Risk Reversals, Conversions and Reversals, and Stock-Option Orders).
A flex option is a customized option contract that provides the
ability to customize key contract terms, like exercise price,
exercise styles and expiration dates. See, e.g., http://
www.cboe.com/Institutional/FLEX.aspx; CBOE Rule 24A.4.
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    19. What would be the impact of the proposed access fee cap in Rule
610(c) on market quality? In particular, the Commission encourages
submission of any data that quantifies potential benefits or harm.
    20. Do commenters believe that limiting access fees as proposed in
Rule 610(c) would have a disparate effect on one type of market model
over another? If not, why not? If so, how? And if so, how would the
disparate effect impact the ability of exchanges with different market
models to compete with each other? The Commission further requests
comment as to whether, and if so how, the quoting, order routing or
other behavior of market participants would change if the proposed fee
cap were in place.
    For example, as discussed above, several commenters express concern
with limiting Take fees without also limiting payment for order flow
fees.\140\ They argue that market participants on Make or Take exchange
quote more aggressively because of the Make rebates paid for providing
liquidity that are funded by the Take fees charged to liquidity
takers.\141\ Exchanges with Make or Take fee models thus provide direct
competition based on aggressive quoting to exchanges with payment for

order flow models because a market maker on a payment for order flow
exchange must match the better prices on the Make or Take exchange, or
route to the Make or Take exchange and pay the Take fee.\142\ Limiting
the amount of a Take fee a Make or Take exchange can charge will
directly impact the amount of a Make rebate the exchange can pay to
liquidity providers, which in turn will impact a liquidity provider's
incentive to quote aggressively, thus limiting the Make or Take
exchange's ability to compete with an exchange with a payment for order
flow fee model through aggressive quoting.\143\
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    \140\ See supra note 82 and accompanying text.
    \141\ See BOX Letter, supra note 37, at 3; IB Letter, supra note
37, at 2-3. See also ISE Flash Letter, supra note 73, at 8; and
Harris Letter, supra note 128, at 2.
    \142\ See IB Letter, supra note 37, at 3; GETCO Letter, supra
note 37, at 6-7.
    \143\ See id.
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    The Commission requests comment on whether commenters agree with
this view. Do commenters agree that liquidity providers on Make or Take
exchanges quote more aggressively than liquidity providers on other
exchanges once their displayed quotations are adjusted to account for
the effect of access fees on the ``all in'' cost to the investor? If
so, are liquidity rebates the only reason that liquidity providers on
Make or Take exchanges are willing to quote aggressively? For example,
does the absence of order flow captured by payments to routing brokers
or the absence of guaranteed allocations for liquidity providers also
contribute significantly to aggressive quoting by liquidity providers
on Make or Take exchanges?
    Do commenters believe that limiting Take fees, which are a type of
access fee, would result in reduced Make rebates paid for supplying
liquidity? If so, what are commenters views as to how much Make rebates
would be reduced in reaction to reduced Take fees? What would be the
impact, if any, of reduced Make rebates on market participant
incentives to aggressively quote on exchanges employing a Make or Take
fee model? To the extent that commenters believe that limiting Take
fees would result in reduced Make rebates paid for supplying liquidity,
and that reduced Make rebates would adversely impact market participant
incentives to aggressively quote on exchanges employing a Make or Take
fee model, what impact would this have on those market participants
supplying liquidity? Or on investors taking liquidity?
    The Commission requests comment as to the impact of the proposed
fee cap on the ability of an exchange with a Make or Take fee model to
compete with exchanges with a payment for order flow model. For
example, to the extent that commenters believe that limiting Take fees
would result in reduced Make rebates paid for supplying liquidity, and
that reduced Make rebates would adversely impact market participant
incentives to aggressively quote on exchanges employing a Make or Take
fee model, do commenters believe that a $0.30 per contract access fee
cap, as proposed, would allow Make or Take exchanges to pay a large
enough rebate to continue to incent market participants to quote
aggressively, and thus compete more aggressively on price with payment
for order flow exchanges?
    21. The Commission notes the distinction between ``aggressive''
quotations and ``matching'' quotations. Aggressive quotations are price
leaders and help narrow the NBBO spread (by either improving the NBBO
or remaining alone at the NBBO). Matching quotations follow prices set
elsewhere and add size to the NBBO, but do not narrow the spread. To
what extent do liquidity providers on payment for order flow options
exchanges quote aggressively rather than merely matching the NBBO set
elsewhere? Would applying an access fee cap, as proposed, lead market
participants on one or both types of options exchange to quote more
aggressively and thereby narrow NBBO spreads for listed options? Or
would applying an access fee cap lead market participants on one or
both types of options exchanges to quote less aggressively? Does your
answer change depending on whether the Commission adopts a ban on flash
functionality in the options markets? \144\
---------------------------------------------------------------------------

    \144\ See supra notes 19 and 72-75.
---------------------------------------------------------------------------

    22. As noted above, the Commission recognizes that even though it
is not proposing to prohibit an exchange from employing any particular
market model, the proposed fee limitation may impact different market
models in different ways. An exchange with either a Make or Take fee
model that charges a Take fee in excess of the proposed fee cap, or an
exchange with a Broker Payment fee model that charges a transaction fee
in excess of the proposed fee cap, would take in less revenue per
contract from a reduced Take or transaction fee, as applicable. These
reduced fees for accessing an exchange's best bid or offer, standing
alone, might have an impact on the manner in which broker-dealers and
other market participants, including the exchanges, route order flow.
The exchange with the Make or Take fee model, however, might choose to
recoup some of that revenue by reducing its Make rebate, which may have
an impact on the quoting behavior of market participants that provide
liquidity on that exchange. An exchange with a Broker Payment model
might choose to recoup some of the revenue by amending other fees
charged to its members, which might impact the order routing or other
behavior of those members (and the members' customers), depending upon
the type of fee change.
    The Commission requests comment on how the exchanges might
reallocate their sources of revenue, if at all, in response to the
access fee limit in proposed Rule 610(c)(2). What changes, if any, to
fees other than access fees imposed by, or rebates paid by, exchanges
would the options exchanges make in response to being required to limit
access fees as proposed? Would any potential disparate impact from
these fees changes across exchange fee models lead to harm to
investors? If so, please explain. How, if at all, would potential
changes to fees other than access fees imposed on members by exchanges
impact the behavior of particular categories of market participants,
such as retail investors, market makers, and broker-dealers?
    23. As noted above in Question 20, several commenters express
concern with limiting Take fees without also limiting payment for order
flow fees. They argue that limiting the amount of a Take fee a Make or
Take exchange can charge will directly impact the amount of a Make
rebate the exchange can pay to liquidity providers, which in turn will
impact a liquidity provider's incentive to quote aggressively, thus
limiting the Make or Take exchange's ability to compete with an
exchange with a payment for order flow fee model through aggressive
quoting.\145\ The Commission notes that the percent of overall contract
volume for trading in equity options for the month of February 2010 for
each exchange that primarily employs a Make or Take fee model ranges
from 2.83 percent to 15.36 percent, and that the aggregate market share
of these exchanges was 18.19 percent.\146\ Exchanges that primarily
employ a Broker Payment Model had an aggregate market share of overall
contract volume for trading in equity options for the month of February
2010 of 81.81 percent.\147\ The Commission requests comment as to the
reasons why

commenters believe that the Make or Take fee model has not resulted in
greater market share to date, given the arguments that the payment of a
Make rebate acts as a direct incentive to quote more aggressively. For
instance, how does the existence of flash functionality on other
exchanges impact the ability of Make or Take exchanges to compete on
quoted price?
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    \145\ See supra notes 140-143 and accompanying text.
    \146\ See http://www.theocc.com/webapps/exchange-volume. The
data is for the month of February 2010 and includes market share for
NOM and NYSE Arca, but does not include BATS, which began trading
options on February 26, 2010.
    \147\ This data also is from OCC's public website and is for the
month of February 2010. See http://www.theocc.com/webapps/exchange-
volume. This data covers percent volume for BOX, CBOE, ISE, NYSE
Amex, and Nasdaq OMX Phlx.
---------------------------------------------------------------------------

