[Federal Register Volume 77, Number 180 (Monday, September 17, 2012)]
[Notices]
[Pages 57175-57177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-22790]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67831; File No. SR-Phlx-2012-111]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Routing Fees to NOM
September 11, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\, and Rule 19-4 \2\ thereunder, notice is hereby given
that, on August 31, 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 adopt certain Routing Fees to recoup costs
incurred by the Exchange when routing to the NASDAQ Options Market LLC
(``NOM'').
While the changes proposed herein are effective upon filing, the
Exchange has designated these changes to be operative on September 4,
2012.
The text of the proposed rule change is available on the Exchange's
Web site at http://www.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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to recoup costs that the Exchange
incurs for routing and executing certain orders in equity options to
NOM, specifically, options on Facebook, Inc. (``FB''), Google Inc.
(``GOOG'') and Groupon, Inc. (``GRPN'').
The Exchange's Pricing Schedule at Section V currently includes the
following Routing Fees for routing Customer, Professional,\3\ Firm,
Broker-Dealer, Market Maker \4\ and Specialist \5\ orders to away
markets.
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\3\ The term ``professional'' means any person or entity that
(i) is not a broker or dealer in securities, and (ii) places more
than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). See Rule
1000(b)(14).
\4\ A ``Market Maker'' includes Registered Options Traders
(``ROTs'') (Rule 1014(b)(i) and (ii), which include Streaming Quote
Traders (``SQTs'') (See Rule 1014(b)(ii)(A)) and Remote Streaming
Quote Traders (``RSQTs'') (See Rule 1014(b)(ii)(B)).
\5\ A Specialist is an Exchange member who is registered as an
options specialist pursuant to Rule 1020(a).
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Firm/broker- dealer/
Exchange Customer Professional specialist/market maker
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NYSE AMEX.............................................. $0.11 $0.31 $0.55
BATS Penny............................................. 0.55 0.55 0.55
BATS non-Penny......................................... 0.86 0.91 0.91
BOX.................................................... 0.11 0.11 0.55
BX Options............................................. 0.11 0.54 0.54
CBOE................................................... 0.11 0.31 0.55
CBOE orders greater than 99 contracts in RUT, RMN, NDX, 0.29 0.31 0.55
MNX, ETFs, ETNs and HOLDRs............................
C2..................................................... 0.55 0.56 0.55
ISE.................................................... 0.11 0.29 0.55
ISE Select Symbols \13\................................ 0.31 0.39 0.55
NYSE ARCA (Penny Pilot)................................ 0.55 0.55 0.55
NYSE ARCA (Standard)................................... 0.11 0.11 0.55
NOM.................................................... 0.54 0.54 0.55
NOM-MNX................................................ 0.56 0.56 0.55
NOM-NDX................................................ 0.11 0.81 0.81
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\13\ These fees are applicable to orders routed to ISE that are subject to Rebates and Fees for Adding and
Removing Liquidity in Select Symbols. See ISE's Schedule of Fees for the complete list of symbols that are
subject to these fees.
The Exchange is proposing to adopt NOM Routing Fees when routing
options overlying FB, GOOG and GRPN to NOM to account for the new NOM
fees for removing liquidity and other routing costs incurred by the
Exchange when routing to NOM in FB, GOOG and GRPN, as follows:
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Firm/broker- dealer/
Exchange Customer Professional specialist/market maker
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NOM--FB, GOOG and GRPN.............................. $0.86 $0.91 $0.91
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[[Page 57176]]
NOM recently filed an immediately effective rule change to adopt
Fees for Removing Liquidity applicable to FB, GOOG and GRPN which will
become operative on September 4, 2012.\6\ NOM will assess the
applicable Fees for Removing Liquidity to Phlx market participants,
Customers, Professionals, Firms, Broker-Dealers, Market Makers or
Specialists, when orders are routed from Phlx to NOM. The Exchange is
seeking to adopt new Routing Fees to account for these new fees and
other routing costs incurred by the Exchange when routing options
overlying FB, GOOG or GRPN to NOM.
