45 per contract is equitable because of the higher costs associated with Singly Listed options as compared to Multiply Listed options as explained above. The Exchange believes that the increased costs also form an equitable basis to increase both the Broker-Dealer fees to 28 There are no Payment for Order Flow Fees on trades that are not delivered electronically. 29 See Section II of the Exchange’s Fee Schedule. VerDate Mar<15>2010 16:17 Mar 23, 2011 Jkt 223001 transact indexes and Currencies from $.30 to $.45 per contract. The Exchange believes that the proposed fees are reasonable because the fees are consistent with price differentiation that exists today at all option exchanges. Other exchanges today charge different rates as between Multiply Listed products and Singly Listed products. For example, the Internal Securities Exchange, LLC (‘‘ISE’’) assesses different fees for Customers who transact Multiply Listed options, indexes, ETFs and FX Options ($.00) as compared to Customers who transact Singly Listed indexes, ETFs and FX Options ($.18).30 The Exchange believes that the Customer rate of $.35 per contract for Singly Listed Currencies, equities, ETFs and HOLDRS is reasonable because it is less than Customer rates assessed by NYSE Arca, Inc. (‘‘NYSE Arca’’), where a Customer electronically executing a Penny Pilot option or a foreign currency option is assessed a fee of $.45 per contract.31 The Exchange believes that the Customer rate of $.35 per contract for Singly Listed indexes is reasonable because it is less than the rate assessed by ISE for SPX 32 of $.44 per contract.33 The Exchange believes that the proposed rate of $.45 per contract for Singly Listed Currencies, equities, ETFs, indexes and HOLDRS for Professionals and Firms is reasonable, because the Exchange is proposing to assess Firms and Professionals the same rate assessed on Broker-Dealers today. NYSE Arca assesses Firms that electronically execute foreign currency options an equity options transaction fee of $.45 plus a royalty fee of $.10 per contract.34 The Exchange believes it is reasonable to assess a Professional a per contract fee of $.45 per contract for transacting Singly Listed Currencies because the Exchange is assessing all market participants, except Customers and market makers, the same rate to transact Singly Listed Currencies. The Exchange believes that the price differentiation between market makers as compared to Firms, Broker-Dealers and Specialists is justified because market makers have obligations to the market, which do not apply to Firms, Professionals and Broker-Dealers.35 The Exchange believes that assessing Customers a lower rate to transact Singly Listed indexes is 30 See ISE’s Schedule of Fees. NYSE Arca’s Fee Schedule. 32 SPX refers to options on the Standard & Poor’s 500 Index. 33 See ISE’s Schedule of Fees. 34 See NYSE Arca’s Fee Schedule. 35 See Exchange Rule 1014 titled ‘‘Obligations and Restrictions Applicable to Specialists and Registered Options Traders.’’ 31 See PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 16649 reasonable because all market participants benefit from Customer order flow. The Exchange believes that its proposed rate of $.45 per contract for Singly Listed indexes is reasonable because the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’) assesses a Firm and a Professional $.40 per contract for trading SPX.36 The Exchange believes that assessing Firms and Professionals $.45 per contract in Singly Listed equities, ETFs and HOLDRs is reasonable because NYSE Arca assesses Firms and Broker-Dealers $.50 per contract for equities, ETFs and HOLDRs that are not in the Penny Pilot.37 The Exchange is not amending the rates it assesses Broker-Dealers for Singly Listed indexes and equities. The rate for Singly Listed equities, ETFs and HOLDRs is the same rate the Exchange assesses Broker-Dealers transacting electronic Penny Pilot and non-Penny Pilot orders today.38 The Exchange believes that assessing Customers a lower rate to transact Singly Listed indexes is reasonable because it would increase Customer order flow to the Exchange and such increased liquidity would benefit all market participants. Finally, the Exchange believes that assessing market makers a fee of $.35 per contract for Singly Listed Currencies is reasonable because it is lower than the fee of $.45 plus a royalty fee of $.10 per contract that NYSE Arca assesses market makers that electronically execute foreign currency options.39 The Exchange is not amending the fees assessed on market makers transacting Singly Listed indexes. The Exchange believes that it is reasonable to assess market makers a $.35 per contract fee for equities, ETFs and HOLDRs because NYSE Arca assesses market makers $.45 per contract to electronically execute Penny Pilot options.40 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. 