Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Routing Fees, 35092-35095 [2012-14189]

Download as PDF 35092 Federal Register / Vol. 77, No. 113 / Tuesday, June 12, 2012 / Notices srobinson on DSK4SPTVN1PROD with NOTICES Section 6(b) of the Act.3 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 4 requirements that the rules of an exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, to remove impediments to and to perfect the mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest, and with Section 6(b)(4) of the Act 5, which provides that Exchange rules may provide for the equitable allocation of reasonable dues, fees, and other charges among its Trading Permit Holders and other persons using its facilities. Assessing a higher fee for 10 Gbps connectivity than for 1 Gbps connectivity is reasonable because 10 Gbps connectivity is more robust than 1 Gbps connectivity, and is equitable and not unfairly discriminatory because 10 Gbps connectivity requires more costly equipment and maintenance, and the Exchange must recoup the costs related to providing 10 Gbps connectivity. Further, CBSX market participants may still elect for the less-expensive 1 Gbps connectivity. Finally, the amount of the fee for 10 Gbps connectivity is less than the amount of the fees for 10 Gbps connectivity assessed by other exchanges.6 Assessing higher fees for Sponsored Users is equitable and not unfairly discriminatory because Sponsored Users are able to access the Exchange and use the equipment provided without possessing a trading permit. As such, Trading Permit Holders who have a trading permit will have a higher level of commitment to transacting business on CBSX and using Exchange facilities than Sponsored Users. Finally, these increases maintain the same proportionate amounts that are paid by regular users relative to Sponsored Users. Clarifying that the current $250 monthly fee for a Network Access Port ($500 for Sponsored Users) is for a 1 Gbps connection removes impediments to and to perfect the mechanism for a free and open market and a national market system, and, in general, protects investors and the public interest by eliminating any confusion about which 3 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 5 15 U.S.C. 78f(b)(4). 6 See New York Stock Exchange Price List, page 13, which lists monthly prices of $12,000–61,500 for different types of 10 Gbps connectivity (along with initial charges of $10,000–50,000) and International Securities Exchange Schedule of Fees, page 9, which lists a low-latency Ethernet network access fee of $7,000 per month. 4 15 VerDate Mar<15>2010 22:42 Jun 11, 2012 Jkt 226001 connection will be assessed which fee (now that CBSX will be offering both the 1 Gbps and 10 Gbps connection options). B. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition that is 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 The Exchange neither solicited nor received comments on the proposed rule change. 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)7 of the Act and paragraph (f) of Rule 19b–4 8 thereunder. 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. 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–CBOE–2012–052 on the subject line. 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 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal offices 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– 2012–052, and should be submitted on or before July 3, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–14164 Filed 6–11–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–67123; File No. SR–Phlx– 2012–75] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Routing Fees June 5, 2012. 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–CBOE–2012–052. This file number should be included on the subject line if email is used. To help the 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 May 30, 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 9 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 7 15 U.S.C. 78s(b)(3)(A). 8 17 CFR 240.19b–4(f). PO 00000 Frm 00160 Fmt 4703 1 15 Sfmt 4703 E:\FR\FM\12JNN1.SGM 12JNN1 35093 Federal Register / Vol. 77, No. 113 / Tuesday, June 12, 2012 / Notices 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. at https://www.nasdaqtrader.com/ micro.aspx?id=PHLXfilings, at the principal office of the Exchange, and at the Commission’s Public Reference Room. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend certain Routing Fees to recoup costs incurred by the Exchange in routing to The NASDAQ Options Market LLC (‘‘NOM’’). While the changes proposed herein are effective upon filing, the Exchange has designated these changes to be operative on June 1, 2012. The text of the proposed rule change is available on the Exchange’s Web site II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose 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 Exchange forth in sections A, B, and C below, of the most significant aspects of such statements. The purpose of this filing is to recoup costs that the Exchange incurs for routing and executing certain orders in equity and index options to NOM. The Exchange’s Pricing Schedule at Section V currently includes the following Routing Fees for routing Customer, Professional, Firm, Broker-Dealer and Market Maker 3 