[Federal Register Volume 75, Number 110 (Wednesday, June 9, 2010)]
[Notices]
[Pages 32826-32828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13827]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62196; File No. SR-Phlx-2010-73]
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
to Rebates for Adding and Fees for Removing Liquidity
June 1, 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 May 20, 2010, NASDAQ OMX PHLX, Inc. (``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 the Exchange's Fee Schedule to
increase the number of options to be included in the Exchange's current
rebates for adding, and fees for removing, liquidity. In addition, the
Exchange proposes to clarify its rebates for adding and fees for
removing liquidity, specifically the applicability of fees to
electronic auctions.
While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative for transactions settling on or after June 1, 2010.
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, at the Commission's Public Reference
Room, and on the Commission's Web site at http://www.sec.gov.
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 [sic] The Exchange
proposes to increase liquidity and to attract order
[[Page 32827]]
flow by increasing the number of options to be included in the
Exchange's current rebates for adding and fees for removing liquidity.
Specifically, the Exchange proposes to add the following twenty-
five options: Ambac Financial Group, Inc. (``ABK''), Barrick Gold
Corporation (``ABX''), Ariad Pharmaceuticals, Inc. (``ARIA''), American
Express Company (``AXP''), Ciena Corp. (``CIEN''), Star Scientific,
Inc. (``CIGX''), Dendreon Corp. (``DNDN''), eBay Inc. (``EBAY''),
Corning Inc. (``GLW''), Halliburton Company (``HAL''), iShares Dow
Jones US Real Estate (``IYR''), Motorola, Inc., (``MOT''), NVIDIA
Corporation (``NVDA''), ON Semiconductor Corp. (``ONNN''), Oracle Corp.
(``ORCL''), ProShares UltraShort, QQQ (``QID''), Transocean Ltd.
(``RIG''), Rambus, Inc. (``RMBS''), ProShares UltraShort S&P500
(``SDS''), ProShares UltraShort 20+ Year Treasury (``TBT''), Visa, Inc.
(``V''), Vale S.A. (``VALE''), SPDR S&P Homebuilders (``XHB''), Xerox
Corp. (``XRX''), Yahoo! Inc. (``YHOO'') collectively (``the options'').
The options would be subject to the rebates for adding and fees for
removing liquidity.
The Exchange currently assesses a per-contract transaction charge
in various select symbols \3\ (the ``select Symbols'') on six different
categories of market participants that submit orders and/or quotes that
``take,'' liquidity from the Exchange: (i) Specialists, Registered
Options Traders (``ROTs''),\4\ Streaming Quote Traders (``SQTs'') \5\
and Remote Streaming Quote Traders (``RSQTs''); \6\ (ii) customers; \7\
(iii) specialists, SQTs and RSQTs that receive Directed Orders
(``Directed Participants'' \8\ or ``Directed Specialists, RSQTs, or
SQTs'' \9\); (iv) Firms; (v) broker-dealers; and (vi)
Professionals.\10\ The current per-contract transaction charge depends
on the category of market participant submit orders and/or quotes that
``take,'' liquidity from the Exchange.
---------------------------------------------------------------------------
\3\ The fees and rebates for adding and removing liquidity are
applicable to executions in options overlying AA, AAPL, AIG, ALL,
AMD, AMR, AMZN, BAC, BRCD, C, CAT, CSCO, DELL, DIA, DRYS, EK, F,
FAS, FAZ, GDX, GE, GLD, GS, IBM, INTC, IWM, JPM, LVS, MGM, MSFT, MU,
NEM, NOK, PALM, PFE, POT, QCOM, QQQQ, RIMM, SBUX, SIRI, SKF, SLV,
SMH, SNDK, SPY, T, TZA, UAUA, UNG, USO, UYG, VZ, WYNN, X and XLF
(``Symbols'').
\4\ A ROT includes a SQT, a RSQT and a Non-SQT, which by
definition is neither a SQT or a RSQT. See Exchange Rule 1014 (b)(i)
and (ii).