36 See CBOE’s Fees Schedule. CBOE also assesses a surcharge fee of $0.10 for SPX which applies to all non-public customer transactions, including voluntary professionals, and professionals. 37 See NYSE Arca’s Fee Schedule. Presumably, this includes options only listed on NYSE Arca. 38 See Section II of the Exchange’s Fee Schedule. 39 See NYSE Arca’s Fee Schedule. 40 See NYSE Arca’s Fee Schedule. E:\FR\FM\24MRN1.SGM 24MRN1 16650 Federal Register / Vol. 76, No. 57 / Thursday, March 24, 2011 / 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 The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.41 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: emcdonald on DSK2BSOYB1PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–Phlx-2011–34 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–Phlx–2011–34. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room 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 offices of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–Phlx-2011–34, and should be submitted on or before April 14, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.42 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–6908 Filed 3–23–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64097; File No. SR–BX– 2010–079] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Order Approving Proposed Rule Change To Amend Chapter IV of the BOX Rules To Allow Executing Participants To Provide BOX a List of the Order Flow Providers for Which the Executing Participants Will Provide Directed Order Services March 18, 2011. I. Introduction On December 3, 2010, NASDAQ OMX BX, Inc. (the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposal to amend the rules governing its Directed Order process to: (i) Allow an Executing Participant (‘‘EP’’) to provide BOX a list of the Order Flow Providers (‘‘OFPs’’) for which the EP will provide Directed Order services and (ii) provide that BOX would reveal to the EP the participant ID of the OFP sending the Directed 42 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 41 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Mar<15>2010 16:17 Mar 23, 2011 Jkt 223001 PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 Order.3 The proposed rule change was published for comment in the Federal Register on December 20, 2010.4 The Commission received no comments on the proposal. This order approves the proposal. II. Description of the Proposal Under the BOX’s Directed Order process, Market Makers on BOX are able to handle orders on an agency basis directed to them by OFPs. An OFP sends a Directed Order to BOX with a designation of the Market Maker to whom the order is to be directed. BOX then routes the Directed Order to the appropriate Market Maker. Under Chapter VI, Section 5(c)(ii) of the BOX Rules, a Market Maker only has two choices when receiving a Directed Order: (1) Submit the order to the Price Improvement Period auction process (‘‘PIP’’); 5 or (2) send the order back to BOX for placement onto the BOX Book. A Market Maker who desires to accept Directed Orders must systemically indicate that it is an EP whenever the Market Maker wishes to receive Directed Orders from the BOX Trading Host. If a Market Maker does not systemically indicate that it is an EP, then the BOX Trading Host will not forward any Directed Orders to that Market Maker. In such a case, the BOX Trading Host will send the order directly to the BOX Book. If a Market Maker has systemically indicated that it wishes to receive Directed Orders, it shall not, under any circumstances, reject the receipt of a Directed Order from the BOX Trading Host nor reject the Directed Order back to the OFP who sent it.6 The Exchange proposes to amend Chapter VI, Section 5(c)(i) of the BOX Rules to allow EPs to provide BOX a list of OFPs for which the EP will provide Directed Order services. Under the proposal, prior to accepting any Directed Order through the Trading Host, an EP must inform BOX of the OFPs from whom it has agreed to accept Directed Orders (‘‘Listed OFPs’’ or ‘‘LOFPs’’). The Trading Host will then only send to the EP Directed Orders from LOFPs. Further, under the proposal, the BOX Trading Host would 3 Shortly after the filing of the proposed rule change, the Exchange withdrew an earlier proposal relating to the non-anonymity of Directed Orders (SR–BSE–2005–52). See Securities Exchange Act Release No. 53357 (February 23, 2006), 71 FR 10730 (March 2, 2006) (SR–BSE–2005–52). 4 See Securities Exchange Act Release No. 63539 (December 14, 2010), 75 FR 79429 (‘‘Notice’’). 5 See Chapter V, Section 18 of the BOX Rules. 6 See Chapter VI, Section 5(c)(i) of the BOX Rules. E:\FR\FM\24MRN1.SGM 24MRN1

