Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Equity Options Fees and Singly Listed Option Fee, 20090-20092 [2012-7914]
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20090
Federal Register / Vol. 77, No. 64 / Tuesday, April 3, 2012 / Notices
trading the Shares. Specifically, the
Information Bulletin will discuss the
following: (a) The procedures for
purchases and redemptions of Shares in
Creation Unit aggregations (and that
Shares are not individually redeemable);
(b) NYSE Arca Equities Rule 9.2(a),
which imposes a duty of due diligence
on its ETP Holders to learn the essential
facts relating to every customer prior to
trading the Shares; (c) the risks involved
in trading the Shares during the
Opening and Late Trading Sessions
when an updated Portfolio Indicative
Value will not be calculated or publicly
disseminated; (d) how information
regarding the Portfolio Indicative Value
is disseminated; (e) the requirement that
Equity Trading Permit Holders deliver a
prospectus to investors purchasing
newly issued Shares prior to or
concurrently with the confirmation of a
transaction; and (f) trading information.
(5) For initial and/or continued
listing, the Fund will be in compliance
with Rule 10A–3 under the Exchange
Act,28 as provided by NYSE Arca
Equities Rule 5.3.
(6) The Fund will invest only in U.S.registered equity securities and nonU.S.-registered equity securities that
trade in markets that are members of the
ISG or are parties to a comprehensive
surveillance sharing agreement with the
Exchange; the Fund’s investments will
be consistent with its investment
objective and will not be used to
enhance leverage; and consistent with
the Exemptive Order, the Fund will not
invest in options contracts, futures
contracts, or swap agreements.
(7) The Fund may hold in the
aggregate up to 15% of its net assets in:
(a) Illiquid securities, which include
delayed funding loans, revolving credit
facilities, fixed- and floating-rate loans,
and loan participations and
assignments; and (b) Rule 144A
securities.
(8) A minimum of 100,000 Shares of
the Fund will be outstanding at the
commencement of trading on the
Exchange.
This approval order is based on all of
the Exchange’s representations.
For the foregoing reasons, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act 29 and the rules and
regulations thereunder applicable to a
national securities exchange.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,30 that the
28 17
CFR 240.10A–3.
U.S.C. 78f(b)(5).
30 15 U.S.C. 78s(b)(2).
29 15
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proposed rule change (SR–NYSEArca–
2012–09) be, and it hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–7913 Filed 4–2–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66668; File No. SR–Phlx–
2012–35]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to the
Equity Options Fees and Singly Listed
Option Fee
March 28, 2012.
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 March
16, 2012, 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: (i)
Section II 3 of the Fee Schedule entitled
‘‘Equity Options Fees’’ to assess
Professionals an Options Surcharge in
certain Multiply Listed Options; (ii)
amend Section III 4 of the Fee Schedule
entitled ‘‘Singly Listed Options’’ to
specify certain options that would be
subject to the fees in this section; and
(iii) amend the title of the Fee Schedule.
While changes to the Fee Schedule
pursuant to this proposal are effective
upon filing, the Exchange has
designated these changes to be operative
on April 2, 2012.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaqtrader.com/
31 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Section II of the Fee Schedule includes options
overlying equities, ETFs, ETNs, indexes and
HOLDRs which are Multiply Listed.
4 Section III of the Fee Schedule includes options
overlying equities, ETFs, ETNs, indexes and
HOLDRs which are not listed on another exchange.
1 15
PO 00000
Frm 00096
Fmt 4703
Sfmt 4703
micro.aspx?id=PHLXRulefilings, at the
principal office of the Exchange, 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 Exchange proposes to amend
Section II of the Fee Schedule to assess
Professionals an Options Surcharge for
transactions in RUT,5 MNX,6 NDX 7 and
BKX.8 The Exchange believes that these
surcharges will assist the Exchange in
remaining competitive in these options.