    24. The proposed fee limitation in Rule 610(c)(2) would prohibit an
exchange from imposing, or permitting to be imposed by market
participants, any fee or fees that exceed or accumulate to more than
the proposed limit. The Commission requests comment on whether it is
necessary in the listed options exchanges to include a prohibition, as
proposed, on an exchange permitting other market participants to impose
fees that exceed the limit. The Commission does not believe that market
makers in listed options currently impose fees for the execution of
orders against their quotes on an exchange, but requests comment on
whether they do. Do commenters think it likely that market makers would
in the future impose such fees?
    25. In this proposal, the Commission has not proposed to limit
payment for order flow fees. As stated above, an exchange payment for
order flow fee on members is not an access fee, i.e., it is not a fee
imposed for executing against an exchange's quotation.\148\ The
Commission therefore preliminarily does not believe that it is
necessary or appropriate to prohibit payment for order flow fees to
achieve its stated objectives in proposing to cap access fees--to
ensure fair and efficient access to displayed quotation and to enhance
transparency of quoted prices. Several commenters, however, argue that
payment for order flow fees also impact the displayed (quoted) prices,
and thus the prices received by investors when their orders are
executed, because market makers that are charged the payment for order
flow fees adjust the price at which they are willing to quote to take
into account the amount of the payment for order flow fee. In this
regard, one commenter petitioned the Commission to impose a cap at the
same level on private payment for order flow arrangements between
market makers and agency brokerage firms as any cap it imposes on
``Take'' fees.\149\ Another commenter argues that fees relating to
``accessing'' quotations can be characterized broadly to include
exchange fees used to fund members' payment for order flow.\150\ Do
commenters agree with these statements? If so, do commenters believe
that the Commission should limit payment for order flow fees as an
``access fee''? The Commission further requests comment on its
preliminary determination not to limit payment for order flow fees, and
the basis for that determination.
---------------------------------------------------------------------------

    \148\ As noted above, if a market maker is charged a payment for
order flow fee by an exchange when the market maker is accessing the
best bid or offer of the exchange, then the proposed fee limitation
would apply to that fee because it would be a fee for the execution
of an order against the best bid or offer of the exchange. See supra
Section III.C (discussing payment for order flow fees).
    \149\ See IB Letter, supra note 37, at 1 and 6-7.
    \150\ See Wolverine Letter, supra note 37, at 3.
---------------------------------------------------------------------------

    26. As noted above, the Commission has previously acknowledged a
concern that payment for order flow may result in less aggressive
competition for order flow on the basis of price.\151\ To what extent,
if any, does payment for order flow in the options markets affect a
specialist's or market maker's incentive to quote aggressively? To what
extent does payment for order flow in the options markets affect the
opportunities for non-professional customers to receive better prices
than displayed quotations in price improvement mechanisms? If
commenters believe that payment for order flow diminishes a
specialist's or market maker's incentives to quote aggressively, what
impact, if any, do commenters believe that diminished incentive has on
the quality of displayed quotations? How, if at all, would limiting or
prohibiting payment for order flow fees impact broker-dealer's ability
to obtain best execution of their customer's orders?
---------------------------------------------------------------------------

    \151\ See supra note 116 and accompanying text.
---------------------------------------------------------------------------

    27. On several occasions, the Commission has recognized that the
anticipation of payment for order flow raises a potential conflict of
interest for brokers handling customer orders, and that reliance by
market centers on the strategy of simply paying money to attract orders
may present a threat to aggressive quotation competition. At the same
time, the Commission has stated that payment for order flow is not
necessarily inconsistent with a broker's duty of best execution, so
long as appropriate measures are taken to ensure that that duty is, in
fact, met.\152\ Do customer orders that are routed pursuant to payment
for order flow arrangements receive less favorable executions than
orders not subject to such arrangements?
---------------------------------------------------------------------------

    \152\ See supra notes 117-118 and accompanying text.
---------------------------------------------------------------------------

    28. Some may argue that specialists and market makers in the
options markets establish the prices and sizes of their quotations
based in part on the assumption that their counterparties will be other
professional traders, which involves more risk than trading with
uninformed non-professional traders.\153\ The desirability of trading
with uninformed order flow due to the lower risks of trading with non-
professionals should translate into those orders, on average, receiving
better prices than the specialist's or market maker's quotation.\154\
Under this argument, specialists and market makers may use payment for
order flow as an indirect way to provide a better execution to
uninformed or non-professional orders. Do commenters agree with these
statements?
---------------------------------------------------------------------------

    \153\ See Options Concept Release, supra note 21, at 6131. See
also supra note 128.
    \154\ See Options Concept Release, supra note 21, at 6131.
---------------------------------------------------------------------------

    29. The Commission requests comment on what, if any, impact the
proposed limitation on access fees may have on payment for order flow
fees.
    30. The Commission requests comment on whether the proposed access
fee limitation should apply only to the best bid and offer of each
exchange, or whether the limitation also should apply to ``depth of
book'' quotations.
    31. Some commenters stated that Make or Take pricing leads to more
locked and crossed markets,\155\ while others dispute that.\156\ The
Commission requests commenters' views on this issue. Please provide
data that support your view. Could any increase in the incidence of
locked and crossed markets be caused or influenced by other factors,
such as more efficient and faster quotation updating and trading, or
the expansion of the Minimum Quoting Increment Pilot Program? How, if
at all, does the recently implemented Plan \157\ help alleviate the
frequency of locked and crossed markets? How, if at all, would the
proposed limitation on access fees affect the frequency of locked/
crossed markets?
---------------------------------------------------------------------------

    \155\ See Citadel Petition, supra note 34, at 5, and Ameritrade
Letter, supra note 37, at 11.
    \156\ See BOX Letter, supra note 37, at 3; IB Letter, supra note
37, at 6; NYSE Euronext Letter, supra note 37, at 3-4; and GETCO
Letter, supra note 37, at 7.
    \157\ See supra note 13.
---------------------------------------------------------------------------

    32. The Commission requests comment on what the impact of imposing
a limit on access fees, if any, would be if the Commission were to ban
flash orders on the options exchanges.\158\
---------------------------------------------------------------------------

    \158\ See Flash Order Proposal, supra note 19.
---------------------------------------------------------------------------

    33. The Commission requests comment on whether there are
alternative methods other than the

proposed access fee cap to achieve the objectives of the proposal--to
provide for fair and efficient access to displayed quotations and that
displayed quotations be fair and useful. For example, could additional
disclosure of fees charged by exchanges for executions against their
quotations in listed options achieve the same objectives by fostering
further competition based on transparent pricing? Why or why not?
Please address current disclosure by options exchanges of their fees,
and why that disclosure is or is not sufficient.
    34. The Commission requests comment on whether, if it were to adopt
the proposed access provisions, a phase-in period would be necessary to
allow exchanges and market participants to adapt. If so, what aspect or
aspects of the proposal should be phased in, and what would be the
appropriate phase-in period?
    The Commission recognizes that intermarket access presents a number
of complex problems to which there may be many possible solutions.
Interested persons may wish to propose and discuss specific,
alternative approaches to intermarket access that the Commission should
consider for future rulemaking as it seeks to accomplish its goal of
strengthening the NMS. Commenters may also wish to discuss whether
there are any reasons why the Commission should consider an alternative
approach.

