[Federal Register Volume 76, Number 196 (Tuesday, October 11, 2011)]
[Notices]
[Pages 62872-62873]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-26134]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65478; File No. SR-Phlx-2011-130]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
the SQT Fees
October 4, 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 September 27, 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 amend the Streaming Quote Trader \3\
(``SQT'') Fees.
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\3\ An SQT is defined in Exchange Rule 1014(b)(ii)(A) as an ROT
who has received permission from the Exchange to generate and submit
option quotations electronically in options to which such SQT is
assigned.
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While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on October 3, 2011.
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, on the Commission's Web site at
http://www.sec.gov/ 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 amend the SQT Fees in
Section VI of the Exchange's Fee Schedule, entitled ``Access Service,
Cancellation, Membership, Regulatory and Other Fees.'' The Exchange
proposes to simplify the SQT Fees by amending certain text, without
changing the fees, for ease of reference. Additionally, the Exchange
proposes to amend the calculation of the SQT Fees to incentivize
trading in equity options, excluding currencies and indexes. The
Exchange believes that the proposed SQT Fees will continue to
incentivize SQTs to remain on the Exchange's options floor and thereby
provide liquidity for floor-brokered orders traded in-crowd.
Currently, a member organization is assessed per month an SQT Fee
based on the total number of options in which all SQTs in the same
member organization are assigned. A member organization is assessed an
SQT Fee based on the aggregate amount of equity options and index
options traded by the SQTs in that member organization. The highest
applicable SQT Fee is assessed based on the highest SQT category level
in which the SQT was qualified at any time during a particular calendar
month.\4\ For example, if an SQT was eligible to trade at any time in a
given calendar month as a Category I SQT, and sometime during that same
calendar month became qualified and eligible to trade as a Category II
SQT, the SQT member organization would be assessed the fee applicable
to a Category II SQT, regardless of when such SQT became eligible to
trade at the Category II level, and regardless if, during that same
calendar month, the SQT resumed eligibility as a Category I SQT.\5\
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\4\ See Exchange Rules 1014(b) and 507 for qualifications
relating to assignments.
\5\ For example, if a member organization's SQT is eligible to
trade up to 200 equity and index options issues at any time in a
given month, and is thus qualified as a Category I SQT, and sometime
during that month becomes eligible to trade up to 400 equity and
index options issues during that same month, and is thus qualified
as a Category II SQT, the member organization employing that SQT
would be assessed the fee applicable to a Category II SQT,
regardless of when, during that month, the SQT became eligible to
trade at the Category II level.
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The Exchange proposes to amend the verbiage of the current SQT Fees
to simplify the fees as follows:
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Number of option class
assignments SQT fees
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Up to 200 classes.............. $0.00 per calendar month.
Up to 400 classes.............. $2,200 per calendar month.
Up to 600 classes.............. $3,200 per calendar month.
Up to 800 classes.............. $4,200 per calendar month.
Up to 1000 classes............. $5,200 per calendar month.
Up to 1200 classes............. $6,200 per calendar month.
All equity issues.............. $7,500 per calendar month.
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The Exchange is proposing to remove the references to ``SQT is
Eligible to trade:'' and ``equity and index options issues'' and
instead use the term ``classes.'' The Exchange proposes to amend the
calculation of the SQT Fees as well. In calculating the SQT Fees, the
Exchange will calculate the number of option class assignments for
equity options including exchange-traded funds (``ETFs''), exchange-
traded notes (``ETNs'') \6\ and HOLDRS \7\. The Exchange will not
include and therefore not assess a fee for currencies or indexes in
calculating the number of option class assignments. The Exchange
proposes to amend the Fee Schedule to
[[Page 62873]]
note the method of calculation as follows:
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\6\ ETNs are also known as ``Index-Linked Securities,'' which
are designed for investors who desire to participate in a specific
market segment by providing exposure to one or more identifiable
underlying securities, commodities, currencies, derivative
instruments or market indexes of the foregoing. Index-Linked
Securities are the non-convertible debt of an issuer that have a
term of at least one (1) year but not greater than thirty (30)
years. Despite the fact that Index-Linked Securities are linked to
an underlying index, each trade as a single, exchange-listed
security. Accordingly, rules pertaining to the listing and trading
of standard equity options apply to Index-Linked Securities.
\7\ HOLDRS are Holding Company Depository Receipts.
``In calculating the number of option class assignments, equity
options including ETFs, ETNs and HOLDRS will be counted. Currencies
and indexes will not be counted in the number of option class
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assignments.''
While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on October 3, 2011.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \8\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \9\ in particular, in that
it is an equitable allocation of reasonable fees and other charges
among Exchange members and other persons using its facilities.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed amendments to the SQT Fees
are reasonable because the fees remain the same, except the verbiage is
simplified. The Exchange believes that the fees continue to be
reasonable because SQT Fees are lower than RSQT Fees. This is because
SQTs have more out-of-pocket costs associated with their streaming
quote systems as compared to RSQTs. For example, SQTs generally have to
purchase additional software programs and hardware from outside vendor
to support their streaming quote systems, in addition to incurring
additional costs associated with market data to enable them to price
options within their particular options pricing model. Furthermore, the
Exchange believes that excluding currencies and indexes from the basis
of the calculation of the SQT Fees is reasonable because the Exchange
is seeking to incentivize SQTs to transact equity options including
ETFs, ETNs and HOLDRs.\10\
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\10\ The Exchange is excluding currencies and indexes.
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The Exchange believes that the proposed calculation of the SQT Fees
is equitable and not unfairly discriminatory because the calculation
will be uniformly applied to all SQTs. The exclusion of the currencies
and indexes from the calculation of option class assignments to
determine the amount of SQT Fees will apply equally to all SQTs.
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
19(b)(3)(A)(ii) of the Act.\11\ 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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\11\ 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 No. SR-Phlx-2011-130 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 No. SR-Phlx-2011-130. 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 No. SR-Phlx-
2011-130 and should be submitted on or before November 1, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-26134 Filed 10-7-11; 8:45 am]
BILLING CODE 8011-01-P