Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC Relating to the Equity Options Monthly Cap, 17468-17470 [2011-7282]
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Federal Register / Vol. 76, No. 60 / Tuesday, March 29, 2011 / Notices
PIM and guarantee a price better than
the ISE BBO and equal to or better than
the NBBO to such order, or to release
the order to the book. The DMM’s
decision about whether to choose to
guarantee a particular order at a price
better than the ISE BBO and equal to or
better than the NBBO may be affected by
this proposal because it provides DMMs
with information to differentiate
between orders from informed traders
(i.e., their competitors) and orders from
uninformed traders. It is well known in
academic literature and industry
practice that prices tend to move against
market makers after trades with
informed traders, often resulting in
losses for market makers.19 Thus, there
is a strong economic rationale for
market makers not providing informed
traders price improvement. Uninformed
investors end up bearing the cost of
these market maker losses through
wider spreads that market makers need
to quote to uninformed investors due to
informed order flow.20
Citadel also argues that the
Commission has previously sought to
eliminate similar anti-competitive
practices allowed by self-regulatory
organizations (‘‘SROs’’) involving lack of
order anonymity.21 In particular, Citadel
cites a 1996 investigation of NASD and
Nasdaq Stock Market in which ‘‘[s]ome
market makers, without disclosure to
their customers, shared information
with each other about their customers’
orders, including the size of the order
and, on occasion, the identity of the
customer.’’ 22 Citadel asserts that the
‘‘Commission concluded that this anticompetitive behavior violated the
antifraud provisions of the Exchange
Act, among other provisions.’’ 23
The Commission does not believe that
the proposal will result in market maker
conduct like that in the NASD case,
which found that market makers were
collaborating with other market
participants against the interests of their
customers contrary to the fair dealing
obligations of market makers.24 Unlike
the NASD case, the interests of the
DMM’s customers are not harmed by
this proposal because information
pertaining to a DMM’s Directed Orders
is not shared among competing DMMs
and all orders sent to ISE must be
executed at a price no worse than the
NBBO.25
Finally, Amex contends that the
proposal is anti-competitive because
providing the identity of an EAM to
DMMs provides them with the ability to
enter into anti-competitive customer
allocation arrangements.26 Amex argues
that if ISE Market Makers know the
identities of order flow providers, they
could agree to allocate those order flow
providers among themselves and
provide price improvement to only
those that each has been allocated.27
There is, however, no evidence that
customer allocation arrangements exist
between Market Makers. The
Commission is today approving only the
proposed rule change, which permits a
DMM to determine from which EAM it
will accept Directed Orders. The
Commission is not approving any
customer allocation arrangements
among Market Makers.
For the foregoing reasons, the
Commission finds that the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to a national
securities exchange, and, in particular
with Section 6(b)(5) of the Act.28
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,29 that the
proposed rule change (SR–ISE–2006–01)
is approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–7285 Filed 3–28–11; 8:45 am]
jlentini on DSKJ8SOYB1PROD with NOTICES
19 See
Stoll, H. R., ‘‘The supply of dealer services
in securities of markets,’’ Journal of Finance 33
(1978), at 1133–51; Glosten, L. and P. Milgrom, ‘‘Bid
ask and transaction prices in a specialist market
with heterogeneously informed agents,’’ Journal of
Financial Economics 14 (1985), at 71–100; and
Copeland, T., and D. Galai, ‘‘Information effects on
the bid-ask spread,’’ Journal of Finance 38 (1983),
at 1457–69.
20 Id.
21 See Citadel Letter II, supra note 4, at 6.
22 See Securities Exchange Act Release No. 37542
(August 8, 1996) (File No. 3–8919) (Report Pursuant
to Section 21(a) of the Securities Exchange Act of
1934 Regarding the NASD and the Nasdaq Market),
at 5.
23 See Citadel Letter II, supra note 4, at 6.
24 See Securities Exchange Act Release No. 37542,
supra note 22, at 59.
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64113; File No. SR–Phlx–
2011–36]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NASDAQ
OMX PHLX LLC Relating to the Equity
Options Monthly Cap
March 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 17,
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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Exchange’s Fee Schedule to lower the
monthly cap applicable to Registered
Options Traders (‘‘ROTs’’) 3 and
Specialists 4 for equity options
transactions. The Exchange also
proposes to assess a $0.05 per contract
fee on ROTs and Specialists in certain
circumstances when they have reached
the monthly cap.