VI. Paperwork Reduction Act

    The Commission preliminarily does not believe that the proposed
amendments to Rule 610(a) pertaining to quotations in a listed option
and the proposed access fee limitation in Rule 610(c)(2) contain any
``collection of information'' requirements as defined by the Paperwork
Reduction Act of 1995, as amended (``PRA'').\159\ The proposed
amendment to Rule 610(a) would expand the rule to apply to listed
options, in addition to NMS stocks, and would prohibit each national
securities exchange or national securities association from imposing
unfairly discriminatory terms that prevent or inhibit any person from
obtaining efficient access through a member of such exchange or
association to any quotation in an NMS security. The Commission
preliminarily does not believe that the prohibition in Rule 610(a), as
proposed to be amended to apply to listed options, would require any
new or additional collection of information, as such term is defined in
the PRA, but the Commission encourages comments on this point.\160\
---------------------------------------------------------------------------

    \159\ 44 U.S.C. 3501, et seq.
    \160\ See 44 U.S.C. 3502(3) (defining the term ``collection of
information'' to include, generally, the obtaining, causing to be
obtained, soliciting, or requiring the disclosure to third parties
or the public, of facts or opinions by or for an agency, regardless
of form or format, calling for either: (i) Answers to identical
questions posed to, or identical reporting or recordkeeping
requirements imposed on, ten or more persons, other than agencies,
instrumentalities, or employees of the United States; or (ii)
answers to questions posed to agencies, instrumentalities, or
employees of the United States which are to be used for general
statistical purposes).
    The Commission notes that the requirement under the proposed
amendment to Rule 610(a) is substantially similar to current Rule
610(a) of Regulation NMS. See 17 CFR 242.610(a). The Commission
requested comment on its preliminary view that Rule 610 of
Regulation NMS pertaining to access to quotations in an NMS stock
did not contain a collection of information requirement as defined
by the PRA. See Securities Exchange Act Release No. 49325 (February
26, 2004), 69 FR 11126, 11160-61 (March 9, 2004) (File No. S7-10-04)
(``Regulation NMS Proposing Release''). The Commission notes that no
comments were received that addressed whether Rule 610(a) contained
a collection of information requirement. See Securities Exchange Act
Release No. 50870 (December 16, 2004), 69 FR 77424, 77476 (December
27, 2004) (``Regulation NMS Reproposing Release'').
---------------------------------------------------------------------------

    In addition, proposed Rule 610(c)(2) would prohibit a national
securities exchange from imposing, or permitting to be imposed, any fee
or fees for the execution of an order against a quotation that is the
best bid or best offer of such exchange in a listed option that exceeds
or accumulates to more than $0.30 per contract. The Commission
preliminarily does not believe that the access fee limitation in
proposed Rule 610(c)(2) would require any new or additional collection
of information, as such term is defined in the PRA, but the Commission
encourages comments on this determination.\161\
---------------------------------------------------------------------------

    \161\ The Commission notes that proposed Rule 610(c)(2) is
substantially similar to current Rule 610(c) of Regulation NMS. See
17 CFR 242.610(c). The Commission requested comment on its
preliminary view that Rule 610 of Regulation NMS pertaining to a
limit on access fees did not contain a collection of information
requirement as defined by the PRA. See Regulation NMS Proposing
Release, supra, note 160, at 11160-61. The Commission notes that no
comments were received that addressed whether the proposed access
fee cap under Rule 610 contained a collection of information
requirement. See Regulation NMS Reproposing Release, supra note 160,
at 37577 n.746.
---------------------------------------------------------------------------

    With respect to a proposed rule change that an options exchange may
be required to file pursuant to Section 19(b) of the Exchange Act and
Rule 19b-4 thereunder to bring its rules into compliance with the
proposed amendment to Rule 610(a) and proposed Rule 610(c)(2),\162\ the
burden of filing such proposed rule change would already be included
under the collection of information requirements contained in Rule 19b-
4 under the Exchange Act.\163\
---------------------------------------------------------------------------

    \162\ See infra Section VII.B.
    \163\ See Securities Exchange Act Release No. 50486 (October 5,
2004), 69 FR 60287, 60293 (October 8, 2004) (File No. S7-18-04)
(describing the collection of information requirements contained in
Rule 19b-4 under the Exchange Act). The Commission has submitted
revisions to the current collection of information titled ``Rule
19b-4 Filings with Respect to Proposed Rule Changes by Self-
Regulatory Organizations'' (OMB Control No. 3235-0045). According to
the last submitted revision concluded as of August 5, 2008, the
current collection of information estimates 1279 total annual Rule
19b-4 filings with respect to proposed rule changes by self-
regulatory organizations.
---------------------------------------------------------------------------

VII. Consideration of Costs and Benefits

    The proposed amendments to Rule 610 of Regulation NMS would set
forth new standards governing means of access to quotations in listed
options. The proposal would prohibit an exchange or association from
imposing unfairly discriminatory terms that would prevent or inhibit
the efficient access of any person through members of such exchange or
association to any quotations in an NMS security, including in a listed
option, displayed through its SRO trading facility. In addition, to
ensure the fairness and accuracy of displayed quotations in listed
options, proposed Rule 610(c)(2) would establish an outer limit on the
cost of accessing the best bid and best offer on each exchange in a
listed option of no more than $ 0.30 per contract.

A. Benefits

    The Commission preliminarily believes that the proposed amendments
to Rule 610 of Regulation NMS would help achieve the statutory
objectives for the NMS by promoting fair and efficient access to each
individual options exchange.
1. Proposed Amendment to Rule 610(a)
    The access provision of Rule 610(a), as proposed to be amended, is
designed to strengthen the ability of all market participants that are
not members of an options exchange to fairly and efficiently route
orders to execute against quotations in a listed option, wherever such
quotations are displayed in the NMS, by prohibiting an exchange from
unfairly discriminating against any person trying to obtain access
through a member to that exchange's quotations. The Commission believes
that fair and efficient access to the best displayed quotations of all
options exchanges is critical to achieving best execution of those
orders.\164\ The Commission further believes that such fair and
efficient

access to the best displayed quotations of options exchanges is
critical for compliance with the requirements of the Trade-Through
Rules. Specifically, options exchanges themselves must have the ability
to route orders for execution against the displayed quotations of other
exchanges. Indeed, the concept of intermarket protection against trade-
throughs is premised on the ability of options exchanges to route
orders to execute against, rather than trade through, the quotations
displayed by other options exchanges.\165\
---------------------------------------------------------------------------

    \164\ See NMS Adopting Release, supra note 4, at 37539.
    \165\ Id.
---------------------------------------------------------------------------

    Thus, the Commission preliminarily believes that the proposed
amendment to Rule 610(a) would benefit investors by furthering the
ability of brokers on behalf of their customers, and of investors
themselves, to achieve best execution of their orders in listed
options. The Commission also preliminarily believes that the proposed
amendment to Rule 610(a) would contribute to the smooth functioning of
intermarket trading by furthering the ability of options exchanges and
market participants, including investors, to fairly and efficiently
access the quotations of each options exchange.\166\
---------------------------------------------------------------------------

    \166\ Id.
---------------------------------------------------------------------------

    The proposed amendment to Rule 610(a) also would help to clarify
when certain terms set by exchanges would be unfairly discriminatory,
including terms in current exchange rules. For example, an exchange
could not charge a higher per-contract access fee to a non-member
broker-dealer that is a registered options market maker on another
exchange (``non-member market maker'') acting for its own account than
to a member or non-member broker-dealer acting for its own account that
is not registered as a market maker on another exchange. In this
example, neither broker-dealer is registered as, nor is acting in the
capacity of, a market maker on that exchange.\167\ The Commission
preliminarily believes that this type of distinction could unfairly
discriminate against non-member market makers and prevent or inhibit
such non-member market makers from obtaining efficient access through a
member to that exchange's quotations. Similarly, an exchange could not
charge differing fees for accessing liquidity depending on whether the
order is for the account of a ``directed'' customer. The Commission
preliminarily believes that such a distinction could unfairly
discriminate against non-directed customer orders and prevent or
inhibit such non-directed customers from obtaining efficient access
through a member to that exchange's quotations in certain listed
options.
---------------------------------------------------------------------------

