Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC Relating to the Options Floor Broker Subsidy, 28113-28115 [2011-11765]

Download as PDF Federal Register / Vol. 76, No. 93 / Friday, May 13, 2011 / Notices 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–EDGX– 2011–13 and should be submitted on or before June 3, 2011. 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Cathy H. Ahn, Deputy Secretary. 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–EDGX–2011–13 on the subject line. mstockstill on DSKH9S0YB1PROD with NOTICES of the filing of such 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. SECURITIES AND EXCHANGE COMMISSION 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–EDGX–2011–13. 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,11 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 the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the 11 The text of the proposed rule change is available on the Exchange’s Web site at http:// www.directedge.com, on the Commission’s Web site at http://www.sec.gov, at EDGX, and at the Commission’s Public Reference Room. VerDate Mar<15>2010 17:22 May 12, 2011 Jkt 223001 [FR Doc. 2011–11763 Filed 5–12–11; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–64446; File No. SR–Phlx– 2011–62] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC Relating to the Options Floor Broker Subsidy May 9, 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 April 29, 2011, NASDAQ OMX PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. 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 Section VIII of its Fee Schedule titled the ‘‘Options Floor Broker Subsidy.’’ While changes to the Fee Schedule pursuant to this proposal are effective upon filing, the Exchange has designated these changes to be operative on May 2, 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, at the Commission’s Public Reference Room, and on the Commission’s Web site at http://www.sec.gov. 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 28113 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to: (i) Eliminate the threshold requirement that a member organization with Exchange registered floor brokers must have more than an average of 100,000 executed contracts per day in the applicable month; (ii) amend the computation for eligible contracts; and (iii) amend the eligible contracts per tier and monthly volume subsidy payments. The Exchange believes that the proposed amendments could enable a member organization to receive a higher subsidy because the Exchange is changing from a daily average to a monthly total calculation to determine the number of contracts traded. Eliminating a Threshold The Exchange currently pays an Options Floor Broker Subsidy to member organizations with Exchange registered floor brokers that enter eligible contracts into the Exchange’s Floor Broker Management System (‘‘FBMS’’).3 To qualify for the per contract subsidy, a member organization with Exchange registered floor brokers must have more than 100,000 average executed contracts per day in the month (‘‘100,000 contract threshold’’).4 Only the volume from orders entered by floor brokers into FBMS and subsequently executed on the Exchange qualifies. The 3 FBMS is designed to enable floor brokers and/ or their employees to enter, route, and report transactions stemming from options orders received on the Exchange. FBMS also is designed to establish an electronic audit trail for options orders represented and executed by floor brokers on the Exchange. See Exchange Rule 1080, commentary .06. 4 For purposes of calculating the 100,000 threshold, customer-to-customer transactions, customer-to-non-customer transactions, and noncustomer-to-non-customer transactions are currently included. E:\FR\FM\13MYN1.SGM 13MYN1 28114 Federal Register / Vol. 76, No. 93 / Friday, May 13, 2011 / Notices 100,000 contract threshold is calculated per member organization floor brokerage unit. Where two or more member organizations with Exchange registered floor brokers each entered one side of a transaction into FBMS, the executed contracts are divided equally among qualifying member organizations that participate in that transaction.5 The Exchange is proposing to eliminate the 100,000 contract threshold. The Exchange believes that this threshold is no longer necessary because the Exchange is changing to a monthly total calculation. In the future, all eligible contracts will qualify for a subsidy rather than just those that are entered by members exceeding the 100,000 contract threshold. Computation for Eligible Contracts Currently, customer-to-customer transactions qualify towards the 100,000 contract threshold, but do not qualify for the subsidy. Dividend, merger and short stock interest strategies do not qualify towards the 100,000 contract threshold or the per contract subsidy. The largest component of a Complex Order counts toward the 100,000 contract threshold but neither that component nor any other component of the Complex Order qualifies for the per contract subsidy. Firm facilitation transactions count towards reaching the 100,000 contract threshold, but no per contract subsidy is paid for a firm facilitation