The Exchange also proposes to amend
Section III of the Fee Schedule to
specify that the following options:
PHLX Semiconductor SectorSM
(SOX SM), PHLX Housing SectorTM
(HGX SM) and PHLX Oil Service
SectorSM (OSX SM) are subject to the
Singly Listed Options Transaction
Charge even though these options will
no longer be Singly Listed. These abovereferenced options are proprietary
indexes. These options will be listed on
the NASDAQ Options Market LLC
(‘‘NOM’’) commencing on April 2, 2012.
The Exchange seeks to continue to
recoup fees associated with maintaining
these proprietary indexes. The Exchange
is also proposing to amend the title of
the Fee Schedule to more specifically
describe the document.
Section II Amendments
The Exchange currently assesses an
Options Surcharge for transactions in
RUT, MNX and NDX of $.15 per
5 RUT represents the options on the Russell
2000® Index (the ‘‘Full Value Russell Index’’ or
‘‘RUT’’).
6 MNX represents options on the one-tenth value
of the Nasdaq 100 Index traded under the symbol
MNX (‘‘MNX’’).
7 NDX represents options on the Nasdaq 100
Index1 traded under the symbol NDX (‘‘NDX’’).
8 BKX represents the KBW Bank Index.
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Federal Register / Vol. 77, No. 64 / Tuesday, April 3, 2012 / Notices
contract for Market Makers,9 BrokerDealers and Firms.10 The Exchange also
currently assesses an Options Surcharge
for transactions in BKX of $.10 per
contract for Market Makers, BrokerDealers and Firms.11 The Exchange is
proposing to assess Professionals an
Options Surcharge for transactions in
RUT, MNX and NDX of $.15 per
contract and an Options Surcharge for
transactions in BKX of $.10 per contract.
Customers will continue not to be
assessed an Options Surcharge in RUT,
MNX, NDX and BKX.
20091
Section III Amendments
Currently, SOX, HGX and OSX are
Singly Listed Options subject to the
following fees in Section III of the Fee
Schedule:
Customer
Market maker
Firm
Broker-dealer
$0.35
Options Transaction Charge ............................
Professional
$0.45
$0.35
$0.45
$0.45
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 12
in general, and furthers the objectives of
Section 6(b)(4) of the Act 13 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’s proposal to assess
Professionals a $.15 per contract
Options Surcharge for transactions in
RUT, MNX and NDX and a $.10 per
contract Options Surcharge for
transactions in BKX is reasonable
because Professionals would be assessed
a fee that is less favorable than a
Customer but equivalent to all other
market participants because it has been
established that Professionals have
access to more information than a
Customer. It can be argued that
Professionals have the same
technological and informational
advantages as broker-dealers trading for
their own account. The Exchange
believes that Professionals, who are
considered sophisticated algorithmic
traders, utilize the advantaged Customer
pricing they receive to effectively
compete with Market Makers and
Broker-Dealers 14 without the
obligations of either. Also, the Exchange
believes that unlike Customers,
Professionals are able to shoulder the
burden of fees as effectively as other
market participants.
The Exchange’s proposal to assess
Professionals a $.15 per contract
Options Surcharge for transactions in
RUT, MNX and NDX and a $.10 per
contract Options Surcharge for
transactions in BKX is equitable and not
unfairly discriminatory because all
market participants, except for
Customers, would be uniformly
assessed the Options Surcharge fees for
RUT, MNX, NDX and BKX, respectively.
A lower Customer fee benefits all
market participants by incentivizing
market participants to transact a greater
number of Customer orders, which
results in increased liquidity.