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 https://nasdaqtrader.com/
micro.aspx?id=PHLXfilings, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 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).
4 A Specialist is an Exchange member who is
registered as an options specialist pursuant to Rule
1020(a).
2 17
25 See
26 See
ISE Rule 811(e).
Amex Letter, supra note 4, at 2.
27 Id.
28 15
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(2).
30 17 CFR 200.30–3(a)(12).
29 15
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Federal Register / Vol. 76, No. 60 / Tuesday, March 29, 2011 / Notices
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
jlentini on DSKJ8SOYB1PROD with NOTICES
1. Purpose
The purpose of this rule change is to
reduce the monthly transaction fee cap
applicable to ROTs and Specialists for
equity options transactions (‘‘Monthly
Cap’’). The Exchange believes that by
reducing the Monthly Cap, a greater
number of members may benefit from
the Monthly Cap and the Exchange will
attract additional order flow. In
addition, another purpose of this
proposed rule change is to establish a
$0.05 per contract transaction fee when
ROTs and Specialists participate as the
contra-side of a Customer complex
order 5 execution after they have
reached the maximum Monthly Cap.
The Exchange proposes this amendment
to defray the cost of paying Customer
complex order rebates, which attracts
additional Customer order flow to the
Exchange.
The Exchange currently applies a
Monthly Cap of $600,000 on equity
option transaction fees to ROTs and
Specialists, as set forth in Section II of
the Exchange’s Fee Schedule titled
‘‘Equity Options Fees.’’ The Exchange is
proposing to reduce the Monthly Cap
from $600,000 to $550,000.6
The Exchange is also proposing to
assess ROTs and Specialists a $0.05 per
5 A complex order is any order involving the
simultaneous purchase and/or sale of two or more
different options series in the same underlying
security, priced at a net debit or credit based on the
relative prices of the individual components, for the
same account, for the purpose of executing a
particular investment strategy. Furthermore, a
complex order can also be a stock-option order,
which is an order to buy or sell a stated number
of units of an underlying stock or exchange-traded
fund (‘‘ETF’’) coupled with the purchase or sale of
options contract(s). See Exchange Rule 1080,
Commentary .08(a)(i).
6 The trading activity of separate ROTs and
Specialist member organizations are aggregated in
calculating the Monthly Cap if there is at least 75%
common ownership between the member
organizations.
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16:37 Mar 28, 2011
Jkt 223001
contract transaction fee when such
ROTs and Specialists: (i) participate as
the contra-side of a Customer complex
order; and (ii) have reached the
maximum Monthly Cap, which is
proposed to be $550,000. The Exchange
currently pays a rebate of $0.05 per
contract for Customer complex orders
that are electronically-delivered and
executed against a non-Customer such
as a Specialist, ROT, SQT,7 RSQT,8
Professional,9 Firm or Broker-Dealer,
contra-side complex order or if any of
the components of such Customer
complex order are executed against a
non-Customer individual order or
quote.10 The Exchange proposes this fee
to defray the cost of the aforementioned
rebate. The $.05 per contract transaction
fee would only apply to those contracts
that are executed after the affected ROT
or Specialist has reached the Monthly
Cap. For example, when a ROT or
Specialist exceeds the proposed
$550,000 Monthly Cap, a $0.05 per
contract fee would be added to the
Monthly Cap over those trades that were
counted in reaching the $550,000
Monthly Cap, when such ROT or
Specialist is on the contra-side of a
Customer complex order. The ROT or
Specialist would not be assessed the
$0.05 per contract fee until the Monthly
Cap is exceeded. The Exchange
proposes to amend the current language
in the Fee Schedule at Section II to
reflect the proposal. The Exchange also
proposes to make certain typographical
and conforming changes to Section II of
the Fee Schedule to make the language
consistent in that section.
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 11
in general, and furthers the objectives of
Section 6(b)(4) of the Act 12 in
7 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.
8 A RSQT is defined in 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 in options to which such RSQT has
been assigned. An RSQT may only submit such
quotations electronically from off the floor of the
Exchange.