Agencies

[Federal Register Volume 76, Number 57 (Thursday, March 24, 2011)]
[Notices]
[Pages 16646-16650]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-6908]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64096; File No. SR-Phlx-2011-34]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Singly Listed Options

March 18, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 15, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III, below, 
which Items have been prepared by the Exchange. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Fee Schedule to replace its 
Sector Index Options Fees and U.S. Dollar-Settled Foreign Currency 
Option Fees, in Section III of the Fee Schedule, with Singly Listed 
Options \3\ Fees. Also, the Exchange is proposing to create new fees 
for equities, exchange-traded funds (``ETFs'') and Holding Company 
Depository Receipts (``HOLDRS'') which are not listed on another 
exchange.
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    \3\ For purposes of this filing, a Singly Listed Option means an 
option that is only listed on the Exchange and is not listed by any 
other national securities exchange.
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    While changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative on April 1, 2011.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqtrader.com/micro.aspx?id=PHLXfilings, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the

[[Page 16647]]

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 create new fees 
titled ``Singly Listed Options'' to recoup the increased costs 
associated with Singly Listed options as compared with Multiply Listed 
options.
    The Exchange currently assesses fees for equity options as 
specified in Section II of the Fee Schedule titled ``Equity Options 
Fees.'' Section II includes options overlying equities, ETFs HOLDRS, 
BKX \4\, RUT \5\, RMN \6\, MNX \7\ and NDX \8\. The Exchange currently 
assesses fees for sector index options and U.S. Dollar-Settled foreign 
currency options as specified in Section III of the Exchange's Fee 
Schedule titled ``Sector Index Options Fees and U.S. Dollar-Settled 
Foreign Currency Option Fees.''
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    \4\ BKX represents the KBW Bank Index.
    \5\ RUT represents the options on the Russell 2000[reg] Index 
(the ``Full Value Russell Index'' or ``RUT'').
    \6\ RMN represents options on the one-tenth value Russell 
2000[reg] Index \6\ (the ``Reduced Value Russell Index'' or 
``RMN'').
    \7\ MNX represents options on the one-tenth value of the Nasdaq 
100 Index traded under the symbol MNX (``MNX'').
    \8\ NDX represents options on the Nasdaq 100 Index \8\ traded 
under the symbol NDX (``NDX'').
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    The Exchange is proposing to rename Section III as ``Singly Listed 
Options'' and create fees, which would apply to options overlying 
currencies,\9\ equities, ETFs, indexes, and HOLDRS not listed on 
another exchange.\10\ The proposed fees are as follows:
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    \9\ The applicable U.S. dollar-settled foreign currency options 
include XDB, XDE, XDN, XDS, XDA, XDM, XEH, XEV, XDZ, XDC and XDV 
(``Currencies'').
    \10\ The Exchange receives an overnight file from The Options 
Clearing Corporation, the Data Distribution Service feed, which 
provides the Exchange a list of options which are Singly and 
Multiply Listed. The Exchange provides its members with a symbol 
directory that indicates whether a security is Singly or Multiply 
Listed. This information, which is available on the exchange's Web 
site, is updated daily. In the event that a Singly Listed option 
becomes Multiply Listed, the option would be assessed the fees in 
Section II of the Fee Schedule.

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                                                                           Specialist,
                                                  Customer   Professional    ROT, SQT       Firm       Broker-
                                                                             and RSQT                   dealer
----------------------------------------------------------------------------------------------------------------
Options Transaction Charge....................         $.35          $.45         $.35         $.45         $.45
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    The Exchange would remove the Sector Index Option Fees and the U.S. 
Dollar-Settled Foreign Currency Options Fees from Section III of the 
Exchange's Fee Schedule. Sector index options and U.S. Dollar-Settled 
foreign currency options would be subject to the proposed fees in 
Section III.\11\ Currently, the sector index options are assessed the 
following fees:
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    \11\ The Exchange's indexes and currencies, which are subject to 
the fees in Section III, are only listed on the Exchange and 
therefore Singly Listed.

