[Federal Register Volume 76, Number 221 (Wednesday, November 16, 2011)]
[Notices]
[Pages 71089-71092]
[FR Doc No: 2011-29510]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65720; File No. SR-Phlx-2011-147]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
the Complex Order Rebates and Fees for Adding and Removing Liquidity

November 9, 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 November 1, 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 its Complex Order Fees in Section I
of its Fee Schedule entitled ``Rebates and Fees for Adding and Removing
Liquidity in Select Symbols.''
    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
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend Section I, Part
B of the Exchange's Fee Schedule for Complex Orders. A Complex Order is
any order involving the simultaneous purchase and/or sale of two or
more different options series in the same underlying security, priced
at a net debit or credit based on the relative prices of the individual
components, for the same account, for the purpose of executing a
particular investment strategy. Furthermore, a Complex Order can also
be a stock-option order, which is an order to buy or sell a stated
number of units of an underlying stock or ETF coupled with the purchase
or sale of options contract(s).\3\
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    \3\ See Exchange Rule 1080, Commentary .08(a)(i).
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    The Exchange is proposing to: (i) Eliminate all references to
Designated Options; \4\ (ii) amend its Customer Complex Order Rebate
for Adding Liquidity for all Select Symbols,\5\ which will now include
the Designated Options; and (iii) amend its Complex Order Fees for
Removing Liquidity for Select Symbols, which will now include the
Designated Options.
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    \4\ The Exchange defines Designated Options in Section I of its
Fee Schedule as the following options: (i) Standard and Poor's
Depositary Receipts/SPDRs (``SPY''); (ii) the PowerShares QQQ Trust
(``QQQ'') [reg]; (iii) Apple, Inc. (``AAPL''); (iv) iShares Russell
2000 Index (``IWM''); (v) Bank of America Corporation (``BAC'');
(vi) Citigroup, Inc. (``C''); (vii) SPDR Gold Trust (``GLD'');
(viii) Intel Corporation (``INTC''); (ix) JPMorgan Chase & Co.
(``JPM''); (x) iShares Silver Trust (``SLV''); (xi) Financial Select
Sector SPDR (``XLF''); and (xii) Ford Motor Company (``F'') (taken
together, ``Designated Options'').
    \5\ All Designated Options are also Select Symbols.
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    The Exchange proposes to eliminate the Customer Complex Order
Rebate for Adding Liquidity in Designated Options and the Complex Order
Fees for Removing Liquidity in Designated Options. Designated Options
will be paid the rebates and assessed the fees applicable to Select
Symbols. The Exchange initially filed a proposed rule change \6\ to pay
a different Customer Complex Order Rebate to Add Liquidity and assess
different Complex Order Fees for Removing Liquidity for Designated
Options as compared to Select Symbols. In that filing, the Exchange
noted that it believed that the proposed Complex Order rebate and fees
for the Designated Options would attract additional order flow to the
Exchange.
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    \6\ See Securities Exchange Act Release No. 65049 (August 5,
2011), 76 FR 49810 (August 11, 2011) (SR-Phlx-2011-103).
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    At this time, the Exchange is proposing to remove the Complex Order
rebate and fees for Designated Options and instead assess those
Designated Options the same rates that apply to the Select Symbols. The
Exchange is combining Designated Options and Select Symbols into one
category. The Exchange is increasing the Customer Complex Order Rebate
for Adding Liquidity and also increasing the Fees for Removing
Liquidity in the combined category. The Exchange believes that
increasing the Complex Order Customer Rebate for Adding Liquidity will
further attract additional order flow to the Exchange. The Exchange
believes that increasing the Complex Order Fees for Removing Liquidity
will assist the Exchange in recouping certain costs associated with its
Fees and Rebates for Adding and Removing Liquidity while not impeding
the Exchange from continuing to increase its order flow.
    Currently, the Exchange pays a Customer Complex Order Rebate for
Adding Liquidity in Designated Options of $0.27 per contract. The
Exchange proposes to eliminate the Customer Complex Order Rebate for
Adding Liquidity in Designated Options and instead apply the Complex
Order Rebate for Adding Liquidity in Select Symbols to those symbols by
removing the text ``except in Designated Options **'' from the Fee
Schedule. The Exchange currently pays a Customer Complex Order Rebate
for Adding Liquidity in Select Symbols of $0.24 per contract. The
Exchange is proposing to increase that Customer Complex Order Rebate
for Adding Liquidity in Select Symbols to $0.30 per contract.
    Currently, the Exchange assesses the following Complex Order Fees
for Removing Liquidity in Select Symbols and Designated Options,
respectively.