    \167\ See supra note 51 and accompanying text.
---------------------------------------------------------------------------

2. Proposed Rule 610(c)(2)
    The access fee limitation of proposed Rule 610(c)(2) would address
the potential distortions caused by substantial, disparate fees. When a
displayed quotation does not include the amount of any fee or fees
charged by an exchange for executing against that quotation, persons
attempting to execute, or evaluating whether they want to execute,
against that quotation cannot readily ascertain the all-in price for
the trade. The larger the non-displayed fee(s), the less accurate would
be the displayed price in comparison to the all-in price for the trade.
This concern is compounded when competing exchanges charge differing
fees, as the same displayed price on two or more options exchanges may
reflect different all-in prices for executing against the same-priced
quotations. Thus, the wider the disparity in the level of access fees
among different options exchanges, the less useful and accurate may be
the quoted prices at reflecting the full cost of a trade. As a result
of the proposed fee limitation, quoted prices should in many cases more
closely reflect the total cost of a trade because the highest potential
access fee that could be charged by any exchange would be $0.30 per
contract. This limitation, in turn, should enhance the usefulness of
quotation information.
    An access fee limit also makes the cost of accessing quoted prices
more transparent. Currently, the eight options exchanges charge so many
different fees to different categories of options participants and for
different products that it is not easy to estimate that total cost of a
particular transaction. An access fee cap would limit the scope of
differences and therefore would result in quoted prices providing
clearer information on the total cost for executing against quoted
prices. Consequently, the proposed fee limitation would further the
statutory purposes of the Exchange Act by reducing the tendency of
access fees to distort quoted prices. In addition, by applying equally
to all types of options exchanges, the proposed fee limitation would
promote NMS objectives and further the goals of Section 11A of the
Exchange Act relating to equal regulation of markets and broker-
dealers.\168\
---------------------------------------------------------------------------

    \168\ See Section 11A(c)(1)(F) of the Exchange Act, 15 U.S.C.
78k-1(c)(1)(F) (providing objective to assure equal regulation of
all markets for qualified securities and all exchange members,
brokers, and dealers effecting transactions in such securities).
---------------------------------------------------------------------------

    The proposed fee limitation also would benefit the markets and
market participants by addressing options exchanges that otherwise
might charge high fees to market participants required to access their
quotations under the Trade-Through Rules. The requirements under the
Trade-Through Rules and the use of private linkages could provide an
exchange the opportunity to take advantage of intermarket price
protection by acting essentially as a toll booth between price levels.
Even though the exchange charging the highest fees likely would be the
last exchange to which orders would be routed, orders could not be
executed against the next-best price level until someone routed an
order to take out the displayed price at such high fee exchange. While
exchanges would have significant incentives to compete to be near the
top in order-routing priority, arguably there would be little incentive
to avoid being the least-preferred exchange if fees were not limited.
Such a business model could detract from the usefulness of quotation
information and impede market efficiency and competition.\169\
---------------------------------------------------------------------------

    \169\ See NMS Adopting Release, supra note 4, at 37584
(concluding that, with respect to NMS stocks, an outlier business
model would detract from the usefulness of quotation information and
impede market efficiency and competition and that a fee cap would
limit such a business model). See also supra notes 69-71 and
accompanying text.
---------------------------------------------------------------------------

    The Commission preliminarily believes that the proposed access fee
cap would limit the viability of this business model. Consequently,
another benefit of the proposal would be to place all options exchanges
on a level playing field with respect to the maximum amount of access
fees they can charge, and, ultimately, the rebates they can pay to
liquidity providers, by establishing a clear limit on the fees they can
charge. Some options exchanges might choose to charge lower fees,
thereby increasing their ranking in the preferences of order routers.
Others might charge $0.30 per contract and rebate a substantial
proportion to liquidity providers.\170\ The Commission preliminarily
believes that competition will determine which strategy is most
successful. Proposed Rule 610(c)(2) also would preclude an options
exchange from charging high fees selectively to competitors.
---------------------------------------------------------------------------

    \170\ The Commission notes that nothing in proposed Rule
610(c)(2) would preclude an options exchange from taking action to
limit fees beyond what is required by the proposed Rule, and such
options exchanges would have flexibility in establishing their fee
schedules to comply with proposed Rule 610(c)(2), consistent with
existing requirements of the Exchange Act and the rules and
regulations thereunder.
---------------------------------------------------------------------------

    The Commission also preliminarily believes that the proposed access
fee

limitation would further the purposes of Section 11A(c)(1)(B) of the
Exchange Act, which authorizes the Commission to adopt rules assuring
the fairness and usefulness of quotation information. As discussed
above, if options exchanges are allowed to charge high fees and pass
most of them through as rebates, the published quotations of such
exchanges may not reliably indicate the all-in price that is actually
available to investors. For quotations to be fair and useful, there
must be some limit on the extent to which the all-in price for those
who access quotations can vary from the displayed price. Consequently,
the Commission preliminarily believes that the proposed access fee
limitation would further the statutory purposes of the NMS by limiting
the distortive effects of high fees. Moreover, the Commission
preliminarily believes that the proposed fee limitation would further
the statutory purpose of enabling broker-dealers to route orders in a
manner consistent with the operation of the NMS.\171\ Under the Trade-
Through Rules, one exchange cannot trade through another exchange
displaying the best-priced quotations. The purposes of the Trade-
Through Rules would be thwarted if market participants were allowed to
charge high fees that distort quoted prices in a listed option.
---------------------------------------------------------------------------

    \171\ Section 11A(c)(1)(E) of the Exchange Act, 15 U.S.C. 78k-
1(c)(1)(E), authorizes the Commission to adopt rules assuring that
broker-dealers transmit orders for securities in a manner consistent
with the establishment and operation of a national market system.
---------------------------------------------------------------------------

    In proposing amendments to Rule 610, the Commission seeks to help
ensure that transactions in listed options can be executed efficiently
at any market center for reasonable execution fees. By enabling fair
access and transparent pricing among the different market places within
a unified national market, the Commission preliminarily believes that
the proposal would foster efficiency, enhance competition, and
contribute to the best execution of orders in listed options.
    Finally, the Commission notes that the current access fee
limitation in Rule 610(c) has applied to the trading of NMS stocks for
several years and believes that such limitation has not caused any
apparent harm to competition among markets or market participants
trading NMS stocks. For example, when recently requesting comment on
various aspects of equity market structure, the Commission noted how
trading volume for NMS stocks is spread out among the registered
exchanges, ECNs, dark pools, and broker-dealers that execute trades
internally.\172\ The Commission notes that, currently, the options
exchanges are competitive.\173\ As such, the Commission preliminarily
believes that an access fee limitation applied to the trading of listed
options would not harm competition among exchanges or market
participants trading listed options.
---------------------------------------------------------------------------

    \172\ See Securities Exchange Act Release No. 61358 (January 14,
2010), 75 FR 3594, 3598 (January 21, 2010) (S7-02-10).
    \173\ See infra Section VIII.A.1 (discussing market share data
for January 2010 among the eight options exchanges).
---------------------------------------------------------------------------

    The Commission also preliminarily believes that the proposed access
provisions would help to assure investors that their orders are
executed at the best prices and are not subject to large, non-
transparent fees by limiting the difference between the all-in price of
an investor executing its order and the displayed quotation, regardless
of the exchange on which the execution takes place.

