Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Active SQF Port Fee and the Order Entry Port Fee, 54279-54281 [2011-22219]

Download as PDF Federal Register / Vol. 76, No. 169 / Wednesday, August 31, 2011 / Notices pursuant to the Regulatory Contract, however, BX retains ultimate responsibility for enforcing its rules with respect to NOS, except to the extent they are covered by an agreement with FINRA pursuant to Rule 17d–2 under the Act (‘‘17d–2 Agreement’’),19 in which case FINRA is allocated regulatory responsibility. • Second, FINRA and BX will monitor NOS for compliance with the Exchange’s trading rules, and will collect and maintain certain related information.20 • Third, FINRA will provide a report to the BOXR’s chief regulatory officer (‘‘CRO’’), on a quarterly basis, that: (i) Quantifies all alerts (of which FINRA is aware) that identify NES as a participant that has potentially violated Commission or Exchange rules, and (ii) lists all investigations that identify NES as a participant that has potentially violated Commission or Exchange rules.21 • Fourth, the Exchange has adopted Chapter XXXIX, Section 2(c) of the Grandfathered Rules of the Exchange, which requires NASDAQ OMX, as the holding company owning NOS and affiliated with BOX through the ownership of the Exchange, to establish and maintain procedures and internal controls reasonably designed to ensure that NOS does not develop or implement changes to its system, based on non-public information obtained regarding planned changes to the Exchange’s systems as a result of its affiliation with the Exchange, until such information is available generally to similarly situated Exchange members, in connection with the provision of inbound order routing to the Exchange.22 • Fifth, NOS was authorized to route NOM Exchange Direct Orders without checking the NOM book, and orders in NOM non-system securities, inbound to the Exchange from NOM for a pilot period of twelve months, which was 19 17 CFR 240.17d–2. to the Regulatory Contract, both FINRA and the Exchange will collect and maintain all alerts, complaints, investigations and enforcement actions in which NOS (in its capacity as a facility of Nasdaq routing orders to BOX) is identified as a participant that has potentially violated applicable Commission or Exchange rules. The Exchange and FINRA will retain these records in an easily accessible manner in order to facilitate any potential review conducted by the Commission’s Office of Compliance Inspections and Examinations. See Notice, 76 FR at 43741, n.10. 21 See id. 22 See chapter XXXIX, Section 2(c) of the Grandfathered Rules of the Exchange. See also Notice, 76 FR at 43741. jlentini on DSK4TPTVN1PROD with NOTICES 20 Pursuant VerDate Mar<15>2010 16:51 Aug 30, 2011 Jkt 223001 subsequently extended to September 15, 2011.23 The Exchange believes that by meeting the above-listed conditions it has set up mechanisms that protect the independence of the Exchange’s regulatory responsibility with respect to NOS, and has demonstrated that NOS cannot use any information advantage it may have because of its affiliation with the Exchange.24 In the past, the Commission has expressed concern that the affiliation of an exchange with one of its members raises potential conflicts of interest, and the potential for unfair competitive advantage.25 Although the Commission continues to be concerned about potential unfair competition and conflicts of interest between an exchange’s self-regulatory obligations and its commercial interest when the exchange is affiliated with one of its members, for the reasons discussed below, the Commission believes that it is consistent with the Act to permit NOS to provide inbound routing to the Exchange on a permanent basis instead of a pilot basis, subject to the other conditions described above. The Exchange has proposed four ongoing conditions applicable to NOS’s routing activities, which are enumerated above. The Commission believes that these conditions mitigate its concerns about potential conflicts of interest and unfair competitive advantage. In particular, the Commission believes that FINRA’s oversight of NOS,26 combined with FINRA’s monitoring of NOS’s compliance with BOX’s rules and quarterly reporting to the BOXR’s CRO, 23 See Notice, 76 FR at 43741. See also Securities Exchange Act Release No. 65177 (August 19, 2011) (SR–BX–2011–058). The Commission notes that the original pilot period of twelve months began on August 16, 2009, but was extended several times. See Notice, 76 FR at 43740, n.5.; and SR–BX–2011– 058, supra. 24 See BOX Routing Pilot Release, 76 FR at 43741. e.g., Securities Exchange Act Release Nos. 54170 (July 18, 2006), 71 FR 42149 (July 25, 2006) (SR–NASDAQ–2006–006) (order approving Nasdaq’s proposal to adopt Nasdaq Rule 2140, restricting affiliations between Nasdaq and its members); 53382 (February 27, 2006), 71 FR 11251 (March 6, 2006) (SR–NYSE–2005–77) (order approving the combination of the New York Stock Exchange, Inc. and Archipelago Holdings, Inc.); 58673 (September 29, 2008), 73 FR 57707 (October 8, 2008) (SR–Amex–2008–62) (order approving the combination of NYSE Euronext and the American Stock Exchange LLC); 59135 (December 22, 2008), 73 FR 79954 (December 30, 2008) (SR–ISE–2009– 85) (order approving the purchase by ISE Holdings of an ownership interest in DirectEdge Holdings LLC); and 59281 (January 22, 2009), 74 FR 5014 (January 28, 2009) (SR–NYSE–2008–120) (order approving a joint venture between NYSE and BIDS Holdings L.P.). 