orders to away markets. Customer NYSE AMEX .................................................................................................................... BATS Penny .................................................................................................................... BATS non-Penny ............................................................................................................. BOX ................................................................................................................................. CBOE ............................................................................................................................... CBOE orders greater than 99 contracts in RUT, RMN, NDX, MNX, ETFs, ETNs and HOLDRs ....................................................................................................................... C2 .................................................................................................................................... ISE ................................................................................................................................... ISE Select Symbols ......................................................................................................... NYSE ARCA (Penny Pilot) .............................................................................................. NYSE ARCA (Standard) .................................................................................................. NOM ................................................................................................................................. NOM (NDX and MNX) ..................................................................................................... The Exchange is proposing to amend the current ‘‘NOM (NDX and MNX)’’ Professional Firm/brokerdealer/market maker $0.11 0.55 0.86 0.11 0.11 $0.55 0.55 0.91 0.55 0.55 0.29 0.55 0.11 0.31 0.55 0.11 0.54 0.56 Routing Fees by renaming those fees as ‘‘NOM–MNX.’’ The Exchange is $0.31 0.55 0.91 0.11 0.31 0.31 0.56 0.29 0.39 0.55 0.11 0.54 0.56 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 proposing to adopt separate Routing Fees for NOM–NDX as follows: Exchange Customer Professional Firm/brokerdealer/market maker NOM–NDX ....................................................................................................................... $0.11 $0.81 $0.81 srobinson on DSK4SPTVN1PROD with NOTICES NOM recently amended its fees relating to options on the Nasdaq 100 Index traded under the symbol NDX to assess Professionals, Firms, Non-NOM Market Makers and NOM Market Makers (‘‘Non-Customers’’) a $0.70 per contract Fee for Removing Liquidity.4 The Exchange is proposing to amend its Routing Fees to adopt new NDX NOM Routing Fees to account for the revised Customer and Non-Customer NOM NDX Fees to Remove Liquidity and other routing costs incurred by the Exchange when routing to NOM. In May 2009, the Exchange adopted Rule 1080(m)(iii)(A) to establish Nasdaq Options Services LLC (‘‘NOS’’), a member of the Exchange, as the Exchange’s exclusive order router.5 NOS is utilized by the Exchange’s fully automated options trading system, PHLX XL®,6 solely to route orders in options listed and open for trading on the PHLX XL system to destination markets. Each time NOS routes to away markets NOS is charged a $0.06 clearing fee and, in the case of certain exchanges, a transaction fee is also charged in certain symbols, which fees are passed through to the Exchange. The Exchange 3 For the purposes of Routing Fees, a Market Maker includes Specialists (see Rule 1020) and ROTs (Rule 1014(b)(i) and (ii), which includes SQTs (see Rule 1014(b)(ii)(A)) and RSQTs (see Rule 1014(b)(ii)(B)). 4 See SR–NASDAQ–2012–068. NOM is not assessing a Customer a Fee to Remove Liquidity in NDX. NOM previously assessed the following Fees for Removing Liquidity for NDX and MNX: $0.50 per contract for Customers, $0.50 per contract for Professionals, $0.50 per contract for Firms, $0.50 per contract for Non-NOM Market Makers and $0.40 per contract for NOM Market Makers. The Exchange recently adopted separate fees for NDX as noted herein. 5 See Securities Exchange Act Release No. 59995 (May 28, 2009), 74 FR 26750 (June 3, 2009) (SR– Phlx–2009–32). 6 This proposal refers to ‘‘PHLX XL’’ as the Exchange’s automated options trading system. In May 2009 the Exchange enhanced the system and adopted corresponding rules referring to the system as ‘‘Phlx XL II.’’ See Securities Exchange Act Release No. 59995 (May 28, 2009), 74 FR 26750 (June 3, 2009) (SR–Phlx–2009–32). The Exchange intends to submit a separate technical proposed rule change that would change all references to the system from ‘‘Phlx XL II’’ to ‘‘PHLX XL’’ for branding purposes. VerDate Mar<15>2010 22:42 Jun 11, 2012 Jkt 226001 PO 00000 Frm 00161 Fmt 4703 Sfmt 4703 E:\FR\FM\12JNN1.SGM 12JNN1 35094 Federal Register / Vol. 77, No. 113 / Tuesday, June 12, 2012 / Notices currently recoups clearing and transaction charges incurred by the Exchange as well as certain other costs incurred by the Exchange when routing to away markets, such as administrative and technical costs associated with operating NOS, membership fees at away markets, and technical costs associated with routing.7 The Exchange also proposes to amend Section V to relocate note 13 to reference the ISE Select Symbols Routing Fee and remove the stray asterisk that is currently next to the ISE Select Symbols title. The Exchange believes that the asterisk is more appropriately placed near the fee it is describing. As with all fees, the Exchange may adjust these Routing Fees in response to competitive conditions by filing a new proposed rule change. 