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                                                                                Specialist,
                                                        Customer         Directed       ROT, SQT and         Firm        Broker-dealer     Professional
                                                                       participant          RSQT
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Fee for Removing Liquidity in all Select Symbols              $0.25            $0.27            $0.29            $0.30            $0.35            $0.30
 except in Designated Options.....................
Fee for Removing Liquidity in Designated Options..             0.00             0.28             0.29             0.30             0.35             0.30
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    The Exchange proposes to amend the Complex Order Fees for Removing
Liquidity for all Select Symbols, including the Designated Options, for
a Directed Participant,\7\ Specialist,\8\ ROT,\9\ SQT \10\ and
RSQT,\11\ Firm and Professional \12\ as follows:
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    \7\ The term ``Directed Participant'' applies to transactions
for the account of a Specialist, Streaming Quote Trader or Remote
Streaming Quote Trader resulting from a Customer order that is (1)
Directed to it by an order flow provider, and (2) executed by it
electronically on Phlx XL II.
    \8\ A Specialist is an Exchange member who is registered as an
options specialist pursuant to Rule 1020(a).
    \9\ A Registered Options Trader (``ROT'') includes a Streaming
Quote Trader (``SQT''), a Remote Streaming Quote Trader (``RSQT'')
and a Non-SQT, which by definition is neither a SQT nor a RSQT. A
Registered Option Trader is defined in Exchange Rule 1014(b) as a
regular member or a foreign currency options participant of the
Exchange located on the trading floor who has received permission
from the Exchange to trade in options for his own account. See
Exchange Rule 1014 (b)(i) and (ii).
    \10\ 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.
    \11\ An RSQT is defined Exchange Rule in 1014(b)(ii)(B) as an
ROT that is a member or member organization with no physical trading
floor presence who has received permission from the Exchange to
generate and submit option quotations electronically in options to
which such RSQT has been assigned. An RSQT may only submit such
quotations electronically from off the floor of the Exchange.
    \12\ 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).

