Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Option Floor Broker Subsidy, 78710-78712 [2011-32409]

Download as PDF 78710 Federal Register / Vol. 76, No. 243 / Monday, December 19, 2011 / Notices parameter for the system to re-COA again). For example, if after the end of the 15-second interval timer the current market moves to $0.80–$0.99 (or, for example, if the current market moves back to $0.80–$1.01 and then, after the end of the 15-second interval timer moves back again to $0.80–$1.00), then the resting complex order would again initiate the re-COA feature. If there are no responses, the order would be placed back in COB. The cycle is complete. Now that the resting order has been subject to COA 2 times since it was booked in COB, the 60 minute sleep timer will begin and the resting order will not be eligible for the re-COA feature again until the sleep timer expires and there is a quote update after that timer expires that is within the tick distance parameter. All timers would be reset anytime there is a price change at the top of the COB. For example, if five minutes into the sleep interval a second complex order is entered to rest in COB at a price of $0.99 ($0.01 better than the original resting order priced at $0.98), the original resting order would no longer be at the top of the COB and subject to the re-COA feature. The timers would reset and the second complex order (which now represents the top of the COB) would be subject to the re-COA process. If, for example, the second order subsequently trades (constituting a price change at the top of the COB), the original order would be at the top of the COB again and could become subject to the re-COA feature again. 2. Statutory Basis 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 The Exchange neither solicited nor received comments on the proposal. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, provided that the selfregulatory organization has given the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change or such shorter time as designated by the Commission, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 10 and Rule 19b–4(f)(6) thereunder.11 thnsp; At any time within 60 days 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. emcdonald on DSK5VPTVN1PROD with NOTICES The proposed rule change is consistent with Section 6(b) of the Act 8 in general and furthers the objectives of Section 6(b)(5) of the Act 9 in particular in that it should promote just and equitable principles of trade, serve to remove impediments to and perfect the mechanism of a free and open market and a national market system, and protect investors and the public interest. The Exchange believes that the proposed rule change facilitates the orderly execution of complex orders by providing an automated opportunity for price improvement to (and execution of) resting orders priced near the current market. 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: B. Self-Regulatory Organization’s Statement on Burden on Competition Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. CBOE does not believe that the proposed rule change will impose any burden on competition that is not Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–CBOE–2011–119 on the subject line. All submissions should refer to File Number SR–CBOE–2011–119. This file number should be included on the subject line if email 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–CBOE–2011–119 and should be submitted on or before January 9, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2011–32344 Filed 12–16–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65946; File No. SR–Phlx– 2011–168] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Option Floor Broker Subsidy December 13, 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 November 12 17 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). VerDate Mar<15>2010 19:31 Dec 16, 2011 10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b–4(f)(6). Jkt 226001 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\19DEN1.SGM 19DEN1 78711 Federal Register / Vol. 76, No. 243 / Monday, December 19, 2011 / Notices 30, 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 eliminate Section VII of its Fee Schedule entitled 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 December 1, 2011. The text of the proposed rule change is available on the Exchange’s Web site at http://nasdaqtrader.com/ micro.aspx?id=PHLXfilings, at the principal office of the Exchange, on the Commission’s Web site at http:// www.sec.gov, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Broker Subsidy (‘‘Subsidy’’). The Exchange is seeking to incentivize Floor Brokers in other ways, such as offering rebates for certain orders.3 The Exchange believes that the Subsidy is no longer necessary as a means to incentivize Floor Brokers and proposes to eliminate the Subsidy. The Exchange currently pays a Subsidy to member organizations with Exchange registered floor brokers that enter eligible contracts into the Exchange’s Floor Broker Management System (‘‘FBMS’’).4 The Subsidy is paid based on the contract volume on Customer-to-non-Customer as well as non-Customer-to-non-Customer transactions for that month. Only the volume from orders entered by floor brokers into FBMS and subsequently executed on the Exchange qualifies. The Exchange pays a Subsidy based on a monthly total of all eligible contracts as follows: The purpose of the proposed rule change is to eliminate the Options Floor PER ELIGIBLE CONTRACT MONTHLY VOLUME SUBSIDY PAYMENT Tier I Tier II Tier III Tier IV 0 to 1,250,000 ........................... $0.00 per contract ..................... 1,250,001 to 2,250,000 .......................................... $0.03 per contract .................................................. 2,250,001 to 5,250,000 ............ $0.05 per contract .................... 