[Federal Register Volume 75, Number 240 (Wednesday, December 15, 2010)]
[Notices]
[Pages 78286-78288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31457]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63495; File No. SR-Phlx-2010-171]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC Relating
to Collection of Exchange Fees
December 9, 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 December 6, 2010, NASDAQ OMX PHLX LLC (``Phlx'' or the ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the self-regulatory organization. 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, pursuant to Section 19(b)(1) of the Act \3\ and Rule
19b-4
[[Page 78287]]
thereunder,\4\ proposes to amend Exchange Rule 3202, Application of
Other Rules of the Exchange, to add Exchange Rule 909, Collection of
Exchange Fees and Other Claims, to the list of Rules which are
applicable to PSX Participants.
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\3\ 15 U.S.C. 78s(b)(1).
\4\ 17 CFR 240.19b-4.
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The text of the proposed rule change is available on the Exchange's
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings,
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to require PSX
Participants to provide a clearing account number for an account at the
National Securities Clearing Corporation (``NSCC'') for purposes of
permitting the Exchange to debit any undisputed or final fees, fines,
charges and/or other monetary sanctions or other monies due and owing
to the Exchange or other charges related to Rule 924. Currently, the
Exchange requires all members of the Exchange trading options to
provide such an NSCC account number. The Exchange believes that the
proposed debiting process for PSX Participants would create an
efficient method of collecting undisputed or final fees, fines, charges
and/or other monetary sanctions or monies due and owing to the Exchange
from those PSX Participants.\5\ Further, this proposal would provide a
cost savings to the Exchange in that it would alleviate administrative
processes related to the collection of monies owed to the Exchange for
PSX Participants as it does today for members trading options.
Collection matters divert staff resources away from the Exchange's
regulatory and business purposes. In addition, the debiting process
would prevent PSX Participant accounts from becoming overdue.
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\5\ The Exchange will not debit accounts for fees that are
unusually large or for special circumstances, unless such debiting
is requested by the member.
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The Exchange proposes to require PSX Participants and applicants to
provide a clearing account number for an account at NSCC in order to
permit the Exchange to debit any undisputed or final fees, fines,
charges and/or monetary sanctions or other monies due and owing to the
Exchange or other charges related to Rule 924.\6\ The Exchange would
send a monthly invoice \7\ to each PSX Participant on approximately the
3rd-10th business day of the following month. The Exchange would also
send a file to NSCC each month on approximately the 23rd of the
following month to initiate the debit of the appropriate amount stated
on the PSX Participant's invoice for the prior month. Because the PSX
Participant would receive an invoice well before any monies are debited
(normally within two weeks), the PSX Participant would have adequate
time to contact the staff with any questions concerning their invoice.
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\6\ Exchange Rule 924 entitled, Obligations of Members and
Member Organizations to the Exchange, states, among other things,
that members and member organizations shall be liable for such fees,
fines, dues, penalties and other amounts imposed by the Exchange.
\7\ The monthly invoice will indicate that the amount on the
invoice will be debited from the designated NSCC account. Each
month, the Exchange will send a file to the member's clearing firm
which will indicate the amounts to be debited from each member. If a
member is ``self-clearing'', no such file would be sent as the
member would receive the invoice, as noted above, which would
indicate the amount to be debited.
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If a PSX Participant disagrees with the invoice, the Exchange would
not commence the debit until the dispute is resolved. Specifically, the
Exchange will not include the disputed amount in the debit if the
member has disputed the amount in writing to the Exchange's designated
staff by the 15th of the month, or the following business day if the
15th is not a business day, and the amount in dispute is at least
$10,000 or greater. Once NSCC receives the file from the Exchange, NSCC
would proceed to debit the amounts indicated from the clearing members'
account. In the instance where the PSX Participant clears through an
Exchange clearing member, the estimated transactions fees owed to the
Exchange are typically debited by the clearing member on a daily basis
in order to ensure adequate funds have been escrowed. The Exchange
would debit any monies owed including undisputed or final fees,\8\
fines, charges and/or monetary sanctions or monies due and owed to the
Exchange.\9\ The Exchange believes that the debit process would
eliminate the risk of unpaid invoices because of the large amounts of
capital held at NSCC by members.
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\8\ Exchange fees are noted on the Exchange Fee Schedule.
\9\ This includes, among other things, fines which result from:
violation of Rule 60, Order and Decorum; violations of the Minor
Rule Plan pursuant to Rule 970; monetary sanctions imposed by the
Business Conduct Committee relating to a Letter of Caution; and
monetary sanctions imposed by a Hearing Panel in connection with
Disciplinary Violations. With respect to disciplinary sanctions that
are imposed by either the Business Conduct Committee or a Hearing
Panel, the Exchange would not debit any monies until such action is
final. The Exchange would not consider an action final until all
appeal periods have run and/or all appeal timeframes are exhausted.
With respect to non-disciplinary actions, the Exchange would
similarly not take action to debit a member account until all appeal
periods have run and/or all appeal timeframes are exhausted. Any
uncontested disciplinary or non-disciplinary actions will be
debited, and the amount due will appear on the members invoice prior
to the actual NSCC debit.
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The Exchange proposes to add Rule 909 to the list of Exchange Rules
which are applicable to PSX Participants. The Exchange proposes this
rule change become operative upon ten (10) days written notice to PSX
Participants, upon the publication of this rule change in the federal
register.\10\
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\10\ The Exchange would also notify members by phone and through
Equity Trader Alerts of this proposal prior to the approval of the
proposal to prepare members for this rule change.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \11\ in general, and furthers the objectives of Section
6(b)(5) of the Act \12\ in particular, in that it is designed to
promote just and equitable principles of trade, 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, by providing PSX Participants with an efficient process to
pay undisputed or final fees, fines, charges and/or monetary sanctions
or monies dues and owing to the Exchange. The Exchange believes that
this process of debiting NSCC accounts would ease the PSX Participant's
administrative burden in paying monthly invoices, avoid overdue
balances and provide same day collection from all PSX Participants, who
owe monies to the Exchange, which results in equitable treatment.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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[[Page 78288]]
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in 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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to Section 19(b)(3)(A) of the Exchange Act \13\ and Rule 19b-
4(f)(6) \14\ thereunder.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.\15\
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest.\16\ The Exchange has requested that
the Commission waive the 30-day operative delay. The Exchange has
requested that the Commission waive the 30-day operative delay and
designate the proposed rule change to become operative upon ten days
written notice to PSX Participants, upon this proposal's publication in
the Federal Register. \17\ The Exchange proposes to uniformly apply
Exchange Rule 909 to all members of NASDAQ OMX PHLX, options and
equities. The Exchange currently requires members who transact options
to comply with Rule 909 and provide the Exchange with an NSCC number
for the purpose of direct debiting. The Exchange believes that
expanding this Rule to apply to members transacting equities, PSX
Participants, would allow the Exchange to alleviate administrative
processes related to the collection of monies. The Exchange desires to
provide PSX Participants adequate time to transition to direct debit
and therefore requests the Commission waive the 30-day operative delay.
Based on the foregoing, the Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest and hereby designates the proposal operative upon ten
days written notice to PSX Participants, upon this proposal's
publication in the Federal Register.\18\
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\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ Id.
\17\ The Exchange has stated that it will notify members by
phone and through Equity Trader Alerts to prepare members for this
rule change.
\18\ For the purposes only of waiving the 30-day operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.
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-2010-171 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-2010-171. 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 website (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 website 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-2010-171 and should be submitted on
or before January 5, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31457 Filed 12-14-10; 8:45 am]
BILLING CODE 8011-01-P