transaction. The Exchange is proposing to amend the computation of eligible contracts. Customer-to-customer executions, dividend, merger and short stock interest strategies and firm facilitation transactions will be excluded from the eligible contract computations. The Exchange is deleting the references to the 100,000 contract threshold as proposed herein. Therefore, the Exchange is eliminating the consideration of the largest component of a Complex Order (i.e., the component that includes the greatest number of contracts) counting toward the 100,000 contract threshold; the 100,000 contract threshold would no longer exist. The Options Floor Broker Subsidy would now apply to any contracts that are executed as part of a Complex Order. Eligible Contracts per Tier/Monthly Volume Subsidy Payments Currently, a per contract subsidy is paid based on the average daily contract volume for that month, which includes customer-to-non-customer transactions that are in excess of 100,000 contracts. These contracts may include customerto-customer transactions for the purposes of reaching a tier, but as stated above, a per contract subsidy would not be paid on these executions. The Exchange is amending the Options Floor Broker Subsidy to change the ‘‘Per Contract Average Daily Volume Subsidy Payment’’ to a ‘‘Per Eligible Contract Monthly Volume Subsidy Payment.’’ In other words, the computation would not be an average daily computation but a monthly total of all eligible contracts as proposed herein. Currently, the Exchange pays an average daily volume subsidy payment as follows: PER CONTRACT AVERAGE DAILY VOLUME SUBSIDY PAYMENT Tier I Tier II Tier III 100,001 to 200,000 .......................................................... $0.02 per contract ............................................................ 200,001 to 300,000 ......................................................... $0.08 per contract ............................................................ 300,001 and greater. $0.09 per contract. The Exchange is proposing to amend the tiers and payments as follows: PER ELIGIBLE CONTRACT MONTHLY VOLUME SUBSIDY PAYMENT Tier II Tier III 0 to 1,250,000 ................................ $0.00 per contract .......................... mstockstill on DSKH9S0YB1PROD with NOTICES Tier I 1,250,001 to 2,250,000 ................ $0.03 per contract ........................ 2,250,001 to 5,250,000 ................ $0.05 per contract ........................ designated these changes to be operative on May 2, 2011. Tier III 5,250,001 and greater. $0.09 per contract. The Exchange is proposing to amend the remainder of the Fee Schedule to conform to the proposed rule changes. The Exchange is also proposing to remove the following text from the Fee Schedule: ‘‘based on the amount of customer-to-customer contracts, a member organization could enter Tier II or a higher tier due to the amount of customer-to-customer contract volume,’’ because the Exchange believes that language is unnecessary. While changes to the Fee Schedule pursuant to this proposal are effective upon filing, the Exchange has The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act 6 in general, and furthers the objectives of Section 6(b)(4) of the Act 7 in particular, in that it is an equitable allocation of reasonable fees and other charges among Exchange members. The Exchange believes that the proposed amendments to the Options Floor Broker Subsidy are equitable and reasonable because member organizations with Exchange registered floor brokers would continue to be provided an equal opportunity to receive a subsidy. Additionally, any member organization is free to establish floor brokerage operations on the floor of the Exchange, and, as such, would have more opportunity to earn additional payments for attracting additional order flow to the Exchange. The Exchange believes that rewarding members that contribute the most liquidity or executions to the Exchange is reasonable and equitable and therefore the tiered fees will continue to uniformly benefit all market 5 When computing the threshold amount, the Exchange would first count all customer-tocustomer transactions and then all other customerto-non-customer transactions. See also Securities Exchange Act Release Nos. 57253 (February 1, 2008), 73 FR 7352 (February 7, 2008) (SR–Phlx– 2008–08) (adopting a tiered per contract floor broker options subsidy payable to member organization with Exchange registered floor brokers), 62403 (June 30, 2010), 75 FR 39301 (July 8, 2010) (SR–Phlx–2010–80) (an amendment to the threshold volume requirements and per contract average daily volume subsidy payment). 