B. Costs

1. Proposed Amendment to Rule 610(a)
    If the proposed amendment to Rule 610(a) were adopted, it could
impose costs associated with modifications to an options exchange's
rules to comply with such proposed Rule's specific anti-discriminatory
standard for access to an exchange's quotations through a member. The
Commission notes, however, that each exchange registered as a national
securities exchange is currently subject to similar restrictions in
Section 6 of the Exchange Act, including the requirements in Section
6(b)(5) that the rules of a national securities exchanges be designed,
among other things, not to permit unfair discrimination between
customers, issuers, brokers, or dealers.\174\ Accordingly, the
Commission preliminarily believes that it would be unlikely for the
options exchanges to need to amend their rules to comply with Rule
610(a), as proposed to be amended. To the extent that any amendments
are necessary, the Commission preliminarily expects such amendments
would be minimal. The Commission, therefore, preliminarily believes
that any costs incurred as a result of the requirement under the
proposed amendment to Rule 610(a) by an options exchange would not be
significant.
---------------------------------------------------------------------------

    \174\ Section 6(b)(5) of the Exchange Act also requires in part
that the rules of a national securities exchanges be designed to:
(1) Promote just and equitable principles of trade; (2) remove
impediments to and perfect the mechanism of a free and open market
and a national market system; and (3) protect investors and the
public interest. See 15 U.S.C. 78f(b)(5). See also supra note 47 and
accompanying text. No national securities association currently
trades listed options.
---------------------------------------------------------------------------

    More specifically, an options exchange that would need to amend its
rules to comply with the proposed amendment to Rule 610(a) so as not to
unfairly discriminate would be required to file a proposed rule change
on Form 19b-4 with the Commission.\175\ The Commission further notes
that the proposed rule change filing format is not new to the options
exchanges, as multiple filings are made annually by such
exchanges.\176\ The Commission estimates that an average rule change
requires approximately 34 hours for an exchange to complete at an
average hourly cost of $305.\177\ The Commission estimates that the
aggregate cost of one proposed rule change for each options exchange,
which assumes that every options exchange would have to amend its rules
to eliminate any unfairly discriminatory terms not consistent with the
proposed amendments to Rule 610(a), would total approximately $82,960
($305 times 34 times 8). Therefore, the Commission preliminarily
believes that the costs incurred by an options exchange to make such a
filing as a result of the proposed amendment to Rule 610(a) would not
be substantial.\178\
---------------------------------------------------------------------------

    \175\ See 15 U.S.C. 78s(b) (requiring each SRO to file with the
Commission, in accordance with such rules as the Commission may
prescribe, copies of any proposed rule or any proposed change in,
addition to, or deletion from the rules of such SRO, accompanied by
a concise general statement of the basis and purpose of such
proposed rule change). See also 17 CFR 240.19b-4(a) (generally
requiring that filings with respect to proposed rule changes by an
SRO be made on Form 19b-4, 17 CFR 249.819).
    \176\ The Commission notes that, for its 2009 fiscal year
(October 1, 2008 to September 30, 2009), the seven options exchanges
(NYSE Amex, BOX, CBOE, ISE, NOM, NYSE Arca, and Nasdaq OMX Phlx)
filed approximately 444 proposed rule changes in the aggregate
pursuant to Section 19(b) and Rule 19b-4 thereunder.
    \177\ The $305 per-hour figure for an attorney is from SIFMA's
Management & Professional Earnings in the Securities Industry 2008,
modified by Commission staff to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead. See Securities Exchange Act Release No.
59748 (April 10, 2009), 74 FR 18042, 18093 (April 20, 2009) (S7-08-
09) (noting the Commission's modification to the $305 per hour
figure for an attorney).
    \178\ The Commission also notes that each options exchange
should already have in place policies and procedures to ensure that
terms of access to its market are consistent with the federal
securities laws and the rules thereunder. See supra note 174 and
accompanying text. The Commission preliminarily believes that such
options exchange's existing policies and procedures should not
change as a result of the proposed amendments to Rule 610, and,
therefore, should not incur any new costs, including administrative
costs, in this regard.
---------------------------------------------------------------------------

2. Proposed Rule 610(c)(2)
    The Commission preliminarily does not believe that the fee
limitation of

proposed Rule 610(c)(2) would impose significant new costs on the
options exchanges or market participants. The Commission preliminarily
believes that the proposed fee limitation would be relatively easy to
administer given that it would impose a single accumulated access fee
limitation for all options. For options exchanges that currently charge
and collect fees and that would continue to do so, the costs of
imposing and collecting fees are already incurred. The fee limitation
would not require an options exchange that does not currently charge
fees to begin charging fees. Thus, the Commission preliminarily
believes that the proposed fee limitation should not impose significant
new administrative costs.
    The Commission recognizes that the fee limitations of proposed Rule
610(c)(2) would affect options exchanges that currently impose access
fees in excess of the proposed limits. As a result of the access fee
limitations of proposed Rule 610(c)(2), such options exchanges would be
required to modify their respective rules to ensure compliance with the
proposed Rule's fee cap. The Commission preliminarily believes,
however, that the potential administrative costs associated with any
necessary changes to the rules of an options exchange that may be
needed to account for the proposed access fee limitation would not be
substantial. The Commission notes that an options exchange that would
need to amend its rules and fee schedule to comply with the access fee
limitation as a result of proposed Rule 610(c)(2) would be required to
file a proposed rule change on Form 19b-4 with the Commission.\179\ The
Commission further notes that the proposed rule change filing format
and the process to change a due, fee, or other charge applicable only
to members is not new to the options exchanges, as multiple fee filings
are made annually by such exchanges.\180\ As stated above, the
Commission estimates that an average rule change requires approximately
34 hours for an exchange to complete at an average hourly cost of
$305.\181\ The Commission estimates that the aggregate cost for all
options exchanges of one proposed rule change for each exchange would
total approximately $82,960.\182\ Therefore, the Commission
preliminarily believes that the costs incurred by an options exchange
to make such a filing as a result of proposed Rule 610(c)(2) would not
be substantial.\183\
---------------------------------------------------------------------------

    \179\ See supra note 175.
    \180\ An exchange generally would be able to amend its fees
imposed on its members by filing a proposed rule change pursuant to
Section 19(b)(3)(A) of the Exchange Act of Rule 19b-4(f)(2)
thereunder. See 15 U.S.C. 78s(b)(3)(A) and 17 CFR 240.19b-4(f)(2)
(permitting proposed rule changes that establish or change a due,
fee, or other charge applicable only to members to take effect upon
filing with the Commission). The Commission notes that, for its 2009
fiscal year, the seven options exchanges filed approximately 120
proposed rule changes in the aggregate pursuant to Section
19(b)(3)(A) of the Exchange Act and Rule 19b-4(f)(2) thereunder. See
supra note 176 (noting the approximate total of all proposed rule
changes filed by the options exchanges pursuant to Section 19(b) and
Rule 19b-4 thereunder during the same time period).
    \181\ See supra note 177.
    \182\ The Commission notes that if an exchange were required to
submit a proposed rule change to address a rule or fee that was not
consistent with the anti-discriminatory standard proposed in Rule
610(a), as well as a fee that exceeds the proposed fee cap, the
exchange could choose to submit one rule filing that would make
changes necessary to comply with proposed Rules 610(a) and 610(c)(2)
to reduce costs.
    \183\ The Commission also notes that each options exchange
should already have in place policies and procedures to ensure that
all of the fees it charges, including access fees, are consistent
with the federal securities laws and the rules thereunder. The
Commission preliminarily believes that, while an options exchange
may be required to amend its fee schedule to account for the
proposed access fee limitation, such options exchange's existing
policies and procedures should not change as a result of the
proposed amendments to Rule 610, and therefore, should not incur any
new costs, including administrative costs, in this regard.
---------------------------------------------------------------------------