Additionally, today Professionals are
assessed a higher fee as compared to
Customers in both Penny Pilot
Options 15 and non-Penny Pilot
Options.16
The Exchange’s proposal to continue
to assess SOX, HGX and OSX the fees
in Section III for Singly Listed Options
is reasonable because the Exchange is
seeking to continue to recoup the
operation and development costs
associated with these proprietary
indexes.17
The Exchange believes that its
proposal to continue to assess SOX,
HGX and OSX the fees in Section III for
Singly Listed Options is equitable and
not unfairly discriminatory because all
market participants would be assessed
the Singly Listed Options Transaction
Charges for transacting options on these
indexes instead of the Options
Transaction Charges in Section II.18
Specifically, all market participants
would be assessed the higher fees in
Section III, as compared to the fees in
Section II, with the exception of a
Broker-Dealer electronically transacting
options on these indexes.19 The
Exchange has previously stated that it
9 The term ‘‘Market Maker’’ is utilized herein to
describe fees and rebates applicable to Specialists,
Registered Options Traders, Streaming Quote
Traders and Remote Streaming Quote Traders.
10 Currently, Professionals are not assessed an
Options Surcharge for transactions in RUT, MNX or
NDX.
11 Currently, Professionals are not assessed an
Options Surcharge for transactions in BKX.
12 15 U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(4).
14 Broker-dealers pay registration and
membership fees in self-regulatory organizations
(‘‘SRO’’) and incur costs to comply and assure that
their associated persons comply with the Act and
SRO rules.
15 The Penny Pilot was established in January
2007; and in October 2009, it was expanded and
extended through June 30, 2012. See Securities
Exchange Act Release Nos. 55153 (January 23,
2007), 72 FR 4553 (January 31, 2007) (SR–Phlx–
2006–74) (notice of filing and approval order
establishing Penny Pilot); 60873 (October 23, 2009),
74 FR 56675 (November 2, 2009) (SR–Phlx–2009–
91) (notice of filing and immediate effectiveness
expanding and extending Penny Pilot); 60966
(November 9, 2009), 74 FR 59331 (November 17,
2009) (SR–Phlx–2009–94) (notice of filing and
immediate effectiveness adding seventy-five classes
to Penny Pilot); 61454 (February 1, 2010), 75 FR
6233 (February 8, 2010) (SR–Phlx–2010–12) (notice
of filing and immediate effectiveness adding
seventy-five classes to Penny Pilot); 62028 (May 4,
2010), 75 FR 25890 (May 10, 2010) (SR–Phlx–2010–
65) (notice of filing and immediate effectiveness
adding seventy-five classes to Penny Pilot); 62616
(July 30, 2010), 75 FR 47664 (August 6, 2010) (SR–
Phlx–2010–103) (notice of filing and immediate
effectiveness adding seventy-five classes to Penny
Pilot); 63395 (November 30, 2010), 75 FR 76062
(December 7, 2010) (SR–Phlx–2010–167) (notice of
filing and immediate effectiveness extending the
Penny Pilot); and 65976 (December 15, 2011), 76 FR
79247 (December 21, 2011) (SR–Phlx–2011–172)
(notice of filing and immediate effectiveness
extending the Penny Pilot). See also Exchange Rule
1034.
16 Customers are not assessed an Options
Transaction Charge for either Penny Pilot Options
or non-Penny Pilot Options while Professionals are
assessed $.20 per contract for both Penny and nonPenny Pilot Options.
17 The Exchange continues to incur costs for
maintaining these proprietary indexes including
marketing expenses.
18 The Options Transaction Charges for nonPenny Multiply Listed Options are as follows:
Customers pays $.00 per contract, a Professional
pays $.20 per contract, a Market maker pays $.23
per contract for electronic transactions and $.25 per
contract for non-electronic transactions, a BrokerDealer pays $.50 per contract for electronic
transactions and $.25 per contract for nonelectronic transactions and a Firm pays $.40 per
contract for electronic transactions and $.25 per
contract for non-electronic transactions. See Section
II of the Fee Schedule.
19 The Broker-Dealer non-Penny options
transaction charge for a Multiply Listed Option is
$.50 per contract as compared to the Broker-Dealer
fee of $0.45 per contract for Singly Listed Options.
On April 2, 2012, NOM will list SOX,
HGX and OSX and therefore these
options will become Multiply Listed.