2. Statutory Basis srobinson on DSK4SPTVN1PROD with NOTICES The Exchange believes that its proposal to amend its Pricing Schedule is consistent with Section 6(b) of the Act 8 in general, and furthers the objectives of Section 6(b)(4) of the Act 9 in particular, in that it is an equitable allocation of reasonable fees and other charges among Exchange members. The Exchange believes that the proposed amendment to the current NOM Routing Fees to rename the current fees to apply solely to options on the one-tenth value of the Nasdaq 100 Index traded under the symbol MNX and adopt separate fees for NDX orders routed to NOM is reasonable because the two separate categories take into account the different fees for removing liquidity assessed by NOM for MNX and NDX. The Exchange seeks to recoup costs incurred when routing orders to NOM on behalf of its members. The Exchange believes that the proposed amendment to the current NOM Routing Fees to rename those fees as ‘‘NOM–MNX’’ and not otherwise amend those fees but adopt separate Routing Fees for NDX options routed to NOM is equitable and not unfairly discriminatory because the Exchange will uniformly apply the NOM–MNX 7 The Exchange is therefore adopting NOM’s Fees for Removing Liquidity of $0.70 per contract for Professional, Firm, Non-NOM Market Maker and NOM Maker Makers orders, a $0.06 clearing cost and another $0.05 per contract associated with administrative and technical costs associated with operating NOS, a total of $0.81 per contract. The Exchange would only assess a Customer the 0.06 clearing cost and another $0.05 per contract associated with administrative and technical costs associated with operating NOS (a total of $0.11 per contract) because a Customer is not assessed a Fee for Removing Liquidity on NOM. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(4). VerDate Mar<15>2010 22:42 Jun 11, 2012 Jkt 226001 and NOM–NDX Routing Fees to its members. The proposed NOM Routing Fees for NDX are reasonable because they seek to recoup costs that are incurred by the Exchange when routing Customer, Professional, Firm, Broker-Dealer and Market Maker orders to NOM on behalf of members. Each destination market’s transaction charge varies and there is a standard clearing charge for each transaction incurred by the Exchange along with other administrative and technical costs that are incurred by the Exchange. The Exchange believes that the proposed Routing Fees would enable the Exchange to recover the remove fees assessed to Non-Customers by NOM for NDX options, plus clearing and other administrative and technical fees for the execution of Customer and Non-Customer orders when routed to NOM. The Exchange also believes that the proposed NOM NDX Routing Fees are equitable and not unfairly discriminatory because they would be uniformly applied to all Non-Customer NDX orders that are routed to NOM and to cover the costs for Customer NDX orders that are routed to NOM. The Exchange believes that the proposed technical amendment to relocate the note in Section V is reasonable, equitable and not unfairly discriminatory because it will further clarify the note and the ISE Select Symbols Routing Fee. 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.10 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 10 15 PO 00000 U.S.C. 78s(b)(3)(A)(ii). Frm 00162 Fmt 4703 Sfmt 4703 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–2012–75 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–2012–75. 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 10:00 a.m. and 3:00 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– E:\FR\FM\12JNN1.SGM 12JNN1 Federal Register / Vol. 77, No. 113 / Tuesday, June 12, 2012 / Notices 2012–75 and should be submitted on or before July 3, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–14189 Filed 6–11–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–67144; File No. SR–CBOE– 2012–053] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Trades for Less Than $1 June 6, 2012. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on June 1, 2012, the Chicago Board Options Exchange, Incorporated (‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated the proposal as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. srobinson on DSK4SPTVN1PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is proposing to extend its program that allows transactions to take place at a price that is below $1 per option contract through June 28, 2013. The text of the proposed rule change is available on the Exchange’s Web site (www.cboe.org/Legal), at the Exchange’s Office of the Secretary and at the Commission’s Public Reference Room. CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6). 