[Federal Register Volume 77, Number 17 (Thursday, January 26, 2012)]
[Notices]
[Pages 4077-4079]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-1583]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66208; File No. SR-Phlx-2012-06]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Amending the
Real-Time Risk Management Fee and Other Clarifying Amendments
January 20, 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 January 10, 2012, 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 Real-Time Risk Management Fee to
further clarify the application of the Fee. The Exchange also proposes
to relocate the FLEX and Cabinet Options Transaction Fees within
Section II of the Exchange's Fee Schedule and add clarifying text.
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, 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 Exchange proposes to memorialize the Exchange's practice of
limiting the assessment of the Real-time Risk Management Fee to two (2)
ports. The Exchange also proposes to add language to clarify the types
of ports that are subject to this fee.
The Exchange initially filed to adopt a real-time, trade
information fee (Real-time Risk Management Fee) for members receiving
option trading information on-line (i.e., electronically) from the
Exchange.\3\ The purpose of the fee was to provide members and member
organizations with option trade information electronically on a real-
time basis. Members and member organizations were able to log on to an
interface with AUTOM to receive options (among other information)
transaction information real-time. When adopted, the Exchange limited
the assessment of the Real-Time Risk Management Fee to two ports.\4\
The Exchange has not assessed any member or member organization in
excess of two
[[Page 4078]]
ports since this Fee was adopted in 2000.\5\ The Exchange proposes to
memorialize this practice in its Fee Schedule. The port may be either a
Specialized Quote Feed (``SQF'') \6\ Port or a Clearing Trade Interface
(``CTI'') \7\ Port. The member/member organization is assessed up to
two ports. The Exchange proposes to add the following language to the
Fee Schedule: ``$.003 per contract for members and member organizations
receiving information on a real-time basis up to a maximum of two
ports, which may be either an SQF Port or a CTI Port'' (new language in
bold), to memorialize its current practice.
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\3\ See Securities Exchange Act Release No. 43719 (December 13,
2000), 65 FR 80975 (December 22, 2000) (SR-Phlx-00-97). The Exchange
initially assessed $.0025 per contract and later raised this fee to
$.003 per contract. See also Securities Exchange Act Release No.
61685 (March 10, 2010), 75 FR 13187 (March 18, 2010) (SR-Phlx-2010-
39).
\4\ See Securities Exchange Act Release No. 43719 (December 13,
2000), 65 FR 80975 (December 22, 2000) (SR-Phlx-00-97). The
information included symbol, volume, price, time and clearing
information.
\5\ It was always the intent of the Exchange to limit this Fee
to two ports, although the initial filing does not state this
limitation, this has always been the practice of the Exchange.
\6\ SQF is an interface that allows specialists, streaming quote
traders and remote streaming quote traders to connect and send
quotes into Phlx XL. SQF 6.0 allows participants to access
information in a single feed available to all participants, rather
than through accessing multiple feeds. The information available
includes execution reports and other relevant data. Non quoting
firms may also receive relevant information available over SQF by
connecting to the SQF interface, but they may not send quotes. The
set of data offered over this data feed is administrative in nature
or is used to attract liquidity to the Exchange in response to an
auction. Participants who write interfaces to the Phlx system use
the administrative data to determine the current state of the
trading system. For example, this data displays which symbols are
trading on the Phlx, the current state of an options symbol (i.e.,
open for trading, trading, halted or closed from trading), as well
as similar information regarding complex order strategies. This
administrative data also includes the definition of complex order
strategies. See Securities Exchange Act Release No. 63034 (October
4, 2010), 75 FR 62441 (October 8, 2010) (SR-Phlx-2010-124).
\7\ CTI provides Exchange members with real-time clearing trade
updates. The updates include the members clearing trade messages on
a low latency, real-time basis. The trade messages are routed to a
member's connection containing certain information. The information
includes, among other things, the following: (i) The Clearing Member
Trade Agreement or ``CMTA'' or The Options Clearing Corporation or
``OCC'' number; (ii) Exchange badge or house number; and (iii) the
Exchange internal firm identifier. The administrative and market
event messages include, but are not limited to: System event
messages to communicate operational-related events; options
directory messages to relay basic option symbol and contract
information for options traded on the Exchange; complex strategy
messages to relay information for those strategies traded on the
Exchange; and trading action messages to inform market participants
when a specific option or strategy is halted or released for trading
on the Exchange. The information related to complex order strategy
messages includes information that lists the legs and the leg
ratios, which uniquely defines this strategy for an underlying. In
addition, the interface contains an indicator which distinguishes
electronic and non-electronic delivered orders. This information
will be available to members on a real-time basis. See Securities
Exchange Act Release No. 62155 (May 24, 2010), 75 FR 30081 (May 28,
2010) (SR-Phlx-2010-67).
