Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Complex Orders, 74039-74041 [2012-29965]
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Federal Register / Vol. 77, No. 239 / Wednesday, December 12, 2012 / Notices
2012–135 and should be submitted on
or before January 2, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Kevin M. O’Neill,
Deputy Secretary.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2012–29964 Filed 12–11–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68376; File No. SR–Phlx–
2012–139]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
Complex Orders
December 6, 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 December
3, 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.
mstockstill on DSK4VPTVN1PROD with
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Section I, Part B of the Exchange’s
Pricing Schedule entitled ‘‘Rebates and
Fees for Adding and Removing
Liquidity in Select Symbols’’ to apply a
fee differential approved by the
Commission.
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
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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15:48 Dec 11, 2012
Jkt 229001
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.
1. Purpose
The Exchange filed two immediately
effective rule changes, SR–Phlx–2012–
27 and SR–Phlx–2012–54,3 to amend
certain fees and rebates in Section I,
which filings were temporarily
suspended by the Commission as of
April 30, 2012 (‘‘Suspension Order’’).4
On November 9, 2012, the Commission
approved SR–Phlx–2012–27 and SR–
Phlx–2012–54, as modified by
Amendment No. 1, on a one-year pilot
basis, with such fees being operative on
December 3, 2012 (‘‘Approval Order’’).5
The Approval Order approved certain
fees that were proposed by the Exchange
in SR–Phlx–2012–27.6 The Exchange
proposes, pursuant to the Approval
Order, to reinstate the Complex Order
pricing differential that was suspended
on April 30, 2012. In SR–Phlx–2012–27,
the Exchange filed to amend various
fees.7 The fees for execution of Complex
Orders by Directed Participants and
Market Makers became the subject of the
Suspension Order. Specifically, the
Exchange filed to amend the Directed
Participant Complex Order Fee for
Removing Liquidity from $0.30 to $0.32
per contract and the Marker Maker
Complex Order Fee for Removing
Liquidity from $0.32 to $0.37 per
contract.8 On April 30, 2012, the
Commission suspended both SR–Phlx–
3 See Securities Exchange Act Release Nos. 66551
(March 9, 2012), 77 FR 15400 (March 15, 2012) (SR–
Phlx–2012–27) and 66883 (April 30, 2012), 77 FR
26591 (May 4, 2012) (SR–Phlx–2012–54).
4 By order dated April 30, 2012, the Commission
suspended SR–Phlx–2012–27 and SR–Phlx–2012–
54. See Securities Exchange Release No. 66884
(April 30, 2012), 77 FR 26595 (May 4, 2012) (SR–
Phlx–2012–27and SR–Phlx–2012–54).
5 See Securities Exchange Act Release No. 68202
(November 9, 2012), 77 FR 68856 (November 16,
2012) (SR–Phlx–2012–27 and SR–Phlx–2012–54).
6 Specifically, SR–Phlx–2012–27 proposed,
among other things, to: (1) Increase the Customer
Complex Order Rebate for Adding Liquidity from
$0.30 to $0.32 per contract, (2) create a new
Complex Order Rebate for Removing Liquidity and
specifically pay a Customer a $0.06 Complex Order
Rebate for Removing Liquidity, and (3) increase the
Complex Order Fees for Removing Liquidity for
Firms, Broker-Dealers and Professionals from $0.35
per contract to $0.38 per contract.
7 See Securities Exchange Act Release No. 66551
(March 9, 2012), 77 FR 15400 (March 15, 2012) (SR–
Phlx–2012–27).
8 Id.
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Sfmt 4703
74039
2012–27 and a related filing SR–Phlx–
2012–54 and instituted proceedings to
determine whether the Exchange’s
proposed rule changes should be
approved or disapproved.9 The
proposed $0.05 per contract Complex
Order differential as between Directed
Participants and Market Makers was
suspended and the $0.02 fee differential
was reinstated as of April 30, 2012.10
The subsequent Approval Order
approved the fees related to Complex
Orders on a one-year pilot basis
operative on December 3, 2012.11 Since
the date of the Suspension Order, the
Exchange has filed amendments to
Section I of its Pricing Schedule which
amended certain fees and also the
categories of market participants.12
The Exchange amended its categories
of market participants to specifically
define a Specialist 13 separate and apart
from other Market Makers.14 At the time
of the Suspension Order, the Exchange
defined a Market Maker to include
Specialists and Registered Options
Traders.15 The Exchange redefined a
9 The Commission noted in the Suspension Order
that it ‘‘* * * believes it is appropriate to further
evaluate the potential effect of the proposed rule
changes on competition among different types of
market participants and on market quality,
particularly with respect to the fee differential
between Directed Participants and Market Makers,
and the basis for such differential put forth by the
Exchange.’’ See Securities Exchange Release No.
