[Federal Register Volume 75, Number 237 (Friday, December 10, 2010)]
[Notices]
[Pages 77028-77029]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31101]



[[Page 77028]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63443; File No. SR-Phlx-2010-170]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Fees for Direct Access to Exchange Data

December 6, 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 November 24, 2010, NASDAQ OMX PHLX LLC (``Phlx'' or the 
``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 an amendment to the fee schedule to assess 
``direct access'' fees on customers receiving Exchange data within the 
Exchange's co-location facility. The rule filing also deletes outdated 
dated verbiage in the fee schedule to eliminate confusion regarding 
application of the fees. The Exchange will implement the proposed 
change on December 1, 2010. 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 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
    Phlx is amending its fee schedule to correct an anomaly that 
effectively exempts certain customers residing within the Exchange's 
co-location facility from paying a monthly fee for direct access to 
Exchange data, while customers that receive data from an extranet and 
reside outside the co-location facility are assessed the fee. The 
inequity is a result of the definition of ``direct access'' in the fee 
schedule, which does not by its terms clearly apply to data feeds 
provided to customers through distributors located within the co-
located facility. This rule filing will expand the definition of 
``direct access'' and thereby operate to assess the same fee on all 
firms that have access to the Exchange's raw data feeds, whether co-
located or not.
    The Exchange, like other data providers, assesses fees for its real 
time market data. In general, a customer that receives a data feed 
directly from the Exchange is assessed a ``direct access'' fee. If the 
customer then distributes the data, it is a ``distributor'' as defined 
under the fee schedule and pays an ``internal'' or ``external'' 
distributor fee, depending upon whether it distributes the data 
internally or externally. A ``distributor'' is broadly defined to 
include any entity that distributes the Exchange's data, whether it 
receives the data feed directly from the Exchange or indirectly through 
another entity. Distributor fees apply to distributors located within 
the Exchange's co-location facility as well as those outside of it.
    The definition of what constitutes ``direct access,'' however, is 
limited to several types of communications connections, none of which 
accurately describe the systems by which data is delivered through 
distributors located within the co-location facility to their customers 
also located within the co-location facility. As a result, the 
distributor's customers in the co-location facility are not charged a 
direct access fee, even though they receive the Exchange's data in its 
raw data format and have the same low latency data access as non-co-
located extranet customers that pay the Direct Access fee.
    To correct this disparity, this rule filing will include within the 
definition of ``direct access'' the receipt of Exchange data within the 
co-location facility. It will also delete terms that, while describing 
various means by which data is currently accessed, do not clearly or 
adequately describe all viable technological means of accessing data. 
More specifically, the terms ``Exchange-operated Web site, system or 
application'' are deleted, as they are limiting terms that do not 
clearly encompass potential technological means of accessing Exchange 
data. Their elimination does not impact the fees of any customer 
currently assessed a Direct Access fee, but should preclude the need 
for future rule changes to the definition of direct access, as the 
means by which those same customers access data evolve over time.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\3\ in general, and with 
Sections 6(b)(5) of the Act,\4\ in particular. The proposal is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. The filing permits 
transparent, uniform fees for direct access to Exchange data for all 
customers, whether co-located or not.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In addition, the Exchange believes that the proposed rule change is 
consistent with the provisions of Section 6 of the Act,\5\ in general, 
and with Section 6(b)(4) of the Act,\6\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system which The Exchange operates or controls. In 
particular, the Exchange notes that the amendment corrects an anomaly 
that effectively exempts certain customers receiving the data from 
paying a direct access fee.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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, as amended.

[[Page 77029]]

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.\7\ 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.
---------------------------------------------------------------------------

    \7\ 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 http://www.sec.gov/rules/sro.shtml; or
     Send an e-mail to [email protected]. Please include 
File Number SR-Phlx-2010-170 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-2010-170. 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 available publicly. All 
submissions should refer to File Number SR-Phlx-2010-170 and should be 
submitted on or before January 3, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31101 Filed 12-9-10; 8:45 am]
BILLING CODE 8011-01-P