5,250,001 and greater. $0.09 per contract. emcdonald on DSK5VPTVN1PROD with NOTICES In computing the monthly eligible contracts, the Exchange currently excludes: (i) Customer-to-Customer executions; (ii) Firm-to-Customer executions where the Firm has reached the Firm Related Equity Option cap (‘‘Cap’’) (see Section II); (iii) Firm-toFirm executions, where both sides have reached the Cap; (iv) dividend,5 merger 6 and short stock interest 7 strategies; and (v) firm facilitation transactions.8 The Subsidy applies to contracts that are executed as part of a Complex Order.9 Where two or more member organizations with Exchange registered floor brokers each enter one side of a transaction into FBMS, the executed contracts are divided equally among qualifying member organizations that participate in that transaction. The Exchange also proposes to eliminate other references to the Subsidy in the Fee Schedule at Section I entitled ‘‘Rebates and Fees for Adding and Removing Liquidity in Select Symbols’’ and in the Table of Contents. The Exchange proposes to eliminate this Subsidy on December 1, 2011. The Exchange has provided notification to its Floor Brokers of its intent to eliminate the Subsidy. 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. The Exchange believes that the proposed elimination of the Subsidy is reasonable for various reasons. First, the Exchange believes that its purpose for offering Floor Brokers an incentive to transact certain eligible contracts through FBMS no longer exists. Second, 3 See SR–Phlx–2011–169 [sic] (a proposed rule change to amend and adopt rebates applicable to both electronic QCC Orders and Floor QCC Orders with some exceptions and also amend and adopt a Service Fee). 4 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. 5 A dividend strategy is defined as transactions done to achieve a dividend arbitrage involving the purchase, sale and exercise of in-the-money options of the same class, executed the first business day prior to the date on which the underlying stock goes ex-dividend. See Section II of the Fee Schedule. 6 A merger strategy is defined as transactions done to achieve a merger arbitrage involving the purchase, sale and exercise of options of the same class and expiration date, executed the first business day prior to the date on which shareholders of record are required to elect their respective form of consideration, i.e., cash or stock. See Section II of the Fee Schedule. 7 A short stock interest strategy is defined as transactions done to achieve a short stock interest arbitrage involving the purchase, sale and exercise of in-the-money options of the same class. See Section II of the Fee Schedule. 8 A facilitation occurs when a floor broker holds an options order for a public customer and a contraside order for the same option series and, after providing an opportunity for all persons in the trading crowd to participate in the transaction, executes both orders as a facilitation cross. See Exchange Rule 1064. 9 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 ETF coupled with the purchase or sale of options contract(s). See Exchange Rule 1080, Commentary .08(a)(i). 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(4). VerDate Mar<15>2010 19:31 Dec 16, 2011 Jkt 226001 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 E:\FR\FM\19DEN1.SGM 19DEN1 78712 Federal Register / Vol. 76, No. 243 / Monday, December 19, 2011 / Notices the Exchange is proposing to equalize the incentives provided to Floor Brokers and members entering electronic orders by offering a rebate on both electronic QCC Orders and Floor QCC Orders.12 Finally, in light of offering Floor Brokers a rebate on Floor QCC Orders, the Exchange no longer desires to incentivize Floor Brokers with the Subsidy. The Exchange believes that eliminating the Subsidy is equitable and not unfairly discriminatory for various reasons. First, the Exchange will not offer the Subsidy to any Floor Broker. Second, members executing orders electronically are not being offered the Subsidy today, so eliminating the Subsidy will further equalize Floor Brokers and members entering electronic orders. Finally, unlike the Subsidy which is based on monthly volume, there is no volume requirement to obtain a rebate on either an electronic QCC Order or a Floor QCC Order. The rebate is paid on each contract for electronic QCC Orders and Floor QCC Orders. Therefore, all Floor Brokers are in an equal position to qualify for the rebate. 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. emcdonald on DSK5VPTVN1PROD with NOTICES 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.13 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 12 The Exchange recently determined to offer a rebate to Floor Brokers for Floor QCC Orders as of December 1, 2011. See SR–Phlx–2011–169 [sic]. 13 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Mar<15>2010 19:31 Dec 16, 2011 Jkt 226001 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2011–32409 Filed 12–16–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–Phlx–2011–168 on the subject line. [Release No. 34–65945; File No. SR–Phlx– 2011–171] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Qualified Contingent Cross Orders 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–2011–168. This file number should be included on the subject line if email 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 such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–Phlx– 2011–168 and should be submitted on or before January 9, 2012. December 13, 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 December 1, 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 its Fee Schedule to increase a rebate and adopt a rebate related to Qualified Contingent Cross orders (‘‘QCC Orders’’). 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, on the Commission’s Web site at http:// www.sec.gov, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set 1 15 14 17 PO 00000 CFR 200.30–3(a)(12). Frm 00103 Fmt 4703 Sfmt 4703 2 17 E:\FR\FM\19DEN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 19DEN1