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                                                                           Specialist,
                                                  Customer   Professional    ROT, SQT       Firm       Broker-
                                                                             and RSQT                   dealer
----------------------------------------------------------------------------------------------------------------
Options Transaction Charge....................         $.44          $.35         $.35         $.30         $.45
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    U.S. Dollar-Settled foreign currency options, which include XDB, 
XDE, XDN, XDS, XDA, XDM, XEH, XEV, XDZ, XDC and XDV, are assessed the 
following fees:

----------------------------------------------------------------------------------------------------------------
                                                                           Specialist,
                                                  Customer   Professional    ROT, SQT       Firm       Broker-
                                                                             and RSQT                   dealer
----------------------------------------------------------------------------------------------------------------
Options Transaction Charge....................         $.44          $.30         $.30         $.30         $.45
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    In addition, the Exchange proposes to assess Singly Listed 
equities, ETFs and HOLDRS the proposed fees in Section III.\12\ Singly 
listed equities, ETFs and HOLDRS are currently subject to the fees in 
Section II.\13\ The Exchange currently assesses equity options, 
including options overlying equities, ETFs, HOLDRS, BKX, RUT, RMN, MNX 
and NDX, the following fees which are located in Section II of the 
Exchange's Fee Schedule:
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    \12\ This fee proposal would not impact any equity options 
transacted in any of the symbols which are listed in Section I of 
the Exchange's Fee Schedule titled ``Rebates and Fees for Adding and 
Removing Liquidity in Select Symbols.'' The Exchange is not amending 
Section I.
    \13\ Multiply Listed options overlying equities, ETFs, HOLDRS, 
BKX, RUT, RMN, MNX and NDX would continue to be subject to the fees 
in Section II. For purposes of this filing, a Multiply Listed 
security means an option that is listed on more than one exchange.