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(4). VerDate Mar<15>2010 17:22 May 12, 2011 Jkt 223001 2. Statutory Basis PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 E:\FR\FM\13MYN1.SGM 13MYN1 Federal Register / Vol. 76, No. 93 / Friday, May 13, 2011 / Notices participants. The Exchange believes that by amending the computation from an average daily computation to a monthly computation and also amending the tier levels, because the computation is based on a total monthly volume, additional member organizations could benefit from the ability to obtain greater subsidy payments. The Exchange also believes that the proposed amendments to the rates paid to member organizations are both reasonable and equitable because the Exchange continues to pay member organizations the subsidy. Although the rates are lowered, the Exchange added an additional tier which provides member organizations the ability to obtain the same or larger subsidy payments based on volume, potentially with lower volume. The Exchange also believes that the amendments to the computations to exclude customer-to-customer executions, dividend, merger and short stock interest strategies, and firm facilitation transactions are reasonable because the proposal to compute the monthly total eligible contracts, which could result in a greater number of eligible contracts, may still provide member organizations with the same or greater benefits as the previous subsidy. In addition, the proposals to amend the computation are equitable because the computations apply uniformly to all member organizations. Finally, the Exchange does not believe that this subsidy is unreasonable or discriminatory because any floor broker is capable of meeting the volume criteria. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. mstockstill on DSKH9S0YB1PROD with NOTICES C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.8 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 8 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Mar<15>2010 17:22 May 12, 2011 Jkt 223001 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. 28115 available publicly. All submissions should refer to File Number SR–Phlx– 2011–62 and should be submitted on or before June 3, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Cathy H. Ahn, Deputy Secretary. 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: [FR Doc. 2011–11765 Filed 5–12–11; 8:45 am] 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–2011–62 on the subject line. Self-Regulatory Organizations; BATS Y–Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add BYX Rule 11.22, Entitled ‘‘Data Products’’ BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64444; File No. SR–BYX– 2011–012] May 9, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 Paper Comments notice is hereby given that on May 5, • Send paper comments in triplicate 2011, BATS Y–Exchange, Inc. (the to Elizabeth M. Murphy, Secretary, ‘‘Exchange’’ or ‘‘BYX’’) filed with the Securities and Exchange Commission, Securities and Exchange Commission 100 F Street, NE., Washington, DC (the ‘‘Commission’’) the proposed rule 20549–1090. change as described in Items I and II All submissions should refer to File below, which Items have been prepared Number SR–Phlx–2011–62. This file by the Exchange. The Commission is number should be included on the publishing this notice to solicit subject line if e-mail is used. To help the comments on the proposed rule change Commission process and review your from interested persons. comments more efficiently, please use only one method. The Commission will I. Self-Regulatory Organization’s post all comments on the Commission’s Statement of the Terms of Substance of Internet Web site (http://www.sec.gov/ the Proposed Rule Change rules/sro.shtml). Copies of the The Exchange is proposing to submission, all subsequent continue to make available those data amendments, all written statements feeds provided by the Exchange to data with respect to the proposed rule recipients 3 without charge and to start change that are filed with the making available the Latency Commission, and all written Monitoring feed, which will also be communications relating to the available without charge. The Exchange proposed rule change between the also proposes to add language to its Commission and any person, other than Rules to memorialize those data feeds those that may be withheld from the that have already been approved by the public in accordance with the Commission.4 provisions of 5 U.S.C. 552, will be The text of the proposed rule change available for Web site viewing and is available at the Exchange’s Web site printing in the Commission’s Public Reference Room, 100 F Street, NE., 9 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). Washington, DC 20549, on official 2 17 CFR 240.19b–4. business days between the hours of 10 3 Exchange data recipients include Members of a.m. and 3 p.m. Copies of the filing also the Exchange as well as non-Members that have will be available for inspection and entered into an agreement with the Exchange that copying at the principal office of the permits them to receive Exchange data. Exchange. All comments received will 4 BATS has separately filed a rule proposal and received approval to offer certain data products for be posted without change; the which it assesses a fee but, outside of its fee Commission does not edit personal schedule, did not propose written rules related to identifying information from such data products. See Securities Exchange Act submissions. You should submit only Release No. 61885 (April 9, 2010), 75 FR 10332 (April 16, 2010). information that you wish to make PO 00000 Frm 00130 Fmt 4703 Sfmt 4703 E:\FR\FM\13MYN1.SGM 13MYN1