66884 (April 30, 2012), 77 FR 26595, 26596 (May
4, 2012) (SR–Phlx–2012–27and SR–Phlx–2012–54).
10 By order dated April 30, 2012, the Commission
suspended SR–Phlx–2012–27 and SR–Phlx–2012–
54. See Securities Exchange Release No. 66884
(April 30, 2012), 77 FR 26595 (May 4, 2012) (SR–
Phlx–2012–27 and SR–Phlx–2012–54).
11 See Securities Exchange Act Release No. 68202
(November 9, 2012), 77 FR 68856 (November 16,
2012) (SR–Phlx–2012–27 and SR–Phlx–2012–54).
12 See Securities Exchange Act Release Nos.
67189 (June 12, 2012), 77 FR 36310 (June 18, 2012)
(SR–Phlx–2012–77) (an immediately effective rule
filing which, among other things, amended the
Complex Order Directed Participant fee from $0.34
to $0.36 per contract and noted that the Complex
Order fee for Removing Liquidity, applicable to
Specialists and Market Makers, will be decreased by
$0.02 per contract when the Specialist or Market
Maker transacts against a Customer order directed
to them. This filing also established the category of
Specialist); and 67633 (August 9, 2012), 77 FR
49040 (August 15, 2012) (SR–Phlx–2012–104) (an
immediately effective rule filing, which, among
other things, amended the Complex Order
Specialist and Market Maker fees from $0.36 to
$0.39 per contract).
13 A ‘‘Specialist’’ is an Exchange member who is
registered as an options specialist pursuant to Rule
1020(a).
14 See Securities Exchange Act Release No. 67189
(June 12, 2012), 77 FR 36310 (June 18, 2012) (SR–
Phlx–2012–77).
15 A Registered Options Trader (‘‘ROT’’) includes
a Streaming Quote Trader (‘‘SQT’’), a Remote
Streaming Quote Trader (‘‘RSQT’’) and a Non-SQT,
which by definition is neither a SQT or a RSQT.
A ROT is defined in Exchange Rule 1014(b) as a
regular member of the Exchange located on the
trading floor who has received permission from the
E:\FR\FM\12DEN1.SGM
Continued
12DEN1
74040
Federal Register / Vol. 77, No. 239 / Wednesday, December 12, 2012 / Notices
Complex Order fee differential that was
recently approved by the Commission.22
This proposal does not amend the
current pricing in Section I, Part B of the
Pricing Schedule other than to offer
discounted pricing to Market Makers
and Specialists when the Market Maker
or Specialist transacts against a
Customer Order directed to them by
increasing the Complex Order Fee for
Removing Liquidity discount from $0.02
to $0.05 per contract, consistent with
the Approval Order.23
The Exchange believes that the
proposed amendments are consistent
with the Act because the proposal
merely incorporates amendments
approved by the Commission pursuant
to an Approval Order.24
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
IV. Solicitation of Comments
2. Statutory Basis
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes that its
proposal to amend its Pricing Schedule
is consistent with Section 6(b) of the
Act 19 in general, and furthers the
objectives of Section 6(b)(4) of the Act 20
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 also believes that it is
an equitable allocation of reasonable
rebates among Exchange members and
other persons using its facilities.