1 15 22:42 Jun 11, 2012 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 those 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 parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose An ‘‘accommodation’’ or ‘‘cabinet’’ trade refers to trades in listed options on the Exchange that are worthless or not actively traded. Cabinet trading is generally conducted in accordance with the Exchange Rules, except as provided in Exchange Rule 6.54, Accommodation Liquidations (Cabinet Trades), which sets forth specific procedures for engaging in cabinet trades. Rule 6.54 currently provides for cabinet transactions to occur via open outcry at a cabinet price of $1 per option contract in any options series open for trading in the Exchange, except that the Rule is not applicable to trading in option classes participating in the Penny Pilot Program. Under the procedures, bids and offers (whether opening or closing a position) at a price of $1 per option contract may be represented in the trading crowd by a Floor Broker or by a Market-Maker or provided in response to a request by a PAR Official/OBO, a Floor Broker or a Market-Maker, but must yield priority to all resting orders in the PAR Official/OBO cabinet book (which resting cabinet book orders may be closing only). So long as both the buyer and the seller yield to orders resting in the cabinet book, opening cabinet bids can trade with opening cabinet offers at $1 per option contract. The Exchange has temporarily amended the procedures through June 29, 2012 to allow transactions to take place in open outcry at a price of at least $0 but less than $1 per option contract.5 5 See Securities Exchange Act Release Nos. 59188 (December 30, 2008), 74 FR 480 (January 6, 2009)(SR–CBOE–2008–133)(adopting the amended procedures on a temporary basis through January 30, 2009), 59331 (January 30, 2009), 74 FR 6333 (February 6, 2009)(extending the amended procedures on a temporary basis through May 29, 2009), 60020 (June 1, 2009), 74 FR 27220 (June 8, 11 17 VerDate Mar<15>2010 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Jkt 226001 PO 00000 Frm 00163 Fmt 4703 Sfmt 4703 35095 These lower priced transactions are traded pursuant to the same procedures applicable to $1 cabinet trades, except that (i) bids and offers for opening transactions are only permitted to accommodate closing transactions in order to limit use of the procedure to liquidations of existing positions, and (ii) the procedures are also available for trading in option classes participating in the Penny Pilot Program.6 The Exchange believes that allowing a price of at least $0 but less than $1 better accommodates the closing of options positions in series that are worthless or not actively traded, particularly due to market conditions which may result in a significant number of series being out-of-themoney. For example, a market participant might have a long position in a call series with a strike price of $100 and the underlying stock might now be trading at $30. In such an instance, there might not otherwise be a market for that person to close-out the position even at the $1 cabinet price (e.g., the series might be quoted no bid).7 2009)(SR–CBOE–2009–034)(extending the amended procedures on a temporary basis through June 1, 2010), 62192 (May 28, 2010), 75 FR 31828 (June 4, 2010)(SR–CBOE–2010–052)(extending the amended procedures on a temporary basis through June 1, 2011); 64403 (May 4, 2011), 76 FR 27110 (May 10, 2011)(SR–CBOE–2011–048)(extending the amended procedures on a temporary basis through December 30, 2011); and 65872 (December 2, 2011), 76 FR 76788 (December 8, 2011)(SR–CBOE–2011– 113)(extending the amended procedures on a temporary basis through June 29, 2012). 6 Currently the $1 cabinet trading procedures are limited to options classes traded in $0.05 or $0.10 standard increment. The $1 cabinet trading procedures are not available in Penny Pilot Program classes because in those classes an option series can trade in a standard increment as low as $0.01 per share (or $1.00 per option contract with a 100 share multiplier). Because the temporary procedures allow trading below $0.01 per share (or $1.00 per option contract with a 100 share multiplier), the procedures are available for all classes, including those classes participating in the Penny Pilot Program. 7 As with other accommodation liquidations under Rule 6.54, transactions that occur for less than $1 are not be disseminated to the public on the consolidated tape. In addition, as with other accommodation liquidations under Rule 6.54, the transactions are exempt from the Consolidated Options Audit Trail (‘‘COATS’’) requirements of Exchange Rule 6.24, Required Order Information. However, the Exchange maintains quotation, order and transaction information for the transactions in the same format as the COATS data is maintained. In this regard, all transactions for less than $1 must be reported to the Exchange following the close of each business day. The rule also provides that transactions for less than $1 will be reported for clearing utilizing forms, formats and procedures established by the Exchange from time to time. In this regard, the Exchange initially intends to have clearing firms directly report the transactions to The Options Clearing Corporation (‘‘OCC’’) using OCC’s position adjustment/transfer procedures. This manner of reporting transactions for clearing is similar to the procedure that CBOE currently E:\FR\FM\12JNN1.SGM Continued 12JNN1

