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]
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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 (https://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 (https://www.sec.gov/
rules/sro.shtml).
Copies of the submission, all
subsequent amendments, all written
statements with respect to the proposed
rule change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of 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).
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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
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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 https://nasdaqtrader.com/
micro.aspx?id=PHLXfilings, at the
principal office of the Exchange, on the
Commission’s Web site at https://
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).
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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 (https://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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filing
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 https://nasdaqtrader.com/
micro.aspx?id=PHLXfilings, at the
principal office of the Exchange, on the
Commission’s Web site at https://
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
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CFR 200.30–3(a)(12).
Frm 00103
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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 https://nasdaqtrader.com/micro.aspx?id=PHLXfilings, at the
principal office of the Exchange, on the Commission's Web site at
https://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.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4).
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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.
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\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].
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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.
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\13\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an 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 (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing 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.
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\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