26 This oversight will be accomplished through the Regulatory Contract between the Exchange and FINRA, and, as applicable, a 17d–2 Agreement. 25 See, PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 54279 will help to protect the independence of the Exchange’s regulatory responsibilities with respect to NOS. The Commission also believes that Chapter XXXIX, Section 2(c) of the Exchange’s Grandfathered Rules is designed to ensure that NOS cannot use any information advantage it may have because of its affiliation with the Exchange. IV. Conclusion It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act,27 that the proposed rule change (SR–BX–2011– 045) be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–22221 Filed 8–30–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65195; File No. SR–Phlx– 2011–117] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Active SQF Port Fee and the Order Entry Port Fee August 25, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 2 thereunder, notice is hereby given that, on August 12, 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 reflect that the Exchange will not assess a charge for the use of additional Active Specialized Quote Feed (‘‘SQF’’) Ports and Order Entry Ports in limited circumstances. The text of the proposed rule change is available on the Exchange’s Web site 27 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 28 17 E:\FR\FM\31AUN1.SGM 31AUN1 54280 Federal Register / Vol. 76, No. 169 / Wednesday, August 31, 2011 / Notices at http://nasdaqtrader.com/ micro.aspx?id=PHLXRulefilings, 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. jlentini on DSK4TPTVN1PROD with NOTICES 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 allow member organizations to utilize additional Active SQF Ports and Order Entry Ports in very limited circumstances, at no additional charge, to accommodate member organizations that are attempting to colocate or otherwise change their technology and require extra ports during these transitions.3 The Exchange is proposing this rule change to offset costs for member organizations that are transitioning technology and require additional ports as back-up ports only while the transition is occurring. Specifically, the Exchange would not assess the Active SQF Port Fee or the Order Entry Port Fee on member organizations for the use of additional Active SQF Ports and/or Order Entry Ports for ten (10) business days in the following limited circumstances where a member organization is: (i) Colocating to another facility; or (ii) changing technology. The member organization would be required to provide the Exchange with written notification of the date it would commence the transition and the number of additional Active SQF Ports and/or Order Entry Ports that it would require during the transition. The member organization would not be assessed a fee for the use of additional Active SQF Ports and/or 3 Members require extra ports during certain technology transitions to ensure that they have functioning ports if they experience difficulties during the transition and need to send messages. VerDate Mar<15>2010 16:51 Aug 30, 2011 Jkt 223001 Order Entry Ports for the ten business days. If the member organization required additional ports beyond the ten business day period, it would be assessed the applicable monthly fee for the applicable ports.4 The member organization would continue to be assessed Active SQF Port Fees and Order Entry Port Fees for the ports that it requested, and the Exchange provided to it, prior to the transition.5 For example, a member organization that was utilizing three Order Entry Ports on a monthly basis, notified the Exchange that it would be updating its technology and required use of four additional Order Entry Ports for a ten day period (from September 2, 2011, through September 15, 2011), and completed its transition in ten business days (by September 15, 2011) would only be assessed the Order Entry Port Fee, as applicable, for three Order Entry Ports. If the same member organization, using the same facts, notified the Exchange that it required use of the four additional Order Entry Ports for more than ten business days (beyond September 15, 2011), the Exchange would assess that member organization the Order Entry Port Fee, as applicable, for all seven ports, the three original ports and the four additional ports. The Exchange currently has a tiered Active SQF Port Fee as follows: affiliated with their member organization.7 The Exchange currently assesses an Order Entry Port Fee of $500 per month per mnemonic.8 The Order Entry Port Fee is a connectivity fee assessed on member organizations in connection with routing orders to the Exchange via an external order entry port. Member organizations access the Exchange’s network through order entry ports. A member organization may have more than one order entry port. The Exchange proposes to add text to the Fee Schedule at Section VI entitled ‘‘Access Service, Cancellation, Membership, Regulatory and Other Fees’’ to indicate that: There will be no cost for additional Active SQF Ports or Order Entry Ports 9 acquired for ten business days in connection with a technology transition; notification is required to the Exchange concerning the transition; and the additional ports will be removed from the system at the end of the ten business days. 2. Statutory Basis The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act 10 in general, and furthers the objectives of Section 6(b)(4) of the Act 11 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 its Cost per Number of active SQF ports port per proposal to not assess an Active SQF month Port Fee or Order Entry Port Fee for ten business days where a member 0–4 ................................................ $350 organization is transitioning technology 5–18 .............................................. 1,250 is reasonable because the Exchange is 19–40 ............................................ 2,350 seeking to accommodate member 41 and over .................................. 3,000 organizations by not assessing fees for additional ports related to the Active SQF ports refer to ports that technology transition. The Exchange receive inbound quotes at any time believes that ten days is ample time for within that month. SQF is an interface member organizations to receive that enables specialists, Streaming additional services at no cost. The Quote Traders (‘‘SQTs’’) and Remote Exchange believes this accommodation Streaming Quote Traders (‘‘RSQTs’’) to will assist member organizations in connect and send quotes into Phlx XL. 7 Active SQF Port Fees are capped at $40,000 per Active SQF Port Fees are capped at $500 month (‘‘Cap’’) until December 30, 2011 for all per month for member organizations that are (i) Phlx Only Members; 6 and (ii) member organizations other than those member organizations who meet the requirements of the have 50 or less SQT assignments $500 per month cap. 4 Member organizations would be required to contact the Exchange to retain ports beyond the ten business day period as the Exchange intends to remove additional ports acquired at no cost once the ten day business day period has ended. 5 A member organization is required to complete a form in the manner prescribed by the Exchange in order to acquire access to Active SQF Ports or Order Entry Ports. 6 For purposes of the Active SQF Port Fee, a Phlx Only Member is a Phlx member that is not a member or member organization of another national securities exchange. PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 8 The Order Entry Port Fee is waived for mnemonics that are used exclusively for complex orders where one of the components of the complex order is the underlying security. The fee is assessed regardless of usage, and solely on the number of order entry ports assigned to each member organization. 9 The additional ports refer to the ports that were acquired at no cost for ten business days. As previously mentioned, ports that were utilized by the member organization prior to the transition will continue to be assessed the current fees. 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(4). E:\FR\FM\31AUN1.SGM 31AUN1 Federal Register / Vol. 76, No. 169 / Wednesday, August 31, 2011 / Notices effectively and efficiently transitioning technology and avoiding interruption to their business, which in turn benefits the market place. The Exchange believes that this proposal is equitable and not unfairly discriminatory because the Exchange is offering the additional ports at no charge to all member organizations that transition technology. These member organizations who would receive the additional ports at no costs are being offered these services because they are in a special circumstance, a transition of technology, and this proposal would prevent additional extraordinary costs related to the transition. 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.12 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. jlentini on DSK4TPTVN1PROD with NOTICES 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: Number SR–Phlx–2011–117 on the subject line. SECURITIES AND EXCHANGE COMMISSION Paper Comments [Release No. 34–65197; File No. SR–EDGX– 2011–27] • 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–2011–117. 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– 2011–117 and should be submitted on or before September 21, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–22219 Filed 8–30–11; 8:45 am] Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend EDGX Rule 1.5(q) August 25, 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 August 19, 2011, EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change EDGX Exchange, Inc. (‘‘EDGX’’ or the ‘‘Exchange’’), proposes to amend EDGX Rule 1.5(q) to change the starting time of the Pre-Opening Session from 8 a.m. Eastern Time (‘‘ET’’) to 7 a.m. E.T. The text of the proposed rule change is attached as Exhibit 5 and is available on the Exchange’s Web site at http:// www.directedge.com, at the Exchange’s principal office, and at the Public Reference Room of the Commission. 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 self-regulatory organization 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 BILLING CODE 8011–01–P 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 1. Purpose The purpose of this filing is to amend EDGX Rule 1.5(q) to change the starting 1 15 12 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Mar<15>2010 16:51 Aug 30, 2011 13 17 Jkt 223001 54281 PO 00000 CFR 200.30–3(a)(12). Frm 00092 Fmt 4703 Sfmt 4703 2 17 E:\FR\FM\31AUN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 31AUN1