Agencies

[Federal Register Volume 77, Number 113 (Tuesday, June 12, 2012)]
[Notices]
[Pages 35092-35095]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14189]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67123; File No. SR-Phlx-2012-75]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Routing Fees

June 5, 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 May 30, 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

[[Page 35093]]

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 certain Routing Fees to recoup costs 
incurred by the Exchange in routing to The NASDAQ Options Market LLC 
(``NOM'').
    While the changes proposed herein are effective upon filing, the 
Exchange has designated these changes to be operative on June 1, 2012.
    The text of the proposed rule change is available on the Exchange's 
Web site at https://www.nasdaqtrader.com/micro.aspx?id=PHLXfilings, 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 purpose of this filing is to recoup costs that the Exchange 
incurs for routing and executing certain orders in equity and index 
options to NOM. The Exchange's Pricing Schedule at Section V currently 
includes the following Routing Fees for routing Customer, Professional, 
Firm, Broker-Dealer and Market Maker \3\ orders to away markets.
---------------------------------------------------------------------------

    \3\ For the purposes of Routing Fees, a Market Maker includes 
Specialists (see Rule 1020) and ROTs (Rule 1014(b)(i) and (ii), 
which includes SQTs (see Rule 1014(b)(ii)(A)) and RSQTs (see Rule 
1014(b)(ii)(B)).

----------------------------------------------------------------------------------------------------------------
                                                                                                  Firm/broker-
                         Exchange                               Customer        Professional      dealer/market
                                                                                                      maker
----------------------------------------------------------------------------------------------------------------
NYSE AMEX.................................................             $0.11             $0.31             $0.55
BATS Penny................................................              0.55              0.55              0.55
BATS non-Penny............................................              0.86              0.91              0.91
BOX.......................................................              0.11              0.11              0.55
CBOE......................................................              0.11              0.31              0.55
CBOE orders greater than 99 contracts in RUT, RMN, NDX,                 0.29              0.31              0.55
 MNX, ETFs, ETNs and HOLDRs...............................
C2........................................................              0.55              0.56              0.55
ISE.......................................................              0.11              0.29              0.55
ISE Select Symbols........................................              0.31              0.39              0.55
NYSE ARCA (Penny Pilot)...................................              0.55              0.55              0.55
NYSE ARCA (Standard)......................................              0.11              0.11              0.55
NOM.......................................................              0.54              0.54              0.55
NOM (NDX and MNX).........................................              0.56              0.56              0.55
----------------------------------------------------------------------------------------------------------------

    The Exchange is proposing to amend the current ``NOM (NDX and 
MNX)'' Routing Fees by renaming those fees as ``NOM-MNX.'' The Exchange 
is proposing to adopt separate Routing Fees for NOM-NDX as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                  Firm/broker-
                        Exchange                              Customer         Professional      dealer/market
                                                                                                     maker
----------------------------------------------------------------------------------------------------------------
NOM-NDX................................................             $0.11              $0.81              $0.81
----------------------------------------------------------------------------------------------------------------

    NOM recently amended its fees relating to options on the Nasdaq 100 
Index traded under the symbol NDX to assess Professionals, Firms, Non-
NOM Market Makers and NOM Market Makers (``Non-Customers'') a $0.70 per 
contract Fee for Removing Liquidity.\4\ The Exchange is proposing to 
amend its Routing Fees to adopt new NDX NOM Routing Fees to account for 
the revised Customer and Non-Customer NOM NDX Fees to Remove Liquidity 
and other routing costs incurred by the Exchange when routing to NOM.
---------------------------------------------------------------------------

    \4\ See SR-NASDAQ-2012-068. NOM is not assessing a Customer a 
Fee to Remove Liquidity in NDX. NOM previously assessed the 
following Fees for Removing Liquidity for NDX and MNX: $0.50 per 
contract for Customers, $0.50 per contract for Professionals, $0.50 
per contract for Firms, $0.50 per contract for Non-NOM Market Makers 
and $0.40 per contract for NOM Market Makers. The Exchange recently 
adopted separate fees for NDX as noted herein.
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    In May 2009, the Exchange adopted Rule 1080(m)(iii)(A) to establish 
Nasdaq Options Services LLC (``NOS''), a member of the Exchange, as the 
Exchange's exclusive order router.\5\ NOS is utilized by the Exchange's 
fully automated options trading system, PHLX XL[supreg],\6\ solely to 
route orders in options listed and open for trading on the PHLX XL 
system to destination markets. Each time NOS routes to away markets NOS 
is charged a $0.06 clearing fee and, in the case of certain exchanges, 
a transaction fee is also charged in certain symbols, which fees are 
passed through to the Exchange. The Exchange