    The Commission also recognizes that, as a result of the proposed
access fee limitation, certain options exchanges that currently charge
access fees that exceed, or accumulate to more than, $0.30 per contract
would be required to reduce their access fees, and that this action
could result in a reduction in revenue from transaction fees for those
exchanges.
    The Commission preliminarily estimates that the imposition of an
access fee cap, as proposed, could reduce option exchanges' annual
transaction fee revenues by about $74 million under a flat $0.30 access
fee cap.\184\ The estimated revenue losses per exchange are set forth
in Table 3 of the Appendix. Commission staff estimates the proportion
of fee losses to total fees for December 2009 and applies that
proportion to the annual transaction fee revenue for each exchange. The
Commission staff utilized OCC data that contains aggregate two-sided
volume data by account type (customer, firm or market maker). In order
to estimate the impact on each option exchange's revenues,\185\
Commission staff makes a number of assumptions:
---------------------------------------------------------------------------

    \184\ For this estimate, Commission staff used December 2009
option trading data from OCC and OptionMetrics. The Commission staff
estimates that if the Commission were to impose a fee cap of 0.3
percent of the price of the option for options priced below $1--
similar to the existing cap for NMS stocks--the potential reduction
in revenue for the options exchanges would be $177 million.
     The Commission has not included BATS in these revenue impact
calculations. As noted below, BATS recently started trading options
on February 26, 2010. See infra note 197. Further, BATS' only
transaction fee for listed options is $0.30 per contract for
removing liquidity (and a $0.20 per-contract rebate for providing
liquidity). See BATS Fee Schedule (available at http://
batstrading.com/resources/regulation/rule_book/BATS_Ex_Fee_
Schedule.pdf) (current as of February 26, 2010).
    \185\ See infra note 187 and accompanying text for an estimate
of the impact of the proposed access fee cap on transaction fee
revenues using an assumption that the options exchanges that have a
Make or Take fee model reduce their ``Make'' fees to compensate for
a reduction in ``Take'' fees.
---------------------------------------------------------------------------

     Commission staff assumes that the options exchanges that
impose fees in excess of the proposed access fee cap would not adjust
their rebates or other fees to offset any shortfalls on revenues
imposed by the access fee cap.
     Commission staff looked at a range of fees that each
options exchange charges for accessing the best bid or offer in listed
options on the exchange, based on its published fee schedule.\186\ The
fee ranges include any fee that is charged for execution of an order
against an exchange's best bid or offer. Thus, they include ``Take''
fees, transaction fees, index ``licensing'' fees, certain payment for
order flow fees, and ORF. The fee ranges exclude fees charged for
transactions in FLEX options, credit default options, and the fee that
ISE charges for transactions by broker-dealers registered as market
makers on other exchanges. Commission staff has excluded these specific
transaction fees from these calculations because it preliminarily
believes that the volume of transactions and the corresponding assessed
transaction fees are not significant, but requests comment on whether
such fees should be included in the cost impact calculation. Any
available volume discounts also are not taken into account because such
discounts are variable and if applied would reduce the cost estimates.
Tables 1 and 2 of the Appendix show the fee ranges used in estimating
the revenue impact.
---------------------------------------------------------------------------

    \186\ The fees used are as of January 2010, except that they do
not include fees or credits imposed by Nasdaq OMX Phlx in SR-Phlx-
2009-116, SR-Phlx-2010-14, and SR-Phlx-2009-104, which filings were
abrogated by the Commission on February 19, 2010. See Securities
Exchange Act Release No. 61547 (February 19, 2010), 75 FR 8762
(February 25, 2010).
---------------------------------------------------------------------------

     To estimate the impact on each option exchange's revenues,
the Commission staff generally assumes the maximum possible fee for
electronically transmitted orders grouped by account type, whether or
not the class is included in the Minimum Quoting Increment Pilot
Program, and option type. This assumption would lead, conservatively,
to higher estimates of

revenue losses. Further, because fee levels for equity options tend to
be different than fee levels for index options, and because the fee
levels for classes included in the Minimum Quoting Increment Pilot
Program sometimes are different than the fee levels for classes not
included in that Pilot Program, Commission staff estimates fees
separately for each.
     Commission staff assumes that access fees only apply to
``Takers'' of liquidity at a particular exchange. Staff further assumes
that customers always ``take'' liquidity, market makers always ``make''
liquidity, and firms make up the difference. Based on December 2009
data, Commission staff estimates that average firm volume by option
class is about 52% on the ``take'' side and 48% on the ``make'' side.
     The OCC classifies cleared trades based on OCC membership
rather than exchange membership. Therefore, Commission staff assumes
that the OCC ``firm'' classification applies to both member and non-
member firms at a particular exchange. If a particular exchange charges
different levels of fees for member and non-member firms, Commission
staff conservatively assumes the maximum fee applies to all trades
classified as ``firm'' accounts.
    As noted above, this cost estimate assumes that the exchanges do
not make any changes to their other fees in response to the proposed
access fee cap. Options exchanges may, however, respond to access fee
limits by restructuring their fee schedules to mitigate the effect of
the proposed fee cap. For example, the impact of imposing a fee
limitation in a Make or Take fee model may be mitigated if exchanges
using such fee model reduce the rebates to reflect the reduced ``Take''
fees. In such a case, the net impact on exchange revenue would be less
than the amount by which an exchange is required to reduce its ``Take''
fee because the exchange would pay a smaller rebate to members
providing liquidity. In addition, certain options exchanges may simply
be able to re-calibrate existing fee structures to offset potential
revenue losses, while other exchanges may decide to charge additional
fees to make up for potential revenue losses.
    Options exchanges have the ability, consistent with the
requirements of the Exchange Act, to levy fees on their members.
Currently, exchanges charge their members various types of fees for
membership, transacting on the exchange, and for other services
provided by the exchange, including connectivity fees, regulatory fees,
and other fees. The Commission preliminarily believes that exchanges
are likely to amend their fees that would not be impacted by the access
fee limitation to make up for the reduction in access fee revenue, thus
keeping the overall level of fees paid by members, and the amount of
revenue received by the exchange, relatively constant. Further, the
Commission preliminarily believes that exchanges that provide rebates
to liquidity providers based on the amount of fees the exchanges charge
for accessing liquidity may reduce such rebates commensurate with any
reduction in the fees charged for accessing liquidity. In this event,
the amount of revenue received by the exchange--the difference between
the ``Take'' fee and the ``Make'' rebate--would remain constant. If
exchanges with ``Make or Take'' models reduce their ``Make'' fees to
compensate for a reduction in ``Take'' fees due to the proposed access
fee cap, the Commission estimates that the imposition of an access fee
cap as proposed could reduce option exchanges' transaction fee revenues
by about $55 million under a flat $0.30 access fee cap.\187\
---------------------------------------------------------------------------

    \187\ For this estimate, Commission staff used December 2009
option trading data from OCC and OptionMetrics. See infra Table 3 in
the Appendix.
---------------------------------------------------------------------------

    The Commission also preliminarily believes that the overall cost to
members of exchanges from the proposal to limit access fees would be
minimal. As noted above, exchange members pay various types of fees to
their exchanges, including transaction fees, regulatory fees, and other
fees. Some of these fees are charged for activity by the members'
customers or other non-member market participants that comes through
members. Exchange members today can choose to pass through these fees
to their customers, or not, subject to competition among members for
this order flow. As outlined above, the Commission preliminarily
believes that the overall revenue to the exchanges--and thus the
overall fees charged by exchanges to members--would remain constant,
although the levels of fees within individual fee categories may
change. Thus, the impact of fee changes on individual members and
market participants may vary, depending upon each participant's
business structure and trading strategies, and depending upon what
portion of the fees each member chooses to ``pass through'' to its
customers.