The Exchange proposes to continue to
assess SOX, HGX and OSX the Singly
Listed Options Transaction Charges in
Section III by specifying that these
index options will be subject to Section
III fees, even though they will no longer
be Singly Listed. The Exchange also
proposes to indicate in Section II of the
Fee Schedule that SOX, HGX and OSX
would be subject to the fees in Section
III.
Other Amendments
The Exchange is also proposing to
amend the title of the ‘‘Fee Schedule’’
to ‘‘Pricing Schedule’’ to more
specifically describe this document.
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2. Statutory Basis
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20092
Federal Register / Vol. 77, No. 64 / Tuesday, April 3, 2012 / Notices
incurs higher costs for Singly Listed
Options as compared to Multiply Listed
Options.20 The Chicago Board Options
Exchange, Incorporated (‘‘CBOE’’) noted
in a comment letter dated June 21, 2010
that CBOE relies upon fees to, among
other things, generate returns on its
investments for its own popular
proprietary products (such as The CBOE
Volatility Index® (‘‘VIX®’’) Options).21
In addition, the Exchange believes that
the proposed fees are reasonable,
equitable and not unfairly
discriminatory because the fees are
consistent with price differentiation that
exists today at all option exchanges. For
example, CBOE assesses different rates
for certain proprietary indexes as
compared to other index products
transacted at CBOE. VIX options and
The S&P 500® Index options (‘‘SPXSM’’)
are assessed different fees than other
indexes.22
The Exchange believes that its
proposal to rename the ‘‘Fee Schedule’’
as the ‘‘Pricing Schedule’’ is reasonable,
equitable and not unfairly
discriminatory because the Exchange
believes that the changing the title to
‘‘Pricing Schedule’’ more specifically
describes the fees, rebates and other
charges reflected in the document
termed ‘‘Fee Schedule.’’
The Exchange operates in a highly
competitive market, comprised of nine
exchanges, in which market participants
can easily and readily direct order flow
to competing venues if they deem fee
levels at a particular venue to be
excessive. Accordingly, the fees that are
assessed by the Exchange must remain
competitive with fees charged by other
venues and therefore must continue to
be reasonable and equitably allocated to
those members that opt to direct orders
to the Exchange rather than competing
venues.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
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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.
20 See Securities Exchange Release Act No. 64096
(March 18, 2011), 76 FR 16646 (March 24, 2011)
(SR–Phlx–2011–34).
21 See CBOE’s Comment Letter dated June 21,
2010 to the Proposed Amendments to Rule 610 of
Regulation NMS, File No. S7–09–10. CBOE further
noted that options exchanges expend considerable
resources on research and development related to
new product offerings and options exchanges incur
large licensing costs for many products.
22 See CBOE’s Fees Schedule.
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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.23 At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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–2012–35 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–2012–35. 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
23 15
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
Frm 00098
Fmt 4703
Sfmt 4703
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–
2012–35 and should be submitted on or
before April 24, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–7914 Filed 4–2–12; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #13052 and #13053]
Illinois Disaster #IL–00035
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
This is a notice of an
Administrative declaration of a disaster
for the State of ILLINOIS dated 03/22/
2012.
Incident: Severe Storms and
Tornadoes.
Incident Period: 02/29/2012 through
03/02/2012.
Effective Date: 03/22/2012.
Physical Loan Application Deadline
Date: 05/21/2012.
Economic Injury (EIDL) Loan
Application Deadline Date: 12/24/2012.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW., Suite 6050,
Washington, DC 20416.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
SUMMARY:
24 17
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CFR 200.30–3(a)(12).
03APN1
]]>Agencies
[Federal Register Volume 77, Number 64 (Tuesday, April 3, 2012)]
[Notices]
[Pages 20090-20092]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-7914]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66668; File No. SR-Phlx-2012-35]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
the Equity Options Fees and Singly Listed Option Fee
March 28, 2012.