[[Page 16648]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Specialist, ROT, SQT and        Broker-dealer
                                                                                                   RSQT           --------------------------
                                                                Customer   Professional --------------------------                               Firm
                                                                                                          Non-      Electronic      Non-
                                                                                          Electronic   electronic                electronic
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Options Transaction Charge (Penny Pilot)....................         $.00          $.20         $.22         $.25         $.45         $.25         $.25
Options Transaction Charge (non-Penny Pilot)................          .00           .20          .23          .25          .45          .25          .25
Options Surcharge in RUT, RMN, MNX and NDX..................          N/A           N/A          .15          .15          .15          .15          .15
Options Surcharge in BKX....................................          N/A           N/A          .10          .10          .10          .10          .10
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    The Exchange is proposing to amend the Equity Options Fees in 
Section II by adding the words ``which are Multiply Listed'' to the 
title of Section II to clarify that Section II fees apply to Multiply 
Listed options.\14\ The Exchange also proposes to amend this title 
consistently throughout the Fee Schedule. The Exchange also proposes to 
amend Section IV of the Exchange's Fee Schedule, titled ``PIXL 
Pricing,'' to replace references to ``Sector Index Options Fees and 
U.S. Dollar-Settled Foreign Currency Options'' with the words ``Singly 
Listed Options.'' The Exchange is also proposing to amend the Table of 
Contents to reflect the proposed title for Section III, ``Singly Listed 
Options.''
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    \14\ The proposed fees in Section III would apply to Singly 
Listed options.
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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 and other persons using its 
facilities.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed fees for Singly Listed 
Options are equitable because the Exchange is seeking to recoup the 
operational costs for Singly Listed options, which costs are higher 
than those for Multiply Listed options.\17\ In addition, the Exchange 
believes that the proposed fees for Singly Listed options are equitable 
for the reasons specified below.
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    \17\ By way of example, in analyzing an obvious error, the 
Exchange would have additional data points available in establishing 
a theoretical price for a Multiply Listed option as compared to a 
Singly Listed option, which requires additional analysis and 
administrative time to comply with Exchange rules to resolve an 
obvious error.
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    Customers currently pay: (i) No transaction fee for equity options; 
(ii) a $.44 per contract fee for sector index options; and (iii) a $.44 
per contract fee for U.S. Dollar-Settled foreign currency options. The 
Exchange is proposing to assess a $.35 per contract fee to Customers 
trading Singly Listed options which includes Currencies, equities, 
ETFs, Indexes and HOLDRS. Customers transacting Multiply Listed equity 
options, ETFs or HOLDRS are currently assessed no transaction fee and 
this would not change with this proposal. Customers who currently 
transact Singly Listed equity options, ETFs or HOLDRS would now pay 
$.35 per contract.\18\ The Exchange believes that this fee increase is 
equitable because the Exchange incurs a higher operational cost on 
Singly Listed options as compared to Multiply Listed options as 
described above. The Exchange believes that it is equitable to assess 
Customers $.35 per contract to transact Currencies and indexes, because 
today Customers pay $.44 per contract to transact these products. 
Customers would benefit from the lower fee. The Exchange is able to 
lower the fee by offsetting the costs with the fee increase to 
Customers who transact Singly Listed equity options, ETFs and HOLDRS.
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    \18\ This excludes equity options which are subject to Section I 
of the Fee Schedule titled ``Fees and Rebates for Adding and 
Removing Liquidity in Select Symbols.''
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    The Exchange believes that it is equitable to assess 
Specialists,\19\ Registered Options Traders,\20\ SQTs,\21\ and RSQTs 
\22\ a transaction fee of $.35 per contract to transact Singly Listed 
Currencies, equities, ETFs, indexes and HOLDRS. Market makers \23\ 
today are assessed Equity Options Fees for transacting equity options, 
ETFs or HOLDRS ranging from $.10-$.25 per contract depending on whether 
the transaction is electronic \24\ or non-electronic, a Penny Pilot 
\25\ or a non-Penny Pilot option or an option overlying RUT, RMN, MNX, 
NDX or BKX.\26\ The Exchange believes that it is equitable to assess 
market makers $.35 per contract for transacting Singly Listed equities, 
ETFs and HOLDRs pursuant to the proposed fees in Section III, because 
such orders would not be subject to payment for order flow. Currently, 
equity option transactions, including options overlying equities, ETFs, 
HOLDRS, BKX, RUT, RMN, MNX and NDX, are subject to certain payment for 
order flow fees.\27\ The Exchange assesses Payment for Order Flow Fees 
of $.25 per contract for options trading in the Penny Pilot Program and 
$.70 per

[[Page 16649]]