On November 9, 2012, the
Commission approved SR–Phlx–2012–
27 and SR–Phlx–2012–54, as modified
by Amendment No. 1, on a one-year
pilot basis, with such fees being
operative on December 3, 2012
(‘‘Approval Order’’).21 Pursuant to that
Approval Order and the reasons
articulated therein, the Exchange is
modifying its Pricing Schedule to reflect
the $0.05 per contract Complex Order
fee differential that was proposed in
SR–Phlx–2012–27 and SR–Phlx–2012–
54 and approved. This filing
incorporates the $0.05 per contract
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. Further, the
Exchange notes that the Market Maker
and Specialists Complex Order Fees for
Removing Liquidity currently in place
at the Exchange apply only to certain
Select Symbols which are MultiplyListed and highly liquid securities. As
described herein, the Exchange’s fees
are comparable to and lower than other
fee differentials today at other options
exchanges. Given the highly competitive
environment for options trading and the
attendant benefits to investors, the
Exchange believes that no exchange has
market power sufficient to raise prices
for competitively-traded options in an
unreasonable or unfairly discriminatory
manner in violation of the Exchange
Act. In actuality, it is member firms that
control the order flow that options
markets compete to attract as evidenced
by the large number of pricing-related
rule changes and shifts of market share
among options markets.
Exchange to trade in options for his own account.
See Exchange Rule 1014 (b)(i) and (ii).
16 The term ‘‘Directed Participant’’ applies to
transactions for the account of a Specialist,
Streaming Quote Trader or Remote Streaming Quote
Trader resulting from a Customer order that is (1)
directed to it by an order flow provider, and (2)
executed by it electronically on Phlx XL II.
17 See Securities Exchange Act Release Nos.
67189 (June 12, 2012), 77 FR 36310 (June 18, 2012)
(SR–Phlx–2012–77).
18 See Securities Exchange Act Release No. 68202
(November 9, 2012), 77 FR 68856 (November 16,
2012) (SR–Phlx–2012–27 and SR–Phlx–2012–54).
19 15 U.S.C. 78f(b).
20 15 U.S.C. 78f(b)(4).
21 See Securities Exchange Act Release No. 68202
(November 9, 2012), 77 FR 68856 (November 16,
2012) (SR–Phlx–2012–27 and SR–Phlx–2012–54).
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
mstockstill on DSK4VPTVN1PROD with
Market Maker to include ROTs, SQTs
and RSQTs. The Exchange eliminated
the category ‘‘Directed Participant’’ 16
from the categories of market
participants, and instead added
Specialists as a category of market
participants.17
The Exchange is therefore proposing
to amend the Pricing Schedule to reflect
the $0.05 fee differential between
Market Makers and Specialists that
execute directed Complex Orders and
those that do not that was proposed in
SR–Phlx–2012–27 and SR–Phlx–2012–
54. The Exchange also proposes to state
in the Pricing Schedule that the fee
differential is subject to a one-year pilot.
The Exchange proposes these
amendments become operative on
December 3, 2012 consistent with the
Approval Order.18
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15:48 Dec 11, 2012
Jkt 229001
No written comments were either
solicited or received.
22 To the extent that the Approval Order modified
the Exchange’s Pricing Schedule by restoring a
previous amendment which was not the subject of
the Approval Order, the Exchange addresses those
amendments in a separate rule change. See SR–
Phlx–2012–137 (not yet published).
23 See Securities Exchange Act Release No. 68202
(November 9, 2012), 77 FR 68856 (November 16,
2012) (SR–Phlx–2012–27 and SR–Phlx–2012–54).
24 Id.
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Fmt 4703
Sfmt 4703
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.25 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.
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–2012–139 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–2012–139. 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
25 15
E:\FR\FM\12DEN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
12DEN1
Federal Register / Vol. 77, No. 239 / Wednesday, December 12, 2012 / Notices
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–
2012–139 and should be submitted on
or before January 2, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–29965 Filed 12–11–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68360; File No. SR–CBOE–
2012–115]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the Fees
Schedule
December 5, 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 November
30, 2012, Chicago Board Options
Exchange, Incorporated (the ‘‘Exchange’’
or ‘‘CBOE’’) filed with the Securities
and Exchange Commission (the
‘‘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.
mstockstill on DSK4VPTVN1PROD with
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Fees Schedule. The text of the proposed
rule change is available on the
Exchange’s Web site (https://
www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
26 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
the Exchange’s Office of the Secretary,
and at the Commission.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Volume Incentive Program (‘‘VIP’’) to
state that a Trading Permit Holder
(‘‘TPH’’) may request to receive its
credit under the VIP as a separate direct
payment. Currently, TPHs receive their
credits under the VIP as line-item
credits on their overall monthly bills
from the Exchange. However, for
convenience reasons regarding TPHs’
systems and procedures for processing
credits received under the VIP, a
number of TPHs have requested to
receive such credits as separate
payments from the Exchange. This
poses little problem to the Exchange’s
billing processes, so the Exchange
proposes to provide this option to
requesting TPHs.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
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.