9 The Exchange defines a ‘‘professional’’ as any
person or entity that (i) is not a broker or dealer in
securities, and (ii) places more than 390 orders in
listed options per day on average during a calendar
month for its own beneficial account(s) (hereinafter
‘‘Professional’’).
10 See Exchange’s Fee Schedule at Section II,
Equity Options Fees.
11 15 U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(4).
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17469
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
proposal to lower the Monthly Cap is
reasonable because it lowers potential
transaction fees for ROTs and Specialist
providing liquidity on the Exchange.
The Exchange believes that the
proposal to lower the Monthly Cap is
equitable because it would uniformly
apply to all ROTs and Specialists
transacting equity options.
The Exchange believes that assessing
a $0.05 per contract fee on ROTs and
Specialists who have reached the
Monthly Cap and are on the contra-side
of a Customer complex order is
reasonable because it would serve to
defray the cost of paying the Customer
complex order rebate, which is offered
in certain circumstances. The Customer
complex order rebate serves to attract
Customer order flow to the Exchange,
thereby benefiting all market
participants.
The Exchange believes that assessing
a $0.05 per contract fee on ROTs and
Specialists who have reached the
Monthly Cap and are on the contra-side
of a Customer complex order is
equitable because this fee would only be
assessed once the Monthly Cap is
reached and will uniformly apply to all
ROTs and Specialists that have reached
the Monthly Cap. In addition, this
proposed transaction fee is based upon
the $0.05 per contract fee that the
Exchange currently assesses Firms who
have reached the Firm Related Equity
Option Cap and are on the contra-side
of a Customer complex order.13
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
13 See Securities Exchange Act Release No. 62518
(July 16, 2010), 75 FR 43219 (July 23, 2010) (SR–
Phlx–2010–90). See also the Exchange’s Fee
Schedule at Section II, Equity Options Fees.
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Federal Register / Vol. 76, No. 60 / Tuesday, March 29, 2011 / Notices
19(b)(3)(A)(ii) of the Act.14 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:
jlentini on DSKJ8SOYB1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Phlx–2011–36 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–2011–36. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro/shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filing
will also be available for inspection and
14 15
U.S.C. 78s(b)(3)(A)(ii).
VerDate Mar<15>2010
16:37 Mar 28, 2011
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 No. SR–Phlx–2011–
36 and should be submitted on or before
April 19, 2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–7282 Filed 3–28–11; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF TRANSPORTATION
Office of the Secretary of
Transportation
[Docket No. 2011–0059]
Notice of Transportation Services’
Transition From Paper to Electronic
Fare Media
ACTION:
The Office of Transportation
Services (TRANServe) located in the
U.S. Department of Transportation,
Office of the Secretary of Transportation
within the Office of the Assistant
Secretary for Administration is adopting
a new program distribution
methodology. TRANServe is planning to
shift to electronic fare media in
particular areas, beginning in New York
and parts of the National Capitol
Region, where paper vouchers are not
available for redemption through the
Transit Authority. The shift allows for
the most effective and efficient delivery
mechanism for the qualified
transportation fringe benefit in those
areas. TRANServe provides services to
Federal Government agencies for the
qualified transportation fringe benefit.
To date, TRANServe has distributed
these fringe benefits via a paper voucher
process.
DATES: TRANServe will consider all
comments received on or before April
19, 2011.
ADDRESSES: You may submit comments
by the following methods:
• Federal eRulemaking Portal: Go to
(https://www.regulations.gov Web
address) to submit or view comments
and to view supporting and related
materials available electronically.
SUMMARY:
15 17
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Office of the Secretary, DOT.
Notice.
AGENCY:
PO 00000
CFR 200.30–3(a)(12).
Frm 00093
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• Postal Mail/Commercial Delivery:
Please send one copy of your comment
to Docket No. DOT–OST–2011–0059,
DOT/TRANServe, 1200 New Jersey
Ave., SE., Washington, DC 20590.
Reading Room (Public Terminal): You
may read any comments that we receive
on this docket in our reading room
(Public Terminal). The reading room is
located in Room W12–140 of the U.S.