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 March 16, 2012, 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: (i) Section II \3\ of the Fee
Schedule entitled ``Equity Options Fees'' to assess Professionals an
Options Surcharge in certain Multiply Listed Options; (ii) amend
Section III \4\ of the Fee Schedule entitled ``Singly Listed Options''
to specify certain options that would be subject to the fees in this
section; and (iii) amend the title of the Fee Schedule.
---------------------------------------------------------------------------
\3\ Section II of the Fee Schedule includes options overlying
equities, ETFs, ETNs, indexes and HOLDRs which are Multiply Listed.
\4\ Section III of the Fee Schedule includes options overlying
equities, ETFs, ETNs, indexes and HOLDRs which are not listed on
another exchange.
---------------------------------------------------------------------------
While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on April 2, 2012.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqtrader.com/micro.aspx?id=PHLXRulefilings, at
the principal office of the Exchange, 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 Exchange proposes to amend Section II of the Fee Schedule to
assess Professionals an Options Surcharge for transactions in RUT,\5\
MNX,\6\ NDX \7\ and BKX.\8\ The Exchange believes that these surcharges
will assist the Exchange in remaining competitive in these options. The
Exchange also proposes to amend Section III of the Fee Schedule to
specify that the following options: PHLX Semiconductor Sector\SM\ (SOX
\SM\), PHLX Housing Sector\TM\ (HGX \SM\) and PHLX Oil Service
Sector\SM\ (OSX \SM\) are subject to the Singly Listed Options
Transaction Charge even though these options will no longer be Singly
Listed. These above-referenced options are proprietary indexes. These
options will be listed on the NASDAQ Options Market LLC (``NOM'')
commencing on April 2, 2012. The Exchange seeks to continue to recoup
fees associated with maintaining these proprietary indexes. The
Exchange is also proposing to amend the title of the Fee Schedule to
more specifically describe the document.
---------------------------------------------------------------------------
\5\ RUT represents the options on the Russell 2000[supreg] Index
(the ``Full Value Russell Index'' or ``RUT'').
\6\ MNX represents options on the one-tenth value of the Nasdaq
100 Index traded under the symbol MNX (``MNX'').
\7\ NDX represents options on the Nasdaq 100 Index1 traded under
the symbol NDX (``NDX'').
\8\ BKX represents the KBW Bank Index.
---------------------------------------------------------------------------
Section II Amendments
The Exchange currently assesses an Options Surcharge for
transactions in RUT, MNX and NDX of $.15 per
[[Page 20091]]
contract for Market Makers,\9\ Broker-Dealers and Firms.\10\ The
Exchange also currently assesses an Options Surcharge for transactions
in BKX of $.10 per contract for Market Makers, Broker-Dealers and
Firms.\11\ The Exchange is proposing to assess Professionals an Options
Surcharge for transactions in RUT, MNX and NDX of $.15 per contract and
an Options Surcharge for transactions in BKX of $.10 per contract.
Customers will continue not to be assessed an Options Surcharge in RUT,
MNX, NDX and BKX.
---------------------------------------------------------------------------
\9\ The term ``Market Maker'' is utilized herein to describe
fees and rebates applicable to Specialists, Registered Options
Traders, Streaming Quote Traders and Remote Streaming Quote Traders.
\10\ Currently, Professionals are not assessed an Options
Surcharge for transactions in RUT, MNX or NDX.
\11\ Currently, Professionals are not assessed an Options
Surcharge for transactions in BKX.
---------------------------------------------------------------------------
Section III Amendments
Currently, SOX, HGX and OSX are Singly Listed Options subject to
the following fees in Section III of the Fee Schedule:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Customer Professional Market maker Firm Broker-dealer
--------------------------------------------------------------------------------------------------------------------------------------------------------
Options Transaction Charge............................... $0.35 $0.45 $0.35 $0.45 $0.45
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On April 2, 2012, NOM will list SOX, HGX and OSX and therefore
these options will become Multiply Listed. The Exchange proposes to
continue to assess SOX, HGX and OSX the Singly Listed Options
Transaction Charges in Section III by specifying that these index
options will be subject to Section III fees, even though they will no
longer be Singly Listed. The Exchange also proposes to indicate in
Section II of the Fee Schedule that SOX, HGX and OSX would be subject
to the fees in Section III.