Agencies

[Federal Register Volume 76, Number 93 (Friday, May 13, 2011)]
[Notices]
[Pages 28113-28115]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-11765]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64446; File No. SR-Phlx-2011-62]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC Relating 
to the Options Floor Broker Subsidy

May 9, 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 April 29, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. 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 Section VIII of its Fee Schedule 
titled the ``Options Floor Broker Subsidy.''
    While changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative on May 2, 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, at the Commission's Public Reference 
Room, and on the Commission's Web site at http://www.sec.gov.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The purpose of the proposed rule change is to: (i) Eliminate the 
threshold requirement that a member organization with Exchange 
registered floor brokers must have more than an average of 100,000 
executed contracts per day in the applicable month; (ii) amend the 
computation for eligible contracts; and (iii) amend the eligible 
contracts per tier and monthly volume subsidy payments. The Exchange 
believes that the proposed amendments could enable a member 
organization to receive a higher subsidy because the Exchange is 
changing from a daily average to a monthly total calculation to 
determine the number of contracts traded.
Eliminating a Threshold
    The Exchange currently pays an Options Floor Broker Subsidy to 
member organizations with Exchange registered floor brokers that enter 
eligible contracts into the Exchange's Floor Broker Management System 
(``FBMS'').\3\ To qualify for the per contract subsidy, a member 
organization with Exchange registered floor brokers must have more than 
100,000 average executed contracts per day in the month (``100,000 
contract threshold'').\4\ Only the volume from orders entered by floor 
brokers into FBMS and subsequently executed on the Exchange qualifies. 
The

[[Page 28114]]

100,000 contract threshold is calculated per member organization floor 
brokerage unit. Where two or more member organizations with Exchange 
registered floor brokers each entered one side of a transaction into 
FBMS, the executed contracts are divided equally among qualifying 
member organizations that participate in that transaction.\5\
---------------------------------------------------------------------------

    \3\ FBMS is designed to enable floor brokers and/or their 
employees to enter, route, and report transactions stemming from 
options orders received on the Exchange. FBMS also is designed to 
establish an electronic audit trail for options orders represented 
and executed by floor brokers on the Exchange. See Exchange Rule 
1080, commentary .06.
    \4\ For purposes of calculating the 100,000 threshold, customer-
to-customer transactions, customer-to-non-customer transactions, and 
non-customer-to-non-customer transactions are currently included.
    \5\ When computing the threshold amount, the Exchange would 
first count all customer-to-customer transactions and then all other 
customer-to-non-customer transactions. See also Securities Exchange 
Act Release Nos. 57253 (February 1, 2008), 73 FR 7352 (February 7, 
2008) (SR-Phlx-2008-08) (adopting a tiered per contract floor broker 
options subsidy payable to member organization with Exchange 
registered floor brokers), 62403 (June 30, 2010), 75 FR 39301 (July 
8, 2010) (SR-Phlx-2010-80) (an amendment to the threshold volume 
requirements and per contract average daily volume subsidy payment).
---------------------------------------------------------------------------

    The Exchange is proposing to eliminate the 100,000 contract 
threshold. The Exchange believes that this threshold is no longer 
necessary because the Exchange is changing to a monthly total 
calculation. In the future, all eligible contracts will qualify for a 
subsidy rather than just those that are entered by members exceeding 
the 100,000 contract threshold.
Computation for Eligible Contracts
    Currently, customer-to-customer transactions qualify towards the 
100,000 contract threshold, but do not qualify for the subsidy. 
Dividend, merger and short stock interest strategies do not qualify 
towards the 100,000 contract threshold or the per contract subsidy. The 
largest component of a Complex Order counts toward the 100,000 contract 
threshold but neither that component nor any other component of the 
Complex Order qualifies for the per contract subsidy. Firm facilitation 
transactions count towards reaching the 100,000 contract threshold, but 
no per contract subsidy is paid for a firm facilitation transaction.
    The Exchange is proposing to amend the computation of eligible 
contracts. Customer-to-customer executions, dividend, merger and short 
stock interest strategies and firm facilitation transactions will be 
excluded from the eligible contract computations.
    The Exchange is deleting the references to the 100,000 contract 
threshold as proposed herein. Therefore, the Exchange is eliminating 
the consideration of the largest component of a Complex Order (i.e., 
the component that includes the greatest number of contracts) counting 
toward the 100,000 contract threshold; the 100,000 contract threshold 
would no longer exist. The Options Floor Broker Subsidy would now apply 
to any contracts that are executed as part of a Complex Order.
Eligible Contracts per Tier/Monthly Volume Subsidy Payments
    Currently, a per contract subsidy is paid based on the average 
daily contract volume for that month, which includes customer-to-non-
customer transactions that are in excess of 100,000 contracts. These 
contracts may include customer-to-customer transactions for the 
purposes of reaching a tier, but as stated above, a per contract 
subsidy would not be paid on these executions.
    The Exchange is amending the Options Floor Broker Subsidy to change 
the ``Per Contract Average Daily Volume Subsidy Payment'' to a ``Per 
Eligible Contract Monthly Volume Subsidy Payment.'' In other words, the 
computation would not be an average daily computation but a monthly 
total of all eligible contracts as proposed herein.
    Currently, the Exchange pays an average daily volume subsidy 
payment as follows:

