[Federal Register Volume 74, Number 130 (Thursday, July 9, 2009)]
[Notices]
[Pages 33006-33007]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-16177]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60209; File No. SR-Phlx-2009-55]
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
the Extension of a Pilot Program Related to a Specialist Fee Credit for
Linkage Orders
July 1, 2009.
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 29, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or the
``Exchange'') 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend for a one-year period until July
31, 2010, its current pilot programs relating to: (1) An option
transaction charge credit of $0.21 per contract for Exchange options
specialist units \3\ that incur Phlx option transaction charges when a
customer order is delivered electronically via Phlx XL \4\ or via the
Exchange's Options Floor Broker Management Systems (``FBMS''),\5\ and
is then executed via the Intermarket Option Linkage (``Linkage'') \6\
as a Principal Acting as Agent Order (``P/A Order''); and (2) the Floor
Broker Linkage P/A fee and Options Specialist Unit Credit, which
charges floor brokers an amount equal to the transaction fee(s)
assessed on options specialist units by another exchange in connection
with customer orders that are delivered to the limit order book via
FBMS and executed via Linkage as P/A Orders. The Exchange then provides
to options specialist units a credit in an amount equal to the
transaction fee(s) assessed on them by another exchange in connection
with executing customer orders that are delivered to the limit order
book via FBMS and executed via Linkage as P/A Orders.
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\3\ The Exchange uses the terms ``specialists'' and ``specialist
units'' interchangeably herein.
\4\ See Exchange Rule 1080.
\5\ FBMS is designed to enable Floor Brokers and/or their
employees to enter, route and report transactions stemming from
options orders received on the Exchange. FBMS also is designed to
establish an electronic audit trail for options orders represented
and executed by Floor Brokers on the Exchange, such that the audit
trail provides an accurate, time-sequenced record of electronic and
other orders, quotations and transactions on the Exchange, beginning
with the receipt of an order by the Exchange, and further
documenting the life of the order through the process of execution,
partial execution, or cancellation of that order. See Exchange Rule
1080, Commentary .06.
\6\ Linkage is governed by the Options Linkage Authority under
the conditions set forth under the Plan for the Purpose of Creating
and Operating an Intermarket Option Linkage (the ``Plan'') approved
by the Commission. The registered U.S. options markets are linked
together on a real-time basis through a network capable of
transporting orders and messages to and from each market.
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While changes to the fee schedule pursuant to this proposal are
effective upon filing, the Exchange has designated the changes to be in
effect for transactions settling on or after July 31, 2009.\7\
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\7\ This proposal is scheduled to be in effect for the same time
period as a pilot program relating to fees for Linkage Principal
Orders and P/A Orders. See Securities Exchange Act Release No. 58144
(July 11, 2008), 73 FR 41394 (July 18, 2008) (SR-Phlx-2008-49). See
also, SR-Phlx-2009-53 filed June 29, 2009.
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The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/Filings/, 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 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange currently provides for an option transaction charge
credit of $0.21 per contract for Exchange options specialist units that
incur Phlx option transaction charges when a customer order is
delivered electronically via Phlx XL or via FBMS and then is
[[Page 33007]]
executed via Linkage as a P/A Order. In addition, the Exchange charges
floor brokers an amount equal to the transaction fee(s) assessed on
options specialist units by another exchange in connection with
customer orders that are delivered to the limit order book via FBMS and
executed via Linkage as P/A Orders. Options specialist units are then
credited an amount equal to the transaction fee(s) assessed on them by
another exchange in connection with executing customer orders that are
delivered to the limit order book via FBMS and executed via Linkage as
a P/A Order.
The purpose of extending the current pilot programs discussed above
is to encourage the use of Linkage, remain competitive with other
exchanges with respect to the assessment of Linkage-related fees and to
help alleviate the potential economic burden of multiple transaction
charges imposed on Exchange specialist units in connection with routing
these types of Linkage orders. Additionally, the purpose of assessing a
fee on floor brokers who send customer orders that are delivered to the
limit order book via FBMS and executed via Linkage as P/A Orders is to
more equitably assess the applicable transaction fee(s) on the member
originally entering the order to be executed. Floor brokers may choose
to route these orders through other systems and not place these orders
on the limit order book.
The above-referenced pilot programs are currently scheduled to
expire on July 31, 2009.\8\ This proposal would extend the pilot
programs for another year, through July 31, 2010.
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\8\ See Securities Exchange Act Release No. 58234 (July 25,
2008), 73 FR 45263 (August 4, 2008) (SR-Phlx-2008-55).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) of the Act, \9\ in general, and furthers the objectives of
Section 6(b)(4) \10\ of the Act in particular, in that it is designed
to provide for the equitable allocation of reasonable dues, fees, and
other charges among Exchange members and other persons using its
facilities. The Exchange believes that these pilot programs, in part,
help alleviate the undue financial burden of multiple transaction
charges that are incurred by specialist units in connection with P/A
orders executed via Linkage. By assessing a fee on floor brokers and
giving a corresponding credit to specialist units allows for the
transaction fee(s) to be assessed on the member who submits the order
and for the credit to be given to the specialist unit that routed the
order to another exchange in order to obtain the National Best Bid or
Offer.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
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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 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
No written comments were either solicited or received with respect
to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (i) Does not
significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) by its terms, does not become operative for 30 days from the
date on which it was filed, or such shorter time as the Commission may
designate, if consistent with the protection of investors and the
public interest, it has become effective pursuant to Section
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the self-regulatory organization to submit to the
Commission written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as designated by the
Commission. The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate 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 (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-Phlx-2009-55 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-2009-55. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-Phlx-2009-55 and should be
submitted on or before July 30, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-16177 Filed 7-8-09; 8:45 am]
BILLING CODE 8010-01-P