Other Amendments
The Exchange is also proposing to amend the title of the ``Fee
Schedule'' to ``Pricing Schedule'' to more specifically describe this
document.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \12\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \13\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members and other persons using its
facilities.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4).
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The Exchange's proposal to assess Professionals a $.15 per contract
Options Surcharge for transactions in RUT, MNX and NDX and a $.10 per
contract Options Surcharge for transactions in BKX is reasonable
because Professionals would be assessed a fee that is less favorable
than a Customer but equivalent to all other market participants because
it has been established that Professionals have access to more
information than a Customer. It can be argued that Professionals have
the same technological and informational advantages as broker-dealers
trading for their own account. The Exchange believes that
Professionals, who are considered sophisticated algorithmic traders,
utilize the advantaged Customer pricing they receive to effectively
compete with Market Makers and Broker-Dealers \14\ without the
obligations of either. Also, the Exchange believes that unlike
Customers, Professionals are able to shoulder the burden of fees as
effectively as other market participants.
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\14\ Broker-dealers pay registration and membership fees in
self-regulatory organizations (``SRO'') and incur costs to comply
and assure that their associated persons comply with the Act and SRO
rules.
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The Exchange's proposal to assess Professionals a $.15 per contract
Options Surcharge for transactions in RUT, MNX and NDX and a $.10 per
contract Options Surcharge for transactions in BKX is equitable and not
unfairly discriminatory because all market participants, except for
Customers, would be uniformly assessed the Options Surcharge fees for
RUT, MNX, NDX and BKX, respectively. A lower Customer fee benefits all
market participants by incentivizing market participants to transact a
greater number of Customer orders, which results in increased
liquidity. Additionally, today Professionals are assessed a higher fee
as compared to Customers in both Penny Pilot Options \15\ and non-Penny
Pilot Options.\16\
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\15\ The Penny Pilot was established in January 2007; and in
October 2009, it was expanded and extended through June 30, 2012.
See Securities Exchange Act Release Nos. 55153 (January 23, 2007),
72 FR 4553 (January 31, 2007) (SR-Phlx-2006-74) (notice of filing
and approval order establishing Penny Pilot); 60873 (October 23,
2009), 74 FR 56675 (November 2, 2009) (SR-Phlx-2009-91) (notice of
filing and immediate effectiveness expanding and extending Penny
Pilot); 60966 (November 9, 2009), 74 FR 59331 (November 17, 2009)
(SR-Phlx-2009-94) (notice of filing and immediate effectiveness
adding seventy-five classes to Penny Pilot); 61454 (February 1,
2010), 75 FR 6233 (February 8, 2010) (SR-Phlx-2010-12) (notice of
filing and immediate effectiveness adding seventy-five classes to
Penny Pilot); 62028 (May 4, 2010), 75 FR 25890 (May 10, 2010) (SR-
Phlx-2010-65) (notice of filing and immediate effectiveness adding
seventy-five classes to Penny Pilot); 62616 (July 30, 2010), 75 FR
47664 (August 6, 2010) (SR-Phlx-2010-103) (notice of filing and
immediate effectiveness adding seventy-five classes to Penny Pilot);
63395 (November 30, 2010), 75 FR 76062 (December 7, 2010) (SR-Phlx-
2010-167) (notice of filing and immediate effectiveness extending
the Penny Pilot); and 65976 (December 15, 2011), 76 FR 79247
(December 21, 2011) (SR-Phlx-2011-172) (notice of filing and
immediate effectiveness extending the Penny Pilot). See also
Exchange Rule 1034.
\16\ Customers are not assessed an Options Transaction Charge
for either Penny Pilot Options or non-Penny Pilot Options while
Professionals are assessed $.20 per contract for both Penny and non-
Penny Pilot Options.