Agencies

[Federal Register Volume 76, Number 169 (Wednesday, August 31, 2011)]
[Notices]
[Pages 54279-54281]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-22219]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65195; File No. SR-Phlx-2011-117]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
the Active SQF Port Fee and the Order Entry Port Fee

August 25, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that, on August 12, 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 
reflect that the Exchange will not assess a charge for the use of 
additional Active Specialized Quote Feed (``SQF'') Ports and Order 
Entry Ports in limited circumstances.
    The text of the proposed rule change is available on the Exchange's 
Web site

[[Page 54280]]

at http://nasdaqtrader.com/micro.aspx?id=PHLXRulefilings, 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 allow member 
organizations to utilize additional Active SQF Ports and Order Entry 
Ports in very limited circumstances, at no additional charge, to 
accommodate member organizations that are attempting to colocate or 
otherwise change their technology and require extra ports during these 
transitions.\3\ The Exchange is proposing this rule change to offset 
costs for member organizations that are transitioning technology and 
require additional ports as back-up ports only while the transition is 
occurring.
---------------------------------------------------------------------------

    \3\ Members require extra ports during certain technology 
transitions to ensure that they have functioning ports if they 
experience difficulties during the transition and need to send 
messages.
---------------------------------------------------------------------------

    Specifically, the Exchange would not assess the Active SQF Port Fee 
or the Order Entry Port Fee on member organizations for the use of 
additional Active SQF Ports and/or Order Entry Ports for ten (10) 
business days in the following limited circumstances where a member 
organization is: (i) Colocating to another facility; or (ii) changing 
technology. The member organization would be required to provide the 
Exchange with written notification of the date it would commence the 
transition and the number of additional Active SQF Ports and/or Order 
Entry Ports that it would require during the transition. The member 
organization would not be assessed a fee for the use of additional 
Active SQF Ports and/or Order Entry Ports for the ten business days. If 
the member organization required additional ports beyond the ten 
business day period, it would be assessed the applicable monthly fee 
for the applicable ports.\4\ The member organization would continue to 
be assessed Active SQF Port Fees and Order Entry Port Fees for the 
ports that it requested, and the Exchange provided to it, prior to the 
transition.\5\
---------------------------------------------------------------------------

    \4\ Member organizations would be required to contact the 
Exchange to retain ports beyond the ten business day period as the 
Exchange intends to remove additional ports acquired at no cost once 
the ten day business day period has ended.
    \5\ A member organization is required to complete a form in the 
manner prescribed by the Exchange in order to acquire access to 
Active SQF Ports or Order Entry Ports.
---------------------------------------------------------------------------