C. Request for Comment

    The Commission requests general comment on the costs and benefits
of the proposed amendments to Rules 610(a) and (c) of Regulation NMS
discussed above, as well as any costs and benefits not already
described which could result from them. The Commission also requests
data to quantify any potential costs or benefits.
    The Commission specifically requests comment on the cost estimates
made, and the assumptions underlying those cost estimates as outlined,
in Section VII.B.2. For example, do commenters believe that options
exchanges that currently impose fees in excess of the fee cap proposed
in Rule 610(c)(2) would or would not adjust their rebates or other fees
to offset the impact of a fee cap? If commenters believe that options
exchanges would adjust their rebates or other fees to offset the impact
of a fee cap, what specific types of changes would exchanges make?
Further, depending upon the specific change to rebates or fees that
commenters believe exchanges would make in response to the proposed fee
cap, how do commenters believe that such change(s) would impact the
quoting, order routing, or other behavior of particular categories of
market participants, such as retail investors, market makers, and
broker-dealers?
    Do commenters believe that it is appropriate generally to consider
the maximum fee charged for electronically transmitted orders in
calculating the impact on an options exchange's revenue of the proposed
access fee cap? If so, please explain why. If not, please provide
detail as to what assumptions should underlie such a calculation.
Further, do commenters agree that it is reasonable to exclude specific
fees charged for the execution of orders in FLEX options or credit
default options, and the fee that ISE charges for transactions by
broker-dealers registered as market makers on other exchange, as well
as volume discounts, when determining the maximum fee charged by
options exchanges? Do commenters agree with the assumption that
customers always ``take'' liquidity, market makers always ``make''
liquidity, and firms make up the difference? If not, please provide
detail as to what assumptions should be made and any supporting
information, or describe another approach for estimating the costs of
this proposal.

VIII. Consideration of Burden on Competition and Promotion of
Efficiency, Competition, and Capital Formation

    Section 3(f) of the Exchange Act requires the Commission, whenever
it engages in rulemaking and is required to consider or determine
whether an action is necessary or appropriate in the public interest,
to consider, in addition to the

protection of investors, whether the action would promote efficiency,
competition, and capital formation.\188\ In addition, Section 23(a)(2)
of the Exchange Act requires the Commission, when adopting rules under
the Exchange Act, to consider the impact such rules would have on
competition.\189\ Section 23(a)(2) prohibits the Commission from
adopting any rule that would impose a burden on competition not
necessary or appropriate in furtherance of the purposes of the Exchange
Act.\190\
---------------------------------------------------------------------------

    \188\ 15 U.S.C. 78c(f).
    \189\ 15 U.S.C. 78w(a)(2).
    \190\ Id.
---------------------------------------------------------------------------

A. Competition

    The Commission begins its consideration of potential competitive
impacts with observations of the current structure of the option
markets and broker-dealers, mindful of the statutory requirements
regarding competition. Based on the Commission's experience in
regulating the options markets and broker-dealers, including reviewing
information provided by them in their registrations and filings with
the Commission and approving such registration applications, the
Commission discusses below the basic framework of the markets they
comprise.
1. Market Structure for Options Markets
    In order to consider whether the proposed rules promote
competition, staff of the Commission's Division of Risk, Strategy, and
Financial Innovation evaluated the competitive structure of the
exchange-listed options trading industry in the United States. In
particular, Commission staff considered the nature of competition
between liquidity providers within exchanges and competition between
exchanges to attract order flow. Within the options exchanges, multiple
market makers, proprietary trading firms, and customers submitting
limit orders compete to provide liquidity to incoming market or
marketable limit orders. Options exchanges compete for order flow
through their quotations and, in some cases, through exchange-sponsored
payment for order flow.
    In the late 1990s, the Commission took actions in response to
concerns that the options industry was not fully competitive.
Competition in the listed options market is significantly more rigorous
today that it has been in the past, as a result of several developments
since 1999. These include the move to multiple listing,\191\ the advent
of electronic exchanges,\192\ the extension of the Commission's Quote
Rule to options,\193\ the injunction against trading outside of the
national best bid and offer,\194\ the adoption of market structures on
the floor-based exchanges that permit individual market maker
quotations to be reflected in the exchange's quotation,\195\ and the
Minimum Quoting Increment Pilot Program,\196\ among other developments.
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    \191\ See Securities Exchange Act Release No. 26870 (May 26,
1989), 54 FR 23963 (June 5, 1989) (S7-25-87).
    \192\ See ISE Exchange Approval, supra note 30, 65 FR at 11395;
Securities Exchange Act Release Nos. 49068 (January 13, 2004), 69 FR
2775 (January 20, 2004) (approving options trading rules for BOX)
(``BOX Approval Order''); 54238 (July 28, 2006), 71 FR 44758 (August
7, 2006) (approving NYSE Arca's OX, a fully automated trading system
for standardized equity options intended to replace NYSE Arca's
options trading platform, PCX Plus); 57478 (March 12, 2008), 73 FR
14521 (March 18, 2008) (approving options trading rules for NOM)
(``NOM Approval Order''); and 61419 (January 26, 2010), 75 FR 5157
(February 1, 2010) (approving BATS Exchange proposal to operate as
an options exchange) (``BATS Approval Order'').
    \193\ See Securities Exchange Act Release No. 43591 (November
17, 2000), 65 FR 75439 (December 1, 2000).
    \194\ See supra notes 8-16 and accompanying text.
    \195\ See, e.g., Securities Exchange Act Release No. 47959 (May
30, 2003), 68 FR 34441, 34442 (June 9, 2003) (SR-CBOE-2002-05)
(adopting, among other things, amendments to incorporate firm quote
requirements in CBOE's rules).
    \196\ See supra notes 28-29 and accompanying text.
---------------------------------------------------------------------------

    Among the relevant considerations in assessing the degree of
competition in an industry are the number of competitors and
concentration of market share. Listed options in the United States are
currently traded on eight national securities exchanges, owned by six
entities. These eight exchanges are CBOE, ISE, NYSE Arca, NYSE Amex,
Nasdaq OMX Phlx, NOM, BOX, and BATS. Based on market share data for
January 2010 obtained from the OCC,\197\ the exchange with the highest
market share of option volume was CBOE, with 29.58%, followed by ISE at
22.86%. The two exchanges owned by NYSE Euronext together had a market
share of 25.82% (NYSE Arca had 13.94% and NYSE Amex had 11.88%). The
two exchanges owned by The NASDAQ OMX Group, Inc. together had a market
share of 19.76% (Nasdaq OMX Phlx had 17.17% and NOM had 2.59%). The BOX
had a market share of 1.98%.
---------------------------------------------------------------------------

    \197\ Although the Commission approved BATS Exchange's proposal
to operate as an options exchange in January 2010 (see BATS Approval
Order, supra note 192), BATS Exchange did not commence options
trading operations until February 26, 2010. As a result, there is no
market share data for BATS for purposes of this discussion.
---------------------------------------------------------------------------

    Another key factor determining the competitiveness of an industry
is the extent to which there are significant barriers to entry. In the
Commission's assessment, barriers to entry in providing trading
platforms in the options market are higher than they are in the
equities market because equities may be traded off exchange while
options may not. Thus, new entrants in the options market face the
regulatory costs associated with establishing a national securities
exchange. These costs are not large enough to prevent entry, as
evidenced by the fact that four new option exchanges have entered the
industry since 2000,\198\ and another is anticipated to begin
operations soon.\199\ However, it is possible that the economic
barriers to entry to the options trading industry may be more
significant for participants who do not already have the infrastructure
required to operate registered exchanges. With the sole exception of
the ISE, every new entrant in the options market since 1973 has been
created by participants who were already operating securities
exchanges.
---------------------------------------------------------------------------