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The Exchange's proposal to continue to assess SOX, HGX and OSX the
fees in Section III for Singly Listed Options is reasonable because the
Exchange is seeking to continue to recoup the operation and development
costs associated with these proprietary indexes.\17\
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\17\ The Exchange continues to incur costs for maintaining these
proprietary indexes including marketing expenses.
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The Exchange believes that its proposal to continue to assess SOX,
HGX and OSX the fees in Section III for Singly Listed Options is
equitable and not unfairly discriminatory because all market
participants would be assessed the Singly Listed Options Transaction
Charges for transacting options on these indexes instead of the Options
Transaction Charges in Section II.\18\ Specifically, all market
participants would be assessed the higher fees in Section III, as
compared to the fees in Section II, with the exception of a Broker-
Dealer electronically transacting options on these indexes.\19\ The
Exchange has previously stated that it
[[Page 20092]]
incurs higher costs for Singly Listed Options as compared to Multiply
Listed Options.\20\ The Chicago Board Options Exchange, Incorporated
(``CBOE'') noted in a comment letter dated June 21, 2010 that CBOE
relies upon fees to, among other things, generate returns on its
investments for its own popular proprietary products (such as The CBOE
Volatility Index[supreg] (``VIX[supreg]'') Options).\21\ In addition,
the Exchange believes that the proposed fees are reasonable, equitable
and not unfairly discriminatory because the fees are consistent with
price differentiation that exists today at all option exchanges. For
example, CBOE assesses different rates for certain proprietary indexes
as compared to other index products transacted at CBOE. VIX options and
The S&P 500[supreg] Index options (``SPX\SM\'') are assessed different
fees than other indexes.\22\
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\18\ The Options Transaction Charges for non-Penny Multiply
Listed Options are as follows: Customers pays $.00 per contract, a
Professional pays $.20 per contract, a Market maker pays $.23 per
contract for electronic transactions and $.25 per contract for non-
electronic transactions, a Broker-Dealer pays $.50 per contract for
electronic transactions and $.25 per contract for non-electronic
transactions and a Firm pays $.40 per contract for electronic
transactions and $.25 per contract for non-electronic transactions.
See Section II of the Fee Schedule.
\19\ The Broker-Dealer non-Penny options transaction charge for
a Multiply Listed Option is $.50 per contract as compared to the
Broker-Dealer fee of $0.45 per contract for Singly Listed Options.
\20\ See Securities Exchange Release Act No. 64096 (March 18,
2011), 76 FR 16646 (March 24, 2011) (SR-Phlx-2011-34).
\21\ See CBOE's Comment Letter dated June 21, 2010 to the
Proposed Amendments to Rule 610 of Regulation NMS, File No. S7-09-
10. CBOE further noted that options exchanges expend considerable
resources on research and development related to new product
offerings and options exchanges incur large licensing costs for many
products.
\22\ See CBOE's Fees Schedule.
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The Exchange believes that its proposal to rename the ``Fee
Schedule'' as the ``Pricing Schedule'' is reasonable, equitable and not
unfairly discriminatory because the Exchange believes that the changing
the title to ``Pricing Schedule'' more specifically describes the fees,
rebates and other charges reflected in the document termed ``Fee
Schedule.''
The Exchange operates in a highly competitive market, comprised of
nine exchanges, in which market participants can easily and readily
direct order flow to competing venues if they deem fee levels at a
particular venue to be excessive. Accordingly, the fees that are
assessed by the Exchange must remain competitive with fees charged by
other venues and therefore must continue to be reasonable and equitably
allocated to those members that opt to direct orders to the Exchange
rather than competing venues.
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.\23\ 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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\23\ 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-2012-35 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-2012-35. 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-Phlx-2012-35 and should be
submitted on or before April 24, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-7914 Filed 4-2-12; 8:45 am]
BILLING CODE 8011-01-P
