[Federal Register Volume 76, Number 173 (Wednesday, September 7, 2011)]
[Notices]
[Pages 55438-55440]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-22777]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65233; File No. SR-Phlx-2011-122]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Modify
Fees for NASDAQ OMX PSX
August 31, 2011.
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 August 25, 2011, NASDAQ OMX PHLX LLC (``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.
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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 modify the fees applicable to trading on
the NASDAQ OMX PSX system (``PSX''). 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.
[[Page 55439]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to modify order execution fees applicable
to use of PSX for trading stocks priced at $1 or more. Currently, PSX
charges $0.0025 per share executed for orders that access liquidity.
Consistent with PSX's goal of encouraging display of larger order
sizes, the Exchange currently offers a rebate of $0.0024 per share
executed for Displayed Orders with an original order size of 2,000 or
more shares, but only $0.0022 for Displayed Orders with an original
order size of less than 2,000.\3\ The rebate for Non-Displayed Orders
is $0.0010 per share executed.
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\3\ The higher credit applies to an order as it is decremented
by partial executions, but does not apply in circumstances where an
order for 2,000 shares or more is entered and then reduced in size
by the entering Participant, such that the order is subsequently in
the System for less than 2,000 shares. Moreover, changes to orders
that result from system operations other than execution and
decrementation are deemed to result in new orders. For example, a
Pegged Order is considered a new order each time its price changes.
Thus, if a Participant entered a 2,400 share order that posted to
the PSX book, the order was executed for 1,000 shares, and the
remainder of the order was then executed for 1,400, both of the
executions would receive the higher credit. However, if a PSX
Participant entered a 2,400 share order and subsequently modified
the order down to 1,500 shares, the lower credit would apply.
Finally, if a Participant entered a 2,400 share buy order pegged to
the national best bid, the order executed for 1,000 shares, and the
order then repriced due to a change in the national best bid, the
1,000 share execution would receive the higher 0.0024 credit but a
subsequent execution of the repriced order would receive the lower
credit because it would be treated as a new order with a size below
2,000 shares.
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Effective September 1, 2011, the fee for accessing liquidity will
increase to $0.0027 per share executed; the rebate for providing
displayed liquidity with an original order size of 2,000 or more shares
will increase to $0.0026 per share executed; and the rebate for
Displayed Orders with an original order size of less than 2,000 will
increase to $0.0024 per share executed. Consistent with PSX's goal of
encouraging greater display of liquidity, the rebate for Non-Displayed
Orders that provide liquidity will remain $0.0010 per share executed.
By increasing its rebate for displayed liquidity, the Exchange hopes to
attract more liquidity to PSX.
The Exchange is also correcting two typographical errors in the
Order Execution provision of Section VIII of the fee schedule. These
corrections do not impact any fees assessed by the Exchange.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\4\ in general, and with
Section 6(b)(4) of the Act,\5\ 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. The impact of the price
changes upon the net fees paid by a particular market participant will
depend upon a number of variables, including the prices of the market
participant's quotes and orders relative to the national best bid and
offer (i.e., its propensity to add or remove liquidity), its usage of
Non-Displayed orders, and the size of the orders that it enters.
Although the change will result in an increase of the fee charged to
access liquidity on PSX, the Exchange believes that the proposed fee to
access liquidity is reasonable because it is consistent with Rule
610(c) under Regulation NMS,\6\ which found that fees not in excess of
$0.0030 per share executed would promote the objective of equal
regulation and preventing excessive fees. As the Commission determined
in that matter, competition is best able to determine whether a
strategy of charging fees set at lower levels, or of charging a higher
fee and paying a higher rebate, will be successful.\7\ Moreover, the
increase in fees to access liquidity will be offset by an increase in
the rebate for providing displayed liquidity.
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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(4).
\6\ 17 CFR 242.610(c).
\7\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37596 (June 29, 2005).
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The Exchange believes that the proposal reflects an equitable
allocation of fees, as all similarly situated member organizations will
be subject to the same fee structure, and access to the Exchange's
market is offered on fair and non-discriminatory terms. The Exchange
further believes that it is equitable to pay a higher rebate with
respect to displayed liquidity, because the Exchange expects that the
higher rebate will promote its goal of promoting market transparency
through a market structure that provides higher execution priority to
orders based on their size and display status.
The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues if they
deem fee levels at a particular venue to be excessive. The Exchange
believes that its fees continue to be reasonable and equitably
allocated to members on the basis of whether they opt to direct orders
to the Exchange and thereby make use of its order execution services.
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.
Because the market for order execution and routing is extremely
competitive, members may readily favor the Exchange's competitors in
making order routing decisions to the extent that they deem PSX's fees
to be excessive.
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.\8\ 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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\8\ 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-2011-122 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary,
[[Page 55440]]
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-1090.
All submissions should refer to File Number SR-Phlx-2011-122. 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 the filing also will be available for
inspection and copying at the principal office of the Exchange.\9\ 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-2011-122 and should be
submitted on or before September 28, 2011.
\9\ The text of the proposed rule change is available on the
Commission's Web site at http://www.sec.gov.
\10\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-22777 Filed 9-6-11; 8:45 am]
BILLING CODE 8011-01-P