Providing TPHs with the opportunity to
request to receive their credits under the
VIP as separate direct payments will
provide TPHs with another, possibly
1 15
VerDate Mar<15>2010
15:48 Dec 11, 2012
more convenient, manner in which to
receive their credits under the VIP,
which perfects the mechanism for a free
and open market.
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
Because the foregoing proposed rule
change does not:
A. Significantly affect the protection
of investors or the public interest;
B. Impose any significant burden on
competition; and
C. Become operative for 30 days from
the date on which it was filed, or such
shorter time as the Commission may
designate, it has become effective
pursuant to Section 19(b)(3)(A) 5 of the
Act and Rule 19b–4(f)(6) 6 thereunder.
At any time within 60 days of the
filing of this 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–2012–115 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
5 15
3 15
Jkt 229001
PO 00000
U.S.C. 78f(b).
Frm 00069
Fmt 4703
6 17
Sfmt 4703
74041
E:\FR\FM\12DEN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
12DEN1
Agencies
[Federal Register Volume 77, Number 239 (Wednesday, December 12, 2012)]
[Notices]
[Pages 74039-74041]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29965]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68376; File No. SR-Phlx-2012-139]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Complex Orders
December 6, 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 December 3, 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 Section I, Part B of the Exchange's
Pricing Schedule entitled ``Rebates and Fees for Adding and Removing
Liquidity in Select Symbols'' to apply a fee differential approved by
the Commission.
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 Exchange filed two immediately effective rule changes, SR-Phlx-
2012-27 and SR-Phlx-2012-54,\3\ to amend certain fees and rebates in
Section I, which filings were temporarily suspended by the Commission
as of April 30, 2012 (``Suspension Order'').\4\ On November 9, 2012,
the Commission approved SR-Phlx-2012-27 and SR-Phlx-2012-54, as
modified by Amendment No. 1, on a one-year pilot basis, with such fees
being operative on December 3, 2012 (``Approval Order'').\5\
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\3\ See Securities Exchange Act Release Nos. 66551 (March 9,
2012), 77 FR 15400 (March 15, 2012) (SR-Phlx-2012-27) and 66883
(April 30, 2012), 77 FR 26591 (May 4, 2012) (SR-Phlx-2012-54).
\4\ By order dated April 30, 2012, the Commission suspended SR-
Phlx-2012-27 and SR-Phlx-2012-54. See Securities Exchange Release
No. 66884 (April 30, 2012), 77 FR 26595 (May 4, 2012) (SR-Phlx-2012-
27and SR-Phlx-2012-54).
\5\ See Securities Exchange Act Release No. 68202 (November 9,
2012), 77 FR 68856 (November 16, 2012) (SR-Phlx-2012-27 and SR-Phlx-
2012-54).