\5\ 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).
\6\ 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).
\7\ This applies to all customer orders, directed and non-
directed.
\8\ For purposes of the fees and rebates related to adding and
removing liquidity, a Directed Participant is a Specialist, SQT, or
RSQT that executes a customer order that is directed to them by an
Order Flow Provider and is executed electronically on PHLX XL II.
\9\ See Exchange Rule 1080(l), ``* * * The term `Directed
Specialist, RSQT, or SQT' means a specialist, RSQT, or SQT that
receives a Directed Order.'' A Directed Participant has a higher
quoting requirement as compared with a specialist, SQT or RSQT who
is not acting as a Directed Participant. See Exchange Rule 1014.
\10\ The Exchange defines a ``professional'' as any person or
entity that (i) is not a broker or dealer in securities, and (ii)
places more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s)
(hereinafter ``Professional''). See Exchange Rule 1000(b)(14).
---------------------------------------------------------------------------
The Exchange also currently assesses a per-contract rebate of
transaction charges for orders or quotations that add liquidity in the
select Symbols. The amount of the rebate depends on the category of
participant whose order or quote was executed as part of the Phlx Best
Bid and Offer. The Exchange proposes to add the twenty-five additional
options to the list of select Symbols applicable to the rebates for
adding and fees for removing liquidity.
The Exchange also proposes to clarify its rebates for adding and
fees for removing liquidity, specifically the applicability of fees to
electronic auctions. Currently, the Exchange describes the
applicability of rebates for adding liquidity and fees for removing
liquidity, in an electronic auction, as follows: ``Customer,
Professional, Directed Participant and Specialist, ROT, SQT and RSQT
fees for removing liquidity will not apply to transactions resulting
from electronic auctions. Electronic auctions include, without
limitation, the Complex Order Live Auction (``COLA''), and Quote and
Market Exhaust auctions. Firm and Broker-Dealer fees for removing
liquidity will, however apply to transactions resulting from electronic
auctions.'' The Exchange proposes to make clear that a Specialist, ROT,
including an SQT and RSQT, would not receive a rebate for adding
liquidity in an electronic auction.\11\ The Exchange proposes to add
language to the Fee Schedule to clarify the applicability of rebates
for adding liquidity in an electronic auction.
---------------------------------------------------------------------------
\11\ The Exchange is unable to calculate the rebates for
Specialists, ROTs, including SQTs and RSQTs, in an electronic
auction.
---------------------------------------------------------------------------
While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative for transactions settling on or after June 1, 2010.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \12\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \13\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members. The Exchange believes that
the addition of the options to the rebates for adding and fees for
removing liquidity is reasonable and equitable in that it will apply to
all categories of participants in the same manner. The fees which are
currently applicable to each market participant will continue to apply
to the select Symbols.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes that clarifying the applicability of the
rebates for adding liquidity in an electronic auction is reasonable
because it clearly states when the rebate is applicable to certain
transactions. The Exchange also believes that the clarification is
equitable because it makes clear what fees will be assessed to
Specialists, ROTs, including SQTs and RSQTs, in an electronic auction.
Currently, Specialists, ROTs, including SQTs and RSQTs, do not receive
rebates for adding liquidity in an electronic auction. The Exchange's
proposal would add language to the Fee Schedule to state that with
respect to electronic auctions, Specialists and ROTs would not receive
a rebate, which language is consistent with the Exchange's current
practice.
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
[[Page 32828]]
19(b)(3)(A)(ii) of the Act \14\ and paragraph (f)(2) of Rule 19b-4 \15\
thereunder. 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.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(3)(A)(ii).
\15\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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-2010-73 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2010-73. 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, 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 publicly available. All
submissions should refer to File Number SR-Phlx-2010-73 and should be
submitted on or before June 30, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------
\16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-13827 Filed 6-8-10; 8:45 am]
BILLING CODE 8010-01-P