DOT, 1200 New Jersey Avenue, SW.,
Washington, DC. Normal reading room
hours are 8 a.m. to 4:30 p.m. Monday
through Friday, except holidays. To be
sure someone is there to help you please
call (202) 366–9826 or (202) 366–9317
before arriving.
Other Information: Additional
information about TRANServe is
available on the Internet at (https://
transerve.dot.gov/ ).
FOR FURTHER INFORMATION CONTACT: Ms.
Denise P. Wright, Business Office
Manager, 1200 New Jersey Avenue SE.,
Washington, DC 20590.
SUPPLEMENTARY INFORMATION:
Background
Under the authority of 49 U.S.C. 327,
Administrative Working Capital Fund
and 26 U.S.C. 132(f)(3), Qualified
Transportation Fringe, Cash
Reimbursement, TRANServe conducts
its Program operations as the service
provider by distributing the qualified
transportation fringe benefit. Since the
enactment of Public Law 103–172,
Federal Employees Clean Air Incentives
Act, Executive Order 13150, Federal
Workforce Transportation, and other
enabling legislation, TRANServe has
maintained its servicing operations for
the distribution of transit benefits to
Federal employees via a paper voucher
process.
Since 2000, TRANServe has operated
a highly sophisticated ordering/
inventory/distribution program.
TRANServe’s program is supported by a
complex network of activities, such as
statistical forecasting for nationwide
distribution, multi-million dollar
contract awards, support arrangements
for travel and distribution, and an
elaborate array of financial analysis for
Federal Agency billing. April 2000
served as the transaction baseline year
for TRANServe, when significant and
measurable transaction activity occurred
that accounted for an estimated 800%
increase in Federal Agency participant
growth. Over time, many State and local
transit authorities are transitioning or
have transitioned to electronic fare
media; thus, compelling the shift from
a paper based system (vouchers) to an
electronic fare media structure.
In addition to rising program costs
related to inventory, travel, and
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]]>Agencies
[Federal Register Volume 76, Number 60 (Tuesday, March 29, 2011)]
[Notices]
[Pages 17468-17470]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-7282]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64113; File No. SR-Phlx-2011-36]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC Relating
to the Equity Options Monthly Cap
March 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 17, 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 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 the Exchange's Fee Schedule to lower
the monthly cap applicable to Registered Options Traders (``ROTs'') \3\
and Specialists \4\ for equity options transactions. The Exchange also
proposes to assess a $0.05 per contract fee on ROTs and Specialists in
certain circumstances when they have reached the monthly cap.
---------------------------------------------------------------------------
\3\ 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).
\4\ A Specialist is an Exchange member who is registered as an
options specialist pursuant to Rule 1020(a).
---------------------------------------------------------------------------
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 https://nasdaqtrader.com/micro.aspx?id=PHLXfilings, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
[[Page 17469]]
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 this rule change is to reduce the monthly
transaction fee cap applicable to ROTs and Specialists for equity
options transactions (``Monthly Cap''). The Exchange believes that by
reducing the Monthly Cap, a greater number of members may benefit from
the Monthly Cap and the Exchange will attract additional order flow. In
addition, another purpose of this proposed rule change is to establish
a $0.05 per contract transaction fee when ROTs and Specialists
participate as the contra-side of a Customer complex order \5\
execution after they have reached the maximum Monthly Cap. The Exchange
proposes this amendment to defray the cost of paying Customer complex
order rebates, which attracts additional Customer order flow to the
Exchange.
---------------------------------------------------------------------------
\5\ A complex order is any order involving the simultaneous
purchase and/or sale of two or more different options series in the
same underlying security, priced at a net debit or credit based on
the relative prices of the individual components, for the same
account, for the purpose of executing a particular investment
strategy. Furthermore, a complex order can also be a stock-option
order, which is an order to buy or sell a stated number of units of
an underlying stock or exchange-traded fund (``ETF'') coupled with
the purchase or sale of options contract(s). See Exchange Rule 1080,
Commentary .08(a)(i).
---------------------------------------------------------------------------
The Exchange currently applies a Monthly Cap of $600,000 on equity
option transaction fees to ROTs and Specialists, as set forth in
Section II of the Exchange's Fee Schedule titled ``Equity Options
Fees.'' The Exchange is proposing to reduce the Monthly Cap from
$600,000 to $550,000.\6\
---------------------------------------------------------------------------
\6\ The trading activity of separate ROTs and Specialist member
organizations are aggregated in calculating the Monthly Cap if there
is at least 75% common ownership between the member organizations.