---------------------------------------------------------------------------
The Approval Order approved certain fees that were proposed by the
Exchange in SR-Phlx-2012-27.\6\ The Exchange proposes, pursuant to the
Approval Order, to reinstate the Complex Order pricing differential
that was suspended on April 30, 2012. In SR-Phlx-2012-27, the Exchange
filed to amend various fees.\7\ The fees for execution of Complex
Orders by Directed Participants and Market Makers became the subject of
the Suspension Order. Specifically, the Exchange filed to amend the
Directed Participant Complex Order Fee for Removing Liquidity from
$0.30 to $0.32 per contract and the Marker Maker Complex Order Fee for
Removing Liquidity from $0.32 to $0.37 per contract.\8\ On April 30,
2012, the Commission suspended both SR-Phlx-2012-27 and a related
filing SR-Phlx-2012-54 and instituted proceedings to determine whether
the Exchange's proposed rule changes should be approved or
disapproved.\9\ The proposed $0.05 per contract Complex Order
differential as between Directed Participants and Market Makers was
suspended and the $0.02 fee differential was reinstated as of April 30,
2012.\10\ The subsequent Approval Order approved the fees related to
Complex Orders on a one-year pilot basis operative on December 3,
2012.\11\ Since the date of the Suspension Order, the Exchange has
filed amendments to Section I of its Pricing Schedule which amended
certain fees and also the categories of market participants.\12\
---------------------------------------------------------------------------
\6\ Specifically, SR-Phlx-2012-27 proposed, among other things,
to: (1) Increase the Customer Complex Order Rebate for Adding
Liquidity from $0.30 to $0.32 per contract, (2) create a new Complex
Order Rebate for Removing Liquidity and specifically pay a Customer
a $0.06 Complex Order Rebate for Removing Liquidity, and (3)
increase the Complex Order Fees for Removing Liquidity for Firms,
Broker-Dealers and Professionals from $0.35 per contract to $0.38
per contract.
\7\ See Securities Exchange Act Release No. 66551 (March 9,
2012), 77 FR 15400 (March 15, 2012) (SR-Phlx-2012-27).
\8\ Id.
\9\ The Commission noted in the Suspension Order that it ``* * *
believes it is appropriate to further evaluate the potential effect
of the proposed rule changes on competition among different types of
market participants and on market quality, particularly with respect
to the fee differential between Directed Participants and Market
Makers, and the basis for such differential put forth by the
Exchange.'' See Securities Exchange Release No. 66884 (April 30,
2012), 77 FR 26595, 26596 (May 4, 2012) (SR-Phlx-2012-27and SR-Phlx-
2012-54).
\10\ By order dated April 30, 2012, the Commission suspended SR-
Phlx-2012-27 and SR-Phlx-2012-54. See Securities Exchange Release
No. 66884 (April 30, 2012), 77 FR 26595 (May 4, 2012) (SR-Phlx-2012-
27 and SR-Phlx-2012-54).
\11\ See Securities Exchange Act Release No. 68202 (November 9,
2012), 77 FR 68856 (November 16, 2012) (SR-Phlx-2012-27 and SR-Phlx-
2012-54).
\12\ See Securities Exchange Act Release Nos. 67189 (June 12,
2012), 77 FR 36310 (June 18, 2012) (SR-Phlx-2012-77) (an immediately
effective rule filing which, among other things, amended the Complex
Order Directed Participant fee from $0.34 to $0.36 per contract and
noted that the Complex Order fee for Removing Liquidity, applicable
to Specialists and Market Makers, will be decreased by $0.02 per
contract when the Specialist or Market Maker transacts against a
Customer order directed to them. This filing also established the
category of Specialist); and 67633 (August 9, 2012), 77 FR 49040
(August 15, 2012) (SR-Phlx-2012-104) (an immediately effective rule
filing, which, among other things, amended the Complex Order
Specialist and Market Maker fees from $0.36 to $0.39 per contract).
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The Exchange amended its categories of market participants to
specifically define a Specialist \13\ separate and apart from other
Market Makers.\14\ At the time of the Suspension Order, the Exchange
defined a Market Maker to include Specialists and Registered Options
Traders.\15\ The Exchange redefined a
[[Page 74040]]
Market Maker to include ROTs, SQTs and RSQTs. The Exchange eliminated
the category ``Directed Participant'' \16\ from the categories of
market participants, and instead added Specialists as a category of
market participants.\17\
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\13\ A ``Specialist'' is an Exchange member who is registered as
an options specialist pursuant to Rule 1020(a).
\14\ See Securities Exchange Act Release No. 67189 (June 12,
2012), 77 FR 36310 (June 18, 2012) (SR-Phlx-2012-77).
\15\ A Registered Options Trader (``ROT'') includes a Streaming
Quote Trader (``SQT''), a Remote Streaming Quote Trader (``RSQT'')
and a Non-SQT, which by definition is neither a SQT or a RSQT. A ROT
is defined in Exchange Rule 1014(b) as a regular member of the
Exchange located on the trading floor who has received permission
from the Exchange to trade in options for his own account. See
Exchange Rule 1014 (b)(i) and (ii).