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                                                                    Directed      Specialist, ROT,
                           Customer                                participant      SQT and RSQT          Firm          Broker-dealer     Professional
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$0.00.........................................................             0.30              0.32              0.35              0.35              0.35
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    Customers and Broker-Dealers would remain at the same rates
applicable today for Designated Options. The Exchange proposes to
eliminate the Designated Options category by removing the text ``except
in Designated Options **'' from the Fee Schedule. The Exchange would
also eliminate any other references to Designated Options in Section I
of the Fee Schedule.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \13\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \14\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members. The Exchange also believes
that there is an equitable allocation of reasonable rebates among
Exchange members.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable and equitable to only
pay a Complex Order Rebate for Adding Liquidity to Customers, as
compared to other market participants, because the Customer rebate will
attract Customer order flow to the Exchange for the benefit of all
market participants. Likewise, the Exchange believes that it is
reasonable to not assess a Complex Order Fee for Removing Liquidity for
Customers, because this also will attract Customer order flow to the
Exchange which in turn also benefits all market participants.
    The Exchange believes that its proposal to eliminate the Designated
Options category and pay an increased Customer Complex Order Rebate to
Add Liquidity for all Select Symbols, which would now include the
Designated Options, is reasonable because this will attract additional
order flow to the Exchange. The Exchange also believes that it is
equitable and not unfairly discriminatory to pay all Select Symbols,
including the Designated Options, a higher Customer Rebate for Adding
Liquidity for Complex Orders because all the symbols in Section I will
be paid a uniform rebate to transact Customer orders.
    The Exchange believes that it is reasonable to assess higher
Complex Order Fees for Removing Liquidity for a Directed Participant,
Specialist, ROT, SQT and RSQT, Firm and Professional because the rates
will remain within the range of fees assessed today for Single contra-
side orders.\15\ In addition, the Complex Order Fees for Removing
Liquidity are within the range of fees at the International Securities
Exchange, LLC (``ISE'').\16\ The Exchange proposes to increase the
Complex Order Fees for Removing Liquidity, but continue to assess
market makers \17\ lower rates as compared to other market participants
because market makers have obligations to the market, which do not
apply to Firms, Professionals and Broker-Dealers.\18\ Directed
Participants are assessed a different Complex Order Fee for Removing
Liquidity as compared to other market makers because they have higher
quoting obligations as compared to market makers.\19\ Firms, Broker-
Dealers and Professionals would be assessed equal rates and Customers
would not be assessed a fee.\20\
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    \15\ Single contra-side orders are in Section I, Part A of the
Exchange's Fee Schedule. There is one distinction, namely the
Customer Fee for Removing Liquidity for a Single contra-side order
is $0.25 per contract and there will be no Fee for Removing
Liquidity for Complex Orders in the new combined Fee for Removing
Liquidity for Select Symbols, which will include the Designated
Options.
    \16\ See ISE's Schedule of Fees.
    \17\ The Exchange market maker category includes Specialists
(see Rule 1020) and ROTs (Rule 1014(b)(i) and (ii), which includes
SQTs (see Rule 1014(b)(ii)(A)) and RSQTs (see Rule 1014(b)(ii)(B)).
    \18\ See Exchange Rule 1014 titled ``Obligations and
Restrictions Applicable to Specialists and Registered Options
Traders.''
    \19\ See Exchange Rule 1014 titled ``Obligations and
Restrictions Applicable to Specialists and Registered Options
Traders.''
    \20\ Customers are not assessed a Complex Order Fee for Removing
Liquidity today in Designated Options. Customers are assessed a
$0.25 per contract Complex Order Fee For Removing Liquidity in the
Select Symbols today. The Broker-Dealer fee would remain the same.
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    The Exchange believes that it is equitable and not unfairly
discriminatory to increase the Complex Order Fees for Removing
Liquidity for Select Symbols, including the Designated Options, for all
market participants except Customers and Broker-Dealers because these
fees would apply uniformly to these market participants.\21\ In
addition, the Complex Order Fees for Removing Liquidity are comparable
to the complex order fees at ISE.\22\
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    \21\ Today, Customers are assessed a Complex Order Fee for
Removing Liquidity in all Select Symbols, except Designated Options,
of $0.25 per contract. This proposal would result in a decrease for
Customers currently paying the $0.25 per contract fee today, as the
proposed Customer rate in the combined category will be $0.00. The
Exchange believes that this is reasonable because it is within the
range of fees assessed by other exchanges. ISE does not assess its
customers a complex order taker fee. See ISE's Schedule of Fees. The
Exchange believes that decreasing the Customer Fee for Removing
Liquidity in Complex Orders in the Select Symbols is equitable and
not unfairly discriminatory because today there is no Complex Order
Fee for Removing Liquidity for Designated Options and the proposed
rates will uniformly assess no fee for Customers in the combined
category.
    \22\ See ISE's Schedule of Fees.
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    The Exchange operates in a highly competitive market comprised of
nine U.S. options exchanges in which sophisticated and knowledgeable
market participants can readily send order flow to competing exchanges
if they deem fee levels at a particular exchange to be excessive. The
Exchange believes that the Complex Order fees and rebates it pays/
assesses must be competitive with fees and rebates in place on other
exchanges. The Exchange believes that this competitive marketplace
impacts the fees and rebates present on the Exchange today and
influences the proposals set forth above.

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.\23\ 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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    \23\ 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_ADDRESS>Please include
File Number SR-Phlx-2011-147 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-2011-147. 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 Number SR-Phlx-2011-147 and should be
submitted on or before December 7, 2011.
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    \24\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-29510 Filed 11-15-11; 8:45 am]
BILLING CODE 8011-01-P


From<EMAIL_ADDRESS><EMAIL_ADDRESS>Sent: Wednesday, August 27, 2014 8:33 AM
To: Zenick, Elliott; Hoffman, Howard
Subject: Any chance of meeting on 111(d)?

Good morning, Elliott and Howard,

I'm working with Otter Tail Power on the 111(d) proposal, and they'd like a chance to meet with you (or whoever else might be appropriate) to discuss the emission targets for South Dakota, which has some unique circumstances that may justify revising the target. We're looking at dates between September 22 and October 10. Would you have time within that range for a meeting?

Hope all is well with the two of you. Looking forward to seeing you soon.

Thanks,

Tom

Thomas A. Lorenzen
Partner
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