Agencies

[Federal Register Volume 76, Number 243 (Monday, December 19, 2011)]
[Notices]
[Pages 78710-78712]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-32409]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65946; File No. SR-Phlx-2011-168]


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

 December 13, 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 November

[[Page 78711]]

30, 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 eliminate Section VII of its Fee Schedule 
entitled 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 December 1, 2011.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqtrader.com/micro.aspx?id=PHLXfilings, at the 
principal office of the Exchange, on the Commission's Web site at 
http://www.sec.gov, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of the proposed rule change is to eliminate the Options 
Floor Broker Subsidy (``Subsidy''). The Exchange is seeking to 
incentivize Floor Brokers in other ways, such as offering rebates for 
certain orders.\3\ The Exchange believes that the Subsidy is no longer 
necessary as a means to incentivize Floor Brokers and proposes to 
eliminate the Subsidy.
---------------------------------------------------------------------------

    \3\ See SR-Phlx-2011-169 [sic] (a proposed rule change to amend 
and adopt rebates applicable to both electronic QCC Orders and Floor 
QCC Orders with some exceptions and also amend and adopt a Service 
Fee).
---------------------------------------------------------------------------

    The Exchange currently pays a Subsidy to member organizations with 
Exchange registered floor brokers that enter eligible contracts into 
the Exchange's Floor Broker Management System (``FBMS'').\4\ The 
Subsidy is paid based on the contract volume on Customer-to-non-
Customer as well as non-Customer-to-non-Customer transactions for that 
month. Only the volume from orders entered by floor brokers into FBMS 
and subsequently executed on the Exchange qualifies. The Exchange pays 
a Subsidy based on a monthly total of all eligible contracts as 
follows:
---------------------------------------------------------------------------

    \4\ 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.

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

    In computing the monthly eligible contracts, the Exchange currently 
excludes: (i) Customer-to-Customer executions; (ii) Firm-to-Customer 
executions where the Firm has reached the Firm Related Equity Option 
cap (``Cap'') (see Section II); (iii) Firm-to-Firm executions, where 
both sides have reached the Cap; (iv) dividend,\5\ merger \6\ and short 
stock interest \7\ strategies; and (v) firm facilitation 
transactions.\8\ The Subsidy applies to contracts that are executed as 
part of a Complex Order.\9\ Where two or more member organizations with 
Exchange registered floor brokers each enter one side of a transaction 
into FBMS, the executed contracts are divided equally among qualifying 
member organizations that participate in that transaction.
---------------------------------------------------------------------------

    \5\ A dividend strategy is defined as transactions done to 
achieve a dividend arbitrage involving the purchase, sale and 
exercise of in-the-money options of the same class, executed the 
first business day prior to the date on which the underlying stock 
goes ex-dividend. See Section II of the Fee Schedule.
    \6\ A merger strategy is defined as transactions done to achieve 
a merger arbitrage involving the purchase, sale and exercise of 
options of the same class and expiration date, executed the first 
business day prior to the date on which shareholders of record are 
required to elect their respective form of consideration, i.e., cash 
or stock. See Section II of the Fee Schedule.
    \7\ A short stock interest strategy is defined as transactions 
done to achieve a short stock interest arbitrage involving the 
purchase, sale and exercise of in-the-money options of the same 
class. See Section II of the Fee Schedule.
    \8\ A facilitation occurs when a floor broker holds an options 
order for a public customer and a contra-side order for the same 
option series and, after providing an opportunity for all persons in 
the trading crowd to participate in the transaction, executes both 
orders as a facilitation cross. See Exchange Rule 1064.
    \9\ 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 ETF coupled with the purchase or sale of 
options contract(s). See Exchange Rule 1080, Commentary .08(a)(i).
---------------------------------------------------------------------------

    The Exchange also proposes to eliminate other references to the 
Subsidy in the Fee Schedule at Section I entitled ``Rebates and Fees 
for Adding and Removing Liquidity in Select Symbols'' and in the Table 
of Contents.
    The Exchange proposes to eliminate this Subsidy on December 1, 
2011. The Exchange has provided notification to its Floor Brokers of 
its intent to eliminate the Subsidy.
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.
---------------------------------------------------------------------------

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

    The Exchange believes that the proposed elimination of the Subsidy 
is reasonable for various reasons. First, the Exchange believes that 
its purpose for offering Floor Brokers an incentive to transact certain 
eligible contracts through FBMS no longer exists. Second,

[[Page 78712]]

the Exchange is proposing to equalize the incentives provided to Floor 
Brokers and members entering electronic orders by offering a rebate on 
both electronic QCC Orders and Floor QCC Orders.\12\ Finally, in light 
of offering Floor Brokers a rebate on Floor QCC Orders, the Exchange no 
longer desires to incentivize Floor Brokers with the Subsidy.
---------------------------------------------------------------------------

    \12\ The Exchange recently determined to offer a rebate to Floor 
Brokers for Floor QCC Orders as of December 1, 2011. See SR-Phlx-
2011-169 [sic].
---------------------------------------------------------------------------

    The Exchange believes that eliminating the Subsidy is equitable and 
not unfairly discriminatory for various reasons. First, the Exchange 
will not offer the Subsidy to any Floor Broker. Second, members 
executing orders electronically are not being offered the Subsidy 
today, so eliminating the Subsidy will further equalize Floor Brokers 
and members entering electronic orders. Finally, unlike the Subsidy 
which is based on monthly volume, there is no volume requirement to 
obtain a rebate on either an electronic QCC Order or a Floor QCC Order. 
The rebate is paid on each contract for electronic QCC Orders and Floor 
QCC Orders. Therefore, all Floor Brokers are in an equal position to 
qualify for the rebate.

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.\13\ 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.
---------------------------------------------------------------------------

    \13\ 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 email to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2011-168 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-2011-168. This file 
number should be included on the subject line if email 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 such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-Phlx-2011-168 and should be 
submitted on or before January 9, 2012.
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-32409 Filed 12-16-11; 8:45 am]
BILLING CODE 8011-01-P