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The Exchange also proposes to relocate the FLEX \8\ and Cabinet \9\
Options transaction fees within Section II of the Fee Schedule,
entitled ``Equity Option Fees,'' and add additional text to clarify
that the transaction fees for FLEX \10\ and Cabinet \11\ Options are
not in addition to the Options Transaction Charges. The Exchange also
proposes to include text concerning the waiver of facilitation orders,
currently in Section II in another part of Section II which addresses
other facilitation waivers. The Exchange believes that relocating this
text and adding a sentence which states ``Cabinet and FLEX Option Fees
above are not in addition to the Options Transaction Charges'' will add
more clarity to the Fee Schedule.
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\8\ A FLEX option is a customized option that provides parties
to the transaction with the ability to fix terms including the
exercise style, expiration date, and certain exercise prices. See
Exchange Rule 1079. FLEX Options are a trademark of the Chicago
Board Options Exchange.
\9\ An ``accommodation'' or ``cabinet'' trade refers to trades
in listed options on the Exchange that are worthless or not actively
traded. Cabinet trading is generally conducted in accordance with
Exchange Rules, except as provided in Exchange Rule 1059 entitled
``Accommodation Trading'', which sets forth specific procedures for
engaging in cabinet trading below $ 1 per option contract. Cabinet
or accommodation trading of option contracts is intended to
accommodate persons wishing to effect closing transactions in those
series of options dealt in on the Exchange for which there is no
auction market.
\10\ FLEX transaction fees are $0.10 per contract side for all
participants, except Customers. Specifically, the Exchange assess a
$.10 transaction charge on Professionals, Specialists, Registered
Options Traders, Streaming Quote Traders, Remote Streaming Quote
Traders, Broker-Dealers and Firms. Customers are not assessed a
transaction charge for FLEX Options. See Securities Exchange Act
Release No. 62379 (June 25, 2010), 75 FR 38163 (July 1, 2010) (SR-
Phlx-2010-87).
\11\ Cabinet transaction fees are $ 0.10 per contract side for
all participants, except Customers. Specifically, the Exchange
assess a $.10 transaction charge on Professionals, Specialists,
Registered Options Traders, Streaming Quote Traders, Remote
Streaming Quote Traders, Broker-Dealers and Firms. Customers are not
assessed a transaction charge for Cabinet Options. See Securities
Exchange Act Release No. 65740 (November 18, 2011), 76 FR 72744
(November 25, 2011) (SR-Phlx-2011-150).
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2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \12\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \13\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that amending the Fee Schedule to memorialize
the Exchange's practice of not assessing the Real-time Risk Management
Fee on more than two ports is reasonable because this practice will be
clearly stated on the Fee Schedule. Also, the Exchange believes that it
is reasonable to clearly note the types of ports that are subject to
this Fee. The Exchange also believes that this amendment is equitable
and not unfairly discriminatory because the Exchange is uniformly
assessing the Real-time Risk Management Fee on all members and member
organizations. Every member or member organization will not be assessed
the Real-time Risk Management Fee in excess of two ports, either an SQF
Port or a CTI Port.
The Exchange believes that its proposal to relocate the Cabinet and
FLEX Options section within Section II of the Fee Schedule and add more
clarity concerning the assessment of these fees is reasonable,
equitable and not unfairly discriminatory because the amendments will
further clarify the application of Section II fees. The proposed
amendments are not substantive. The Exchange believes the amendments
would create a more user-friendly Fee Schedule.
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.\14\ 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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\14\ 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
[[Page 4079]]
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 No. SR-Phlx-2012-06 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-2012-06. 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, 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-2012-06 and should be
submitted on or before February 13, 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. 2012-1583 Filed 1-25-12; 8:45 am]
BILLING CODE 8011-01-P