[Federal Register Volume 75, Number 207 (Wednesday, October 27, 2010)]
[Notices]
[Pages 66168-66170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-27140]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63145; File No. SR-Phlx-2010-143]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Active SQF Port Fee
October 21, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 15, 2010, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission
[[Page 66169]]
(``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.
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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 amend fee calculations for the Active SQF
Port Fee. The text of the proposed rule change is available on the
Exchange's Web site at http://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 the proposed rule change is to amend the Active SQF
Port Fee calculation to account for a new version of the Specialized
Quote Feed (``SQF'') interface, which was recently released by the
Exchange. The Exchange is amending the Active SQF Port Fee calculation
so that member organizations not be assessed port fees for use of the
prior version of the interface (SQF 5.0) while transitioning to (and
paying for) the new version (SQF 6.0).
In a given month, active SQF ports are ports that receive inbound
quotes at any time within that month. SQF is an interface that enables
specialists, Streaming Quote Traders (SQTs'') \3\ and Remote Streaming
Quote Traders (``RSQTs'') \4\ to connect and send quotes into Phlx
XL.\5\ The Exchange released SQF 6.0 on October 11, 2010. The Exchange
anticipates that member organizations will utilize both SQF 5.0 and SQF
6.0 for a period of time.
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\3\ An SQT is an Exchange Registered Options Trader (``ROT'')
who has received permission from the Exchange to generate and submit
option quotations electronically through an electronic interface
with AUTOM via an Exchange approved proprietary electronic quoting
device in eligible options to which such SQT is assigned. See
Exchange Rule 1014(b)(ii)(A).
\4\ An RSQT is an ROT that is a member or member organization
with no physical trading floor presence who has received permission
from the Exchange to generate and submit option quotations
electronically through AUTOM in eligible options to which such RSQT
has been assigned. An RSQT may only submit such quotations
electronically from off the floor of the Exchange. See Exchange Rule
1014(b)(ii)(B).
\5\ See Securities Exchange Act Release No. 63034 (October 4,
2010), 75 FR 62441 (October 8, 2010) (SR-Phlx-2010-124).
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Presently, quoting participants (users of SQF 5.0) do not receive
reports of executions against their quote or other information that is
relevant to their quoting application over SQF 5.0. SQF 6.0 provides
more information than SQF 5.0. SQF 6.0 increases efficiency by allowing
member organizations to access, information such as execution reports
and other relevant data through a single feed, rather than through
accessing multiple feeds, which was necessary under SQF 5.0.\6\
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\6\ Member organizations that have written interfaces to the
PHLX system could use the administrative data to determine the
current status of the Exchange's market for a particular option. For
example, this data would show which symbols are trading on the PHLX,
the current state of an options symbol (i.e., open for trading,
trading, halted or closed), as well as similar information regarding
complex order strategies.
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This administrative data will also include the definition of
complex order strategies.\7\ Auction notifications are available on SQF
6.0.\8\ The new interface, SQF 6.0, will also contain execution report
messages, which are not contained in SQF 5.0.\9\ Other data is also
available on SQF 6.0.\10\
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\7\ See Exchange Rule 1080.08.
\8\ A member organization's quoting application can receive
these notifications over the same interface it sends quotes to the
Exchange, SQF, and can now use the data to respond to auctions
quickly and efficiently. This data is not sent as a quote to the
market because it represents interest that is not immediately
executable or, in the case of complex orders, represents a complex
strategy which is not disseminated by the Options Price Reporting
Authority.
\9\ The Exchange currently provides Exchange members with
execution reports through two interfaces. Execution reports are made
available to all exchange participants on a Risk Management Feed
known as ``RMP,'' as well as an interface replacing RMP known as the
Clearing Trade Interface or ``CTI''. See Securities Exchange Act
Release No. 62155 (May 24, 2010), 75 FR 30081 (May 28, 2010) (SR-
Phlx-2010-67).
\10\ Other data that is available on SQF 6.0 includes: (1)
Options Auction Notifications (e.g., opening imbalance, market
exhaust, PIXL or other information currently provided on SQF 5.0)
;(2) Options Symbol Directory Messages (currently provided on SQF
5.0); (3) System Event Messages (e.g., start of messages, start of
system hours, start of quoting, start of opening); (4) Complex Order
Strategy Auction Notifications (COLA); (5) Complex Order Strategy
messages; (6) Option Trading Action Messages (e.g., trading halts,
resumption of trading); and (7) Complex Strategy Trading Action
Message (e.g., trading halts, resumption of trading).
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The Exchange currently assesses an Active SQF Port Fee of $500 per
month per port. Active SQF ports refer to ports that receive inbound
quotes at any time within that month. The Exchange anticipates that
member organizations will utilize both SQF 5.0 and SQF 6.0 for a period
of time.
SQF 5.0 and SQF 6.0 require different port configurations, and, as
a consequence, a member organization could be charged for both types of
active SQF ports in a given month as the member organization
transitions from SQF 5.0 to SQF 6.0. Therefore, the Exchange proposes
not to charge a member organization for the use of SQF 5.0 active ports
to the extent that the member is paying for the same (or greater)
number of SQF 6.0 active ports. (If a member organization has more SQF
5.0 than SQF 6.0 active ports, then the member organization would
continue to pay for the ``extra'' active SQF 5.0 ports.) This would
avoid duplicative billing while a member organization transitions its
ports from SQF 5.0 to SQF 6.0.\11\
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\11\ The Exchange anticipates that it will take several months
for this transition to occur.
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2. Statutory Basis
The Exchange believes that its proposal to amend its schedule of
fees is consistent with Section 6(b) of the Act \12\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \13\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members and other persons using its
facilities. Specifically, the Exchange believes that this fee proposal
is fair, reasonable and equitable because it will prevent all member
organizations from experiencing an unintended increase in SQF port
charges during the transition from SQF 5.0 to SQF 6.0.
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\12\ 15 U.S.C. 78f(b).
\13\ 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 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.
[[Page 66170]]
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.\14\ 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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\14\ 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 (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-Phlx-2010-143 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-2010-143. 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 Web site viewing and
printing in the Commission's Public Reference Room. 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-2010-143 and should be submitted on or before
November 17, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-27140 Filed 10-26-10; 8:45 am]
BILLING CODE 8011-01-P