contract for all other equity options.\28\ The Exchange believes that 
it is equitable to assess market makers a higher rate for transacting 
Singly Listed equities, ETFs or HOLDRS because market makers would not 
be subject to Payment for Order Fees, as they are today and would 
continue to be under this proposal, when transacting Multiply Listed 
equities, ETFs or HOLDRS. The Exchange believes that increasing the fee 
assessed for indexes and Currencies from $.30 to $.35 per contract is 
equitable because as stated previously, the Exchange is seeking to 
recoup costs with respect to Singly Listed products. Additionally, the 
Exchange would be assessing the same fee on indexes and Currencies.
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    \19\ A Specialist is an Exchange member who is registered as an 
options specialist pursuant to Rule 1020(a).
    \20\ A Registered Options Trader (``ROT'') includes a Streaming 
Quote Trader (``SQT''), a Remote Streaming Quote Trader (``RSQT'') 
and a Non-SQT ROT, which by definition is neither a SQT or a RSQT. A 
ROT 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. See Exchange Rule 1014(b)(i) and 
(ii).
    \21\ An SQT 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 in options to which such SQT is 
assigned.
    \22\ A RSQT is defined in Exchange Rule 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 in options to 
which such RSQT has been assigned. An RSQT may only submit such 
quotations electronically from off the floor of the Exchange.
    \23\ The Exchange market maker category includes Specialists 
(see Rule 1020) and ROTs (Rule 1014(b)(i) and (ii), which includes 
SQTs (see Rule 1014(b)(ii)(A)) and RSQTs (see Rule 1014(b)(ii)(B)).
    \24\ Electronically delivered orders do not include orders 
delivered through the Floor Broker Management System.
    \25\ The Penny Pilot was established in January 2007; and in 
October 2009, it was expanded and extended through December 31, 
2010. See Securities Exchange Act Release Nos. 55153 (January 23, 
2007), 72 FR 4553 (January 31, 2007) (SR-Phlx-2006-74) (approval 
order establishing Penny Pilot); 60873 (October 23, 2009), 74 FR 
56675 (November 2, 2009) (SR-Phlx-2009-91) (expanding and extending 
Penny Pilot); 60966 (November 9, 2009), 74 FR 59331 (November 17, 
2009) (SR-Phlx-2009-94) (adding seventy-five classes to Penny 
Pilot); and 61454 (February 1, 2010), 75 FR 6233 (February 8, 2010) 
(SR-Phlx-2010-12) (adding seventy-five options classes to the Penny 
Pilot). See also Exchange Rule 1034.
    \26\ This excludes the symbols which are subject to Section I of 
the Fee Schedule, titled ``Fees and Rebates for Adding and Removing 
Liquidity in Select Symbols.''
    \27\ This excludes the symbols which are subject to Section I of 
the Fee Schedule, titled ``Fees and Rebates for Adding and Removing 
Liquidity in Select Symbols.''
    \28\ There are no Payment for Order Flow Fees on trades that are 
not delivered electronically.
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    The Exchange believes that it is equitable to assess Professionals, 
Firms and Broker-Dealers $.45 per contract to transact Singly Listed 
options including Currencies, equities, ETFs, indexes and HOLDRS. 
Currently, Professionals pay $.20 per contract to transact equities, 
ETFs and HOLDRS, $.35 per contract to transact indexes and $.30 per 
contract to transact Currencies. The Exchange believes that the 
proposed $.45 per contract Professional fee would be equitable because 
of the increased costs associated with Singly Listed options as 
explained above.
    Broker-Dealers today are assessed Equity Options Fees for 
transacting equity options, ETFs or HOLDRS ranging from $.10-$.45 per 
contract depending on whether the transaction is electronic or non-
electronic, a Penny Pilot or non-Penny Pilot option or an option 
overlying RUT, RMN, MNX, NDX or BKX. The Exchange believes that the 
proposed Broker-Dealer fee of $.45 per contract is equitable because it 
is similar to the Exchange's fees for electronic transactions in Penny 
Pilot and non-Penny Pilot options.\29\ Additionally, the Exchange 
believes that the proposed fee for both indexes and Currencies is 
equitable because the rates would remain the same as today.
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    \29\ See Section II of the Exchange's Fee Schedule.
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    Finally, Firms today are assessed fees for transacting equities, 
ETFs and HOLDRS which range from $.10-$.25 per contract. The Exchange 
believes that the proposed Firm fee of $.45 per contract is equitable 
because of the higher costs associated with Singly Listed options as 
compared to Multiply Listed options as explained above. The Exchange 
believes that the increased costs also form an equitable basis to 
increase both the Broker-Dealer fees to transact indexes and Currencies 
from $.30 to $.45 per contract.
    The Exchange believes that the proposed fees are reasonable because 
the fees are consistent with price differentiation that exists today at 
all option exchanges. Other exchanges today charge different rates as 
between Multiply Listed products and Singly Listed products. For 
example, the Internal Securities Exchange, LLC (``ISE'') assesses 
different fees for Customers who transact Multiply Listed options, 
indexes, ETFs and FX Options ($.00) as compared to Customers who 
transact Singly Listed indexes, ETFs and FX Options ($.18).\30\
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    \30\ See ISE's Schedule of Fees.