    For example, a member organization that was utilizing three Order 
Entry Ports on a monthly basis, notified the Exchange that it would be 
updating its technology and required use of four additional Order Entry 
Ports for a ten day period (from September 2, 2011, through September 
15, 2011), and completed its transition in ten business days (by 
September 15, 2011) would only be assessed the Order Entry Port Fee, as 
applicable, for three Order Entry Ports. If the same member 
organization, using the same facts, notified the Exchange that it 
required use of the four additional Order Entry Ports for more than ten 
business days (beyond September 15, 2011), the Exchange would assess 
that member organization the Order Entry Port Fee, as applicable, for 
all seven ports, the three original ports and the four additional 
ports.
    The Exchange currently has a tiered Active SQF Port Fee as follows:

------------------------------------------------------------------------
                                                                Cost per
                  Number of active SQF ports                    port per
                                                                 month
------------------------------------------------------------------------
0-4..........................................................       $350
5-18.........................................................      1,250
19-40........................................................      2,350
41 and over..................................................      3,000
------------------------------------------------------------------------

    Active SQF ports refer to ports that receive inbound quotes at any 
time within that month. SQF is an interface that enables specialists, 
Streaming Quote Traders (``SQTs'') and Remote Streaming Quote Traders 
(``RSQTs'') to connect and send quotes into Phlx XL. Active SQF Port 
Fees are capped at $500 per month for member organizations that are (i) 
Phlx Only Members; \6\ and (ii) have 50 or less SQT assignments 
affiliated with their member organization.\7\
---------------------------------------------------------------------------

    \6\ For purposes of the Active SQF Port Fee, a Phlx Only Member 
is a Phlx member that is not a member or member organization of 
another national securities exchange.
    \7\ Active SQF Port Fees are capped at $40,000 per month 
(``Cap'') until December 30, 2011 for all member organizations other 
than those member organizations who meet the requirements of the 
$500 per month cap.
---------------------------------------------------------------------------

    The Exchange currently assesses an Order Entry Port Fee of $500 per 
month per mnemonic.\8\ The Order Entry Port Fee is a connectivity fee 
assessed on member organizations in connection with routing orders to 
the Exchange via an external order entry port. Member organizations 
access the Exchange's network through order entry ports. A member 
organization may have more than one order entry port.
---------------------------------------------------------------------------

    \8\ The Order Entry Port Fee is waived for mnemonics that are 
used exclusively for complex orders where one of the components of 
the complex order is the underlying security. The fee is assessed 
regardless of usage, and solely on the number of order entry ports 
assigned to each member organization.
---------------------------------------------------------------------------

    The Exchange proposes to add text to the Fee Schedule at Section VI 
entitled ``Access Service, Cancellation, Membership, Regulatory and 
Other Fees'' to indicate that: There will be no cost for additional 
Active SQF Ports or Order Entry Ports \9\ acquired for ten business 
days in connection with a technology transition; notification is 
required to the Exchange concerning the transition; and the additional 
ports will be removed from the system at the end of the ten business 
days.
---------------------------------------------------------------------------

    \9\ The additional ports refer to the ports that were acquired 
at no cost for ten business days. As previously mentioned, ports 
that were utilized by the member organization prior to the 
transition will continue to be assessed the current fees.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \10\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \11\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members and other persons using its 
facilities.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that its proposal to not assess an Active SQF 
Port Fee or Order Entry Port Fee for ten business days where a member 
organization is transitioning technology is reasonable because the 
Exchange is seeking to accommodate member organizations by not 
assessing fees for additional ports related to the technology 
transition. The Exchange believes that ten days is ample time for 
member organizations to receive additional services at no cost. The 
Exchange believes this accommodation will assist member organizations 
in

[[Page 54281]]

effectively and efficiently transitioning technology and avoiding 
interruption to their business, which in turn benefits the market 
place.
    The Exchange believes that this proposal is equitable and not 
unfairly discriminatory because the Exchange is offering the additional 
ports at no charge to all member organizations that transition 
technology. These member organizations who would receive the additional 
ports at no costs are being offered these services because they are in 
a special circumstance, a transition of technology, and this proposal 
would prevent additional extraordinary costs related to the transition.

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.\12\ 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.
---------------------------------------------------------------------------

    \12\ 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-2011-117 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-2011-117. 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-2011-117 and should be 
submitted on or before September 21, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-22219 Filed 8-30-11; 8:45 am]
BILLING CODE 8011-01-P