---------------------------------------------------------------------------
The Exchange is also proposing to assess ROTs and Specialists a
$0.05 per contract transaction fee when such ROTs and Specialists: (i)
participate as the contra-side of a Customer complex order; and (ii)
have reached the maximum Monthly Cap, which is proposed to be $550,000.
The Exchange currently pays a rebate of $0.05 per contract for Customer
complex orders that are electronically-delivered and executed against a
non-Customer such as a Specialist, ROT, SQT,\7\ RSQT,\8\
Professional,\9\ Firm or Broker-Dealer, contra-side complex order or if
any of the components of such Customer complex order are executed
against a non-Customer individual order or quote.\10\ The Exchange
proposes this fee to defray the cost of the aforementioned rebate. The
$.05 per contract transaction fee would only apply to those contracts
that are executed after the affected ROT or Specialist has reached the
Monthly Cap. For example, when a ROT or Specialist exceeds the proposed
$550,000 Monthly Cap, a $0.05 per contract fee would be added to the
Monthly Cap over those trades that were counted in reaching the
$550,000 Monthly Cap, when such ROT or Specialist is on the contra-side
of a Customer complex order. The ROT or Specialist would not be
assessed the $0.05 per contract fee until the Monthly Cap is exceeded.
The Exchange proposes to amend the current language in the Fee Schedule
at Section II to reflect the proposal. The Exchange also proposes to
make certain typographical and conforming changes to Section II of the
Fee Schedule to make the language consistent in that section.
---------------------------------------------------------------------------
\7\ 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.
\8\ A RSQT is defined in 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 in options to
which such RSQT has been assigned. An RSQT may only submit such
quotations electronically from off the floor of the Exchange.
\9\ The Exchange defines a ``professional'' as any person or
entity that (i) is not a broker or dealer in securities, and (ii)
places more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s)
(hereinafter ``Professional'').
\10\ See Exchange's Fee Schedule at Section II, Equity Options
Fees.
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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 \11\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \12\ 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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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposal to lower the Monthly Cap is
reasonable because it lowers potential transaction fees for ROTs and
Specialist providing liquidity on the Exchange.
The Exchange believes that the proposal to lower the Monthly Cap is
equitable because it would uniformly apply to all ROTs and Specialists
transacting equity options.
The Exchange believes that assessing a $0.05 per contract fee on
ROTs and Specialists who have reached the Monthly Cap and are on the
contra-side of a Customer complex order is reasonable because it would
serve to defray the cost of paying the Customer complex order rebate,
which is offered in certain circumstances. The Customer complex order
rebate serves to attract Customer order flow to the Exchange, thereby
benefiting all market participants.
The Exchange believes that assessing a $0.05 per contract fee on
ROTs and Specialists who have reached the Monthly Cap and are on the
contra-side of a Customer complex order is equitable because this fee
would only be assessed once the Monthly Cap is reached and will
uniformly apply to all ROTs and Specialists that have reached the
Monthly Cap. In addition, this proposed transaction fee is based upon
the $0.05 per contract fee that the Exchange currently assesses Firms
who have reached the Firm Related Equity Option Cap and are on the
contra-side of a Customer complex order.\13\
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\13\ See Securities Exchange Act Release No. 62518 (July 16,
2010), 75 FR 43219 (July 23, 2010) (SR-Phlx-2010-90). See also the
Exchange's Fee Schedule at Section II, Equity Options Fees.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
[[Page 17470]]
19(b)(3)(A)(ii) of the Act.\14\ 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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\14\ 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-2011-36 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-2011-36. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/rules/sro/shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for Web site
viewing and printing in the Commission's Public Reference Room, 100 F
Street, NE., Washington, DC 20549, on official business days between
the hours of 10 a.m. and 3 p.m. Copies of such filing will also 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 No. SR-Phlx-
2011-36 and should be submitted on or before April 19, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-7282 Filed 3-28-11; 8:45 am]
BILLING CODE 8011-01-P