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    The Exchange believes that the Customer rate of $.35 per contract 
for Singly Listed Currencies, equities, ETFs and HOLDRS is reasonable 
because it is less than Customer rates assessed by NYSE Arca, Inc. 
(``NYSE Arca''), where a Customer electronically executing a Penny 
Pilot option or a foreign currency option is assessed a fee of $.45 per 
contract.\31\ The Exchange believes that the Customer rate of $.35 per 
contract for Singly Listed indexes is reasonable because it is less 
than the rate assessed by ISE for SPX \32\ of $.44 per contract.\33\
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    \31\ See NYSE Arca's Fee Schedule.
    \32\ SPX refers to options on the Standard & Poor's 500 Index.
    \33\ See ISE's Schedule of Fees.
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    The Exchange believes that the proposed rate of $.45 per contract 
for Singly Listed Currencies, equities, ETFs, indexes and HOLDRS for 
Professionals and Firms is reasonable, because the Exchange is 
proposing to assess Firms and Professionals the same rate assessed on 
Broker-Dealers today. NYSE Arca assesses Firms that electronically 
execute foreign currency options an equity options transaction fee of 
$.45 plus a royalty fee of $.10 per contract.\34\ The Exchange believes 
it is reasonable to assess a Professional a per contract fee of $.45 
per contract for transacting Singly Listed Currencies because the 
Exchange is assessing all market participants, except Customers and 
market makers, the same rate to transact Singly Listed Currencies. The 
Exchange believes that the price differentiation between market makers 
as compared to Firms, Broker-Dealers and Specialists is justified 
because market makers have obligations to the market, which do not 
apply to Firms, Professionals and Broker-Dealers.\35\ The Exchange 
believes that assessing Customers a lower rate to transact Singly 
Listed indexes is reasonable because all market participants benefit 
from Customer order flow.
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    \34\ See NYSE Arca's Fee Schedule.
    \35\ See Exchange Rule 1014 titled ``Obligations and 
Restrictions Applicable to Specialists and Registered Options 
Traders.''
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    The Exchange believes that its proposed rate of $.45 per contract 
for Singly Listed indexes is reasonable because the Chicago Board 
Options Exchange, Incorporated (``CBOE'') assesses a Firm and a 
Professional $.40 per contract for trading SPX.\36\ The Exchange 
believes that assessing Firms and Professionals $.45 per contract in 
Singly Listed equities, ETFs and HOLDRs is reasonable because NYSE Arca 
assesses Firms and Broker-Dealers $.50 per contract for equities, ETFs 
and HOLDRs that are not in the Penny Pilot.\37\ The Exchange is not 
amending the rates it assesses Broker-Dealers for Singly Listed indexes 
and equities. The rate for Singly Listed equities, ETFs and HOLDRs is 
the same rate the Exchange assesses Broker-Dealers transacting 
electronic Penny Pilot and non-Penny Pilot orders today.\38\ The 
Exchange believes that assessing Customers a lower rate to transact 
Singly Listed indexes is reasonable because it would increase Customer 
order flow to the Exchange and such increased liquidity would benefit 
all market participants.
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    \36\ See CBOE's Fees Schedule. CBOE also assesses a surcharge 
fee of $0.10 for SPX which applies to all non-public customer 
transactions, including voluntary professionals, and professionals.
    \37\ See NYSE Arca's Fee Schedule. Presumably, this includes 
options only listed on NYSE Arca.
    \38\ See Section II of the Exchange's Fee Schedule.
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    Finally, the Exchange believes that assessing market makers a fee 
of $.35 per contract for Singly Listed Currencies is reasonable because 
it is lower than the fee of $.45 plus a royalty fee of $.10 per 
contract that NYSE Arca assesses market makers that electronically 
execute foreign currency options.\39\ The Exchange is not amending the 
fees assessed on market makers transacting Singly Listed indexes. The 
Exchange believes that it is reasonable to assess market makers a $.35 
per contract fee for equities, ETFs and HOLDRs because NYSE Arca 
assesses market makers $.45 per contract to electronically execute 
Penny Pilot options.\40\
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    \39\ See NYSE Arca's Fee Schedule.
    \40\ See NYSE Arca's Fee Schedule.
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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.

[[Page 16650]]

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.\41\ 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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    \41\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2011-34 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2011-34. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room 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 offices 
of the Exchange. All comments received will be posted without change; 
the Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
Phlx-2011-34, and should be submitted on or before April 14, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\42\
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    \42\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-6908 Filed 3-23-11; 8:45 am]
BILLING CODE 8011-01-P