[[Page 35094]]

currently recoups clearing and transaction charges incurred by the 
Exchange as well as certain other costs incurred by the Exchange when 
routing to away markets, such as administrative and technical costs 
associated with operating NOS, membership fees at away markets, and 
technical costs associated with routing.\7\
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    \5\ See Securities Exchange Act Release No. 59995 (May 28, 
2009), 74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32).
    \6\ This proposal refers to ``PHLX XL'' as the Exchange's 
automated options trading system. In May 2009 the Exchange enhanced 
the system and adopted corresponding rules referring to the system 
as ``Phlx XL II.'' See Securities Exchange Act Release No. 59995 
(May 28, 2009), 74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32). The 
Exchange intends to submit a separate technical proposed rule change 
that would change all references to the system from ``Phlx XL II'' 
to ``PHLX XL'' for branding purposes.
    \7\ The Exchange is therefore adopting NOM's Fees for Removing 
Liquidity of $0.70 per contract for Professional, Firm, Non-NOM 
Market Maker and NOM Maker Makers orders, a $0.06 clearing cost and 
another $0.05 per contract associated with administrative and 
technical costs associated with operating NOS, a total of $0.81 per 
contract. The Exchange would only assess a Customer the 0.06 
clearing cost and another $0.05 per contract associated with 
administrative and technical costs associated with operating NOS (a 
total of $0.11 per contract) because a Customer is not assessed a 
Fee for Removing Liquidity on NOM.
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    The Exchange also proposes to amend Section V to relocate note 13 
to reference the ISE Select Symbols Routing Fee and remove the stray 
asterisk that is currently next to the ISE Select Symbols title. The 
Exchange believes that the asterisk is more appropriately placed near 
the fee it is describing.
    As with all fees, the Exchange may adjust these Routing Fees in 
response to competitive conditions by filing a new proposed rule 
change.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Pricing 
Schedule is consistent with Section 6(b) of the Act \8\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \9\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed amendment to the current 
NOM Routing Fees to rename the current fees to apply solely to options 
on the one-tenth value of the Nasdaq 100 Index traded under the symbol 
MNX and adopt separate fees for NDX orders routed to NOM is reasonable 
because the two separate categories take into account the different 
fees for removing liquidity assessed by NOM for MNX and NDX. The 
Exchange seeks to recoup costs incurred when routing orders to NOM on 
behalf of its members.
    The Exchange believes that the proposed amendment to the current 
NOM Routing Fees to rename those fees as ``NOM-MNX'' and not otherwise 
amend those fees but adopt separate Routing Fees for NDX options routed 
to NOM is equitable and not unfairly discriminatory because the 
Exchange will uniformly apply the NOM-MNX and NOM-NDX Routing Fees to 
its members.
    The proposed NOM Routing Fees for NDX are reasonable because they 
seek to recoup costs that are incurred by the Exchange when routing 
Customer, Professional, Firm, Broker-Dealer and Market Maker orders to 
NOM on behalf of members. Each destination market's transaction charge 
varies and there is a standard clearing charge for each transaction 
incurred by the Exchange along with other administrative and technical 
costs that are incurred by the Exchange. The Exchange believes that the 
proposed Routing Fees would enable the Exchange to recover the remove 
fees assessed to Non-Customers by NOM for NDX options, plus clearing 
and other administrative and technical fees for the execution of 
Customer and Non-Customer orders when routed to NOM. The Exchange also 
believes that the proposed NOM NDX Routing Fees are equitable and not 
unfairly discriminatory because they would be uniformly applied to all 
Non-Customer NDX orders that are routed to NOM and to cover the costs 
for Customer NDX orders that are routed to NOM.
    The Exchange believes that the proposed technical amendment to 
relocate the note in Section V is reasonable, equitable and not 
unfairly discriminatory because it will further clarify the note and 
the ISE Select Symbols Routing Fee.

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.\10\ 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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    \10\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2012-75 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-2012-75. 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 
10:00 a.m. and 3:00 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-

[[Page 35095]]

2012-75 and should be submitted on or before July 3, 2012.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14189 Filed 6-11-12; 8:45 am]
BILLING CODE 8011-01-P
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