[Federal Register Volume 77, Number 221 (Thursday, November 15, 2012)]
[Notices]
[Pages 68169-68170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-27779]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68196; File No. SR-Phlx-2012-128]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
Fees Assessed Under Section VII. C. of the Pricing Schedule

November 8, 2012.
    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 26, 2012, NASDAQ OMX PHLX LLC (``PHLX'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') a 
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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to modify fees assessed under Section VII. C. 
of the PHLX Pricing Schedule relating to the Central Registration 
Depository (``CRD system''), which are collected by FINRA. PHLX is 
proposing that the implementation date of the proposed rule change will 
be January 2, 2013. The text of the proposed rule change is available 
at http://nasdaqomxphlx.cchwallstreet.com, at PHLX's principal office, 
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 III [sic] 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
    PHLX is amending its fees assessed under Section VII. C. of the 
PHLX Pricing Schedule to reflect a recent fee change made by FINRA,\3\ 
relating to the CRD system.\4\ The fees assessed under Section VII. C. 
are collected and retained by FINRA via the CRD system for the 
registration of associated persons of Exchange members that are not 
also FINRA members. The Exchange originally adopted the fees under 
Section VII. C. to mirror the fees assessed by FINRA on its members for 
use of the CRD system in connection with the Exchange's participation 
in Web CRD.\5\ FINRA recently amended the fees assessed for use of the 
CRD system, which will become effective January 2, 2013.\6\ The CRD 
system fees are use-based and there is no distinction in the cost 
incurred by FINRA if the user is a FINRA member or a member of an 
exchange that is not a FINRA member. Accordingly, the Exchange is 
proposing to amend the fees under Section VII. C. to mirror those 
assessed by FINRA, which will be implemented concurrently with the 
amended FINRA fees on January 2, 2013.\7\
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    \3\ See Securities Exchange Act Release No. 67247 (June 25, 
2012), 77 FR 38866 (June 29, 2012) (SR-FINRA-2012-030).
    \4\ The CRD system is the central licensing and registration 
system for the U.S. securities industry. The CRD system enables 
individuals and firms seeking registration with multiple states and 
self-regulatory organizations to do so by submitting a single form, 
fingerprint card and a combined payment of fees to FINRA. Through 
the CRD system, FINRA maintains the qualification, employment and 
disciplinary histories of registered associated persons of broker-
dealers.
    \5\ See Securities Exchange Act Release No. 53688 (April 20, 
2006), 71 FR 24885 (April 27, 2006) (SR-Phlx-2006-24). See also, 
Section 4(b)(3) of Schedule A to the FINRA By-Laws.
    \6\ Supra note 3.
    \7\ The Exchange notes that it is not adopting all of the 
changes made in the FINRA filing. Certain fees and requirements are 
specific to FINRA and the Exchange elected to not adopt them because 
either such fees did not apply to Exchange-only members or such fees 
did not directly cover the costs associated with the use of the CRD 
system. For example, under FINRA Section 4(h) of Schedule A FINRA 
assesses a fee of $10 per day, up to $300 for each day that a new 
disclosure event or a change in the status of a previously reported 
disclosure event is not timely filed on an initial or amended Form 
U5 or an amended Form U4. [sic] This fee provides a financial 
incentive to a FINRA member to file its Forms U4 and U5 timely. The 
Exchange elected to not adopt such a fee applicable to its members 
that are not also FINRA members.
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    In addition to increasing the existing CRD system fees, FINRA 
adopted a new fee for the additional processing of each initial or 
amended Form BD that includes the initial reporting, amendment, or 
certification of one or more disclosure events or proceedings.\8\ 
Member firms use the Form BD to, among other things, report disclosure 
matters in which they or a control affiliate have been involved. Prior 
to the adoption of the new fee, FINRA did not have a fee designed to 
cover the costs associated with the review of Form BD notwithstanding 
the review is similar to that performed of member firms' Forms U4 and 
U5. Such reviews include confirming that the matter is properly 
reported; reviewing any documentation submitted and determining whether 
additional documentation is required; conducting any necessary 
independent research; and, depending on the matter reported, analyzing 
whether the event or proceeding subjects the individual or member to a 
statutory disqualification pursuant to Section 3(a)(39) of the Act.\9\ 
FINRA adopted a $110 fee for the review of a Form BD, which mirrors the 
increased fee adopted for the review of Forms U4 and U5. As such, the 
Exchange is adopting the identical fee for FINRA's review of a Form BD 
submitted by Exchange members that are not members of FINRA.
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    \8\ Id.
    \9\ 15 U.S.C. 78c(a)(39).
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    The Exchange is proposing that the implementation date of the 
proposed

[[Page 68170]]

rule change will be January 2, 2013. Specifically, the proposed 
initial/transfer registration, disclosure filing, and fingerprint fees 
would become effective for filings or fingerprints submitted on or 
after January 2, 2013. Lastly, the proposed system processing fee would 
become effective for the 2013 Renewal Program.\10\
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    \10\ As part of FINRA's 2013 Renewal Program, Preliminary 
Renewal Statements reflecting the proposed $45 system processing fee 
will be made available to members in the fourth quarter of 2012.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\11\ in general, and with 
Section 6(b)(4) of the Act \12\ and Section 6(b)(5) of the Act,\13\ 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, and it does not unfairly discriminate between customers, 
issuers, brokers or dealers. All similarly situated members are subject 
to the same fee structure, and every member firm must use the CRD 
system for registration and disclosure.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ 15 U.S.C. 78f(b)(5).
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    The change is reasonable because the proposed fees are identical to 
those adopted by FINRA for use of the CRD system for disclosure and the 
registration of associated persons of FINRA members. As FINRA noted in 
amending its fees, it believed the fees are reasonable based on the 
increased costs associated with operating and maintaining the CRD 
system, and listed a number of enhancements made to the CRD system 
since the last fee increase, including: (1) Incorporation of various 
uniform registration form changes; (2) electronic fingerprint 
processing; (3) Web EFT\TM\, which allows subscribing firms to submit 
batch filings to the CRD system; (4) increases in the number and types 
of reports available through the CRD system; and (5) significant 
changes to BrokerCheck, including making BrokerCheck easier to use and 
expanding the amount of information made available through the system. 
These increased costs are similarly borne by FINRA when a member of the 
Exchange that is not a member of FINRA uses the CRD system. 
Accordingly, the fees collected for such use should likewise increase 
in lockstep with the fees assessed FINRA members, as is proposed by the 
Exchange.
    The proposed change, like FINRA's proposal, is consistent with an 
equitable allocation of fees because the fees will apply equally to all 
individuals and members required to report information to the CRD 
system. Thus, those members that register more individuals or submit 
more filings through the CRD system will generally pay more in fees 
than those members that use the CRD system to a lesser extent.

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 that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Pursuant to Section 19(b)(3)(A)(ii) of the Act,\14\ PHLX has 
designated this proposal as establishing or changing a due, fee, or 
other charge imposed by the self-regulatory organization on any person, 
whether or not the person is a member of the self-regulatory 
organization, which renders the proposed rule change effective upon 
filing.
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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 email to [email protected]. Please include 
File Number SR-Phlx-2012-128 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-2012-128. This file 
number should be included on the subject line if email 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 on official business 
days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal offices 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-2012-128, and should be submitted on or before 
December 6, 2012.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27779 Filed 11-14-12; 8:45 am]
BILLING CODE 8011-01-P