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\6\ See SR-NASDAQ-2012-102 (not yet published). NOM filed to
adopt Fees for Removing Liquidity applicable to FB, GOOG and GRPN as
follows: $0.79 per contract fee for Customers, $0.85 per contract
fee for Professionals, Firms, Non-NOM Market Makers and $0.79 per
contract fee for NOM Market Makers.
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In May 2009, the Exchange adopted Rule 1080(m)(iii)(A) to establish
Nasdaq Options Services LLC (``NOS''), a member of the Exchange, as the
Exchange's exclusive order router.\7\ NOS is utilized by the Exchange's
fully automated options trading system, PHLX XL[supreg],\8\ solely to
route orders in options listed and open for trading on the PHLX XL
system to destination markets. Each time NOS routes to away markets NOS
is charged a $0.06 clearing fee and, in the case of certain exchanges,
a transaction fee is also charged in certain symbols, which fees are
passed through to the Exchange. The Exchange currently recoups clearing
and transaction charges incurred by the Exchange as well as certain
other costs incurred by the Exchange when routing to away markets, such
as administrative and technical costs associated with operating NOS,
membership fees at away markets, and technical costs associated with
routing options.\9\ The Exchange proposes to title the new fees ``NOM--
FB, GOOG and GRPN.''
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\7\ See Securities Exchange Act Release No. 59995 (May 28,
2009), 74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32).
\8\ This proposal refers to ``PHLX XL'' as the Exchange's
automated options trading system. In May 2009 the Exchange enhanced
the system and adopted corresponding rules referring to the system
as ``Phlx XL II.'' See Securities Exchange Act Release No. 59995
(May 28, 2009), 74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32). The
Exchange intends to submit a separate technical proposed rule change
that would change all references to the system from ``Phlx XL II''
to ``PHLX XL'' for branding purposes.
\9\ In addition to membership fees and transaction fees, the
Exchange also incurs an Options Regulatory Fee when routing to an
away market that assesses that fee. The Exchange's proposed Routing
Fees for NOM for FB, GOOG and GRPN would include the NOM Fees for
Removing Liquidity of $0.79 per contract fee for Customers, $0.85
per contract fee for Professionals, Firms and Non-NOM Market Makers,
and $0.79 per contract fee for NOM Market Makers, as well as a $0.06
clearing cost and another $0.05 per contract fee associated with
administrative and technical costs for operating NOS. At this time,
the Exchange has determined to assess a maximum fee of $0.91 per
contract for routing options overlying FB, GOOG and GRPN to NOM.
While this does not recover all of the Exchange's costs, the
Exchange has determined at this time to not assess more than a $0.91
per contract Routing Fee.
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As with all fees, the Exchange may adjust these Routing Fees in
response to competitive conditions by filing a new proposed rule
change.
2. Statutory Basis
The Exchange believes that its proposal to amend its Pricing
Schedule is consistent with Section 6(b) of the Act \10\ in general,
and furthers the objectives of Section 6(b)(4) of the Act \11\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed NOM Routing Fees are
reasonable because they seek to recoup costs that are incurred by the
Exchange when routing Customer, Professional, Firm, Broker-Dealer,
Specialist and Market Maker orders to NOM on behalf of members,
respectively. Each destination market's transaction charge varies and
there is a standard clearing charge for each transaction incurred by
the Exchange along with other administrative and technical costs that
are incurred by the Exchange. The Exchange believes that the proposed
Routing Fees would enable the Exchange to recover the remove fees
assessed to market participants by NOM on options overlying FB, GOOG
and GRPN, plus clearing and other administrative and technical fees for
the execution of Customer, Professional, Firm, Broker-Dealer,
Specialist and Market Maker orders when routed to NOM. The Exchange
also believes that the proposed NOM Routing Fees are equitable and not
unfairly discriminatory because they would be uniformly applied to all
Customer, Professional, Firm, Broker-Dealer, Specialist and Market
Maker orders that are routed to NOM.
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.\12\ 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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\12\ 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 email to [email protected]. Please include
File Number SR-Phlx-2012-111 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-2012-111. 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
[[Page 57177]]
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
10:00 a.m. and 3:00 p.m. Copies of the 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-2012-111 and should be
submitted on or before October 9, 2012.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-22790 Filed 9-14-12; 8:45 am]
BILLING CODE 8011-01-P