\16\ The term ``Directed Participant'' applies to transactions
for the account of a Specialist, Streaming Quote Trader or Remote
Streaming Quote Trader resulting from a Customer order that is (1)
directed to it by an order flow provider, and (2) executed by it
electronically on Phlx XL II.
\17\ See Securities Exchange Act Release Nos. 67189 (June 12,
2012), 77 FR 36310 (June 18, 2012) (SR-Phlx-2012-77).
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The Exchange is therefore proposing to amend the Pricing Schedule
to reflect the $0.05 fee differential between Market Makers and
Specialists that execute directed Complex Orders and those that do not
that was proposed in SR-Phlx-2012-27 and SR-Phlx-2012-54. The Exchange
also proposes to state in the Pricing Schedule that the fee
differential is subject to a one-year pilot. The Exchange proposes
these amendments become operative on December 3, 2012 consistent with
the Approval Order.\18\
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\18\ See Securities Exchange Act Release No. 68202 (November 9,
2012), 77 FR 68856 (November 16, 2012) (SR-Phlx-2012-27 and SR-Phlx-
2012-54).
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2. Statutory Basis
The Exchange believes that its proposal to amend its Pricing
Schedule is consistent with Section 6(b) of the Act \19\ in general,
and furthers the objectives of Section 6(b)(4) of the Act \20\ 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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\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(4).
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The Exchange also believes that it is an equitable allocation of
reasonable rebates among Exchange members and other persons using its
facilities.
On November 9, 2012, the Commission approved SR-Phlx-2012-27 and
SR-Phlx-2012-54, as modified by Amendment No. 1, on a one-year pilot
basis, with such fees being operative on December 3, 2012 (``Approval
Order'').\21\ Pursuant to that Approval Order and the reasons
articulated therein, the Exchange is modifying its Pricing Schedule to
reflect the $0.05 per contract Complex Order fee differential that was
proposed in SR-Phlx-2012-27 and SR-Phlx-2012-54 and approved. This
filing incorporates the $0.05 per contract Complex Order fee
differential that was recently approved by the Commission.\22\
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\21\ See Securities Exchange Act Release No. 68202 (November 9,
2012), 77 FR 68856 (November 16, 2012) (SR-Phlx-2012-27 and SR-Phlx-
2012-54).
\22\ To the extent that the Approval Order modified the
Exchange's Pricing Schedule by restoring a previous amendment which
was not the subject of the Approval Order, the Exchange addresses
those amendments in a separate rule change. See SR-Phlx-2012-137
(not yet published).
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This proposal does not amend the current pricing in Section I, Part
B of the Pricing Schedule other than to offer discounted pricing to
Market Makers and Specialists when the Market Maker or Specialist
transacts against a Customer Order directed to them by increasing the
Complex Order Fee for Removing Liquidity discount from $0.02 to $0.05
per contract, consistent with the Approval Order.\23\
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\23\ See Securities Exchange Act Release No. 68202 (November 9,
2012), 77 FR 68856 (November 16, 2012) (SR-Phlx-2012-27 and SR-Phlx-
2012-54).
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The Exchange believes that the proposed amendments are consistent
with the Act because the proposal merely incorporates amendments
approved by the Commission pursuant to an Approval Order.\24\
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\24\ Id.
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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. Further, the Exchange notes
that the Market Maker and Specialists Complex Order Fees for Removing
Liquidity currently in place at the Exchange apply only to certain
Select Symbols which are Multiply-Listed and highly liquid securities.
As described herein, the Exchange's fees are comparable to and lower
than other fee differentials today at other options exchanges. Given
the highly competitive environment for options trading and the
attendant benefits to investors, the Exchange believes that no exchange
has market power sufficient to raise prices for competitively-traded
options in an unreasonable or unfairly discriminatory manner in
violation of the Exchange Act. In actuality, it is member firms that
control the order flow that options markets compete to attract as
evidenced by the large number of pricing-related rule changes and
shifts of market share among options markets.
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.\25\ 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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\25\ 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-2012-139 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-2012-139. 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
[[Page 74041]]
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-2012-139 and should be
submitted on or before January 2, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-29965 Filed 12-11-12; 8:45 am]
BILLING CODE 8011-01-P