                                Per Contract Average Daily Volume Subsidy Payment
----------------------------------------------------------------------------------------------------------------
                 Tier I                            Tier II                             Tier III
----------------------------------------------------------------------------------------------------------------
100,001 to 200,000.....................  200,001 to 300,000........  300,001 and greater.
$0.02 per contract.....................  $0.08 per contract........  $0.09 per contract.
----------------------------------------------------------------------------------------------------------------

The Exchange is proposing to amend the tiers and payments as follows:

                              Per Eligible Contract Monthly Volume Subsidy Payment
----------------------------------------------------------------------------------------------------------------
                Tier I                         Tier II                  Tier III                 Tier III
----------------------------------------------------------------------------------------------------------------
0 to 1,250,000.......................  1,250,001 to 2,250,000.  2,250,001 to 5,250,000.  5,250,001 and greater.
$0.00 per contract...................  $0.03 per contract.....  $0.05 per contract.....  $0.09 per contract.
----------------------------------------------------------------------------------------------------------------

The Exchange is proposing to amend the remainder of the Fee Schedule to 
conform to the proposed rule changes.
    The Exchange is also proposing to remove the following text from 
the Fee Schedule: ``based on the amount of customer-to-customer 
contracts, a member organization could enter Tier II or a higher tier 
due to the amount of customer-to-customer contract volume,'' because 
the Exchange believes that language is unnecessary.
    While changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative on May 2, 2011.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \6\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \7\ in particular, in that 
it is an equitable allocation of reasonable fees and other charges 
among Exchange members.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposed amendments to the Options 
Floor Broker Subsidy are equitable and reasonable because member 
organizations with Exchange registered floor brokers would continue to 
be provided an equal opportunity to receive a subsidy. Additionally, 
any member organization is free to establish floor brokerage operations 
on the floor of the Exchange, and, as such, would have more opportunity 
to earn additional payments for attracting additional order flow to the 
Exchange.
    The Exchange believes that rewarding members that contribute the 
most liquidity or executions to the Exchange is reasonable and 
equitable and therefore the tiered fees will continue to uniformly 
benefit all market

[[Page 28115]]

participants. The Exchange believes that by amending the computation 
from an average daily computation to a monthly computation and also 
amending the tier levels, because the computation is based on a total 
monthly volume, additional member organizations could benefit from the 
ability to obtain greater subsidy payments. The Exchange also believes 
that the proposed amendments to the rates paid to member organizations 
are both reasonable and equitable because the Exchange continues to pay 
member organizations the subsidy. Although the rates are lowered, the 
Exchange added an additional tier which provides member organizations 
the ability to obtain the same or larger subsidy payments based on 
volume, potentially with lower volume.
    The Exchange also believes that the amendments to the computations 
to exclude customer-to-customer executions, dividend, merger and short 
stock interest strategies, and firm facilitation transactions are 
reasonable because the proposal to compute the monthly total eligible 
contracts, which could result in a greater number of eligible 
contracts, may still provide member organizations with the same or 
greater benefits as the previous subsidy. In addition, the proposals to 
amend the computation are equitable because the computations apply 
uniformly to all member organizations.
    Finally, the Exchange does not believe that this subsidy is 
unreasonable or discriminatory because any floor broker is capable of 
meeting the volume criteria.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\8\ 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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-2011-62 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-2011-62. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of 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-2011-62 and should be 
submitted on or before June 3, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-11765 Filed 5-12-11; 8:45 am]
BILLING CODE 8011-01-P