    \198\ See ISE Exchange Approval, supra note 30; BOX Approval
Order, supra note 192; NOM Approval Order, supra note 192; and BATS
Approval Order, supra note 192.
    \199\ See supra note 8 (referring to the order approving C2
Options Exchange's application for registration as a national
securities exchange).
---------------------------------------------------------------------------

    Broker-dealers are required to register with the Commission and be
a member of at least one SRO. The broker-dealer industry, including
market makers, is a competitive industry, with most trading activity
concentrated among several dozen larger participants and with thousands
of smaller participants competing for niche or regional segments of the
market.
    There are approximately 5,178 registered broker-dealers, of which
approximately 890 are small broker-dealers.\200\ Larger broker-dealers
often enjoy economies of scale over smaller broker-dealers and compete
with each other to service the smaller broker-dealers, who are both
their competitors and customers. The reasonably low barriers to entry
for broker-dealers are evidenced, for example, by the fact that the
average number of new broker-dealers entering the market each year
between 2001 and 2008 was 389.\201\
---------------------------------------------------------------------------

    \200\ These numbers are based on a review of 2007 and 2008 FOCUS
Report filings reflecting registered broker-dealers, and discussions
with SRO staff. The number does not include broker-dealers that are
delinquent on FOCUS Report filings.
    \201\ This number is based on a review of FOCUS Report filings
reflecting registered broker-dealers from 2001 through 2008. The
number does not include broker-dealers that are delinquent on FOCUS
Report filings. New registered broker-dealers for each year during
the period from 2001 through 2008 were identified by comparing the
unique registration number of each broker-dealer filed for the
relevant year to the registration numbers filed for each year
between 1995 and the relevant year.

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2. Discussion of Impacts of Proposed Amendments to Rules 610(a) and
610(c) on Competition
    The Commission believes that the estimated costs associated with
implementing and complying with the proposed amendments to Rules 610(a)
and 610(c) are not so large as to raise significant barriers to entry,
or otherwise significantly alter the competitive landscape of the
listed options market. Given the reasonably high level of competition
for order flow in option markets and among broker-dealers, the
Commission believes that this industry would remain competitive,
despite the potential costs associated with implementing and complying
with the proposed amendments to Rules 610(a) and 610(c), even if those
costs influence to some degree the profitability of individual option
markets or entry and exit of broker-dealers at the margin.
    Trading fees typically constitute the largest component of revenues
for option exchanges. For example, transaction fees accounted for
approximately 80.8% of total revenues for the CBOE in 2008. Thus, a
change in the fee structure that significantly reduces total fees could
potentially have an important impact on industry profits and thus on
the ability of smaller exchanges, including potential new entrants, to
meet their fixed costs. However, the Commission believes that the
proposed access fee limitations would have a limited, if any, negative
impact on the profitability of individual option markets because option
markets would be able to adjust their fee structures to accommodate the
access fee cap. Therefore, the Commission preliminarily believes that
limiting access fees to $0.30 per contract would not lead to a large
reduction in total revenues, and would not put an undue burden on
smaller exchanges or new entrants that would result in a decrease in
competition in the industry.
    The Commission recognizes that a limit on access fees that applies
to exchanges utilizing a ``Make or Take'' market model effectively
limits the size of the liquidity rebate that such exchanges can offer,
inasmuch as the economic viability of the ``Make or Take'' model
generally requires that the rebate be smaller than the access fee. The
Commission also recognizes that effectively limiting the size of the
liquidity rebate in this way may limit the ability of exchanges
utilizing the ``Make or Take'' model to attract liquidity. However, the
Commission preliminarily believes that the proposal would not unduly
burden ``Make or Take'' fee models. In the ``Make or Take'' fee model,
the market earns the differential between the ``make'' credit and the
``take'' fee. The proposal allows for access fees of up to $0.30 per
contract and thus can accommodate a $0.30 per-contract differential in
``make'' credits and ``take'' fees. The largest differential charged by
``Make or Take'' model option markets currently is $0.20 per contract,
sufficiently within the $0.30 per-contract access fee limit of the
proposal. In addition, the Commission observes that the ``Make or
Take'' market model has become the dominant structure in the equity
market despite the cap of $0.003 per share, suggesting that a similar
cap in the option market would not prevent the ``Make or Take'' model
from succeeding in the option market. The Commission requests comment
on this preliminary view.\202\
---------------------------------------------------------------------------

    \202\ See also Section V (Request for Comment).
---------------------------------------------------------------------------

    Further, the proposed rules apply uniformly to exchanges with
different markets and fee structures, thereby facilitating the ability
of option markets to compete in a level regulatory environment. A fee
limitation is necessary to preclude individual markets from having fee
structures that take improper advantage of the protection against
trade-throughs in the Trade-Through Rules. Precluding option markets
from taking improper advantage of trade-through protection and making
sure that all option markets compete under the same regulatory
landscape should strengthen the ability of option markets to compete
fairly for business.
    The Commission believes that the proposed access fee limitations
may have benefits that enhance quote competition among markets. The
proposed access fee provisions are intended to bolster transparency in
the options markets by improving the integrity of the quotations and
preventing large, non-transparent fees from being charged on orders
that are being sent to a particular market in order to comply with the
trade through provisions of the Trade-Through Rules. Since quotation
information would be more informative under the proposed access fee
limitations, the Commission expects that the proposed amendments would
likely encourage quote competition. Moreover, the Commission
preliminarily believes that, by prohibiting a national securities
exchange or national securities association from imposing unfairly
discriminatory terms that would prevent or inhibit the efficient access
of any person through members or non-member subscribers, the proposed
rule would promote competition to offer the best displayed quotation
among exchanges that trade listed options.
    The Commission also believes that the proposal would have a minimal
effect on the competitiveness of the broker-dealer industry. Since the
proposal seeks to limit access fees, the proposal may result in a
reduction in fees paid by broker-dealers to options exchanges. On the
other hand, it is possible that options exchanges could increase
broker-dealer fees, including market maker fees, to offset any revenue
losses from an access fee limit. However, since transaction fee costs
are typically a small part of the total expenses for a broker-dealer,
the Commission preliminarily believes that any increase in transaction
fee costs for broker-dealers would have a minimal, if any, effect on
the competitiveness of the broker-dealer industry. The Commission seeks
comment, however, on the level of options exchange-levied fees on
broker-dealers and whether an increase in these fees would inhibit the
competitiveness of the broker-dealer industry.
    In summary, the Commission preliminarily believes that the proposal
would not result in an undue burden on the competitiveness of any
option markets and, as a result, would not result in any decrease in
competition among option markets. Moreover, the Commission
preliminarily believes that the proposal would promote quote
competition in options. The Commission also preliminarily believes that
the proposal would not result in an undue burden on the competitiveness
of the broker dealer industry.

B. Capital Formation

    A purpose of the proposed amendments to Rules 610(a) and 610(c) is
to strengthen transparency and quote competition in the option markets
regulated by the Commission which should help make investors more
willing to invest, resulting in the promotion of capital formation.
Long holdings of equity are integral to capital formation. Fair and
robust option markets, in which long holders can hedge risk through the
option markets, support the public offerings of the underlying equities
by which issuers raise capital and, as a result, investors who provided
private capital realize profits and manage risk. Therefore, the
Commission preliminarily believes that the proposed amendments to Rules
610(a) and 610(c) would increase transparency and quote competition,
thereby enhancing investment, and thus capital formation.

C. Efficiency

    The access provision of Rule 610(a), as proposed to be amended, is
designed to strengthen the ability of all market participants that are
not members of an options exchange to fairly and efficiently route
orders to execute against quotations in a listed option, wherever such
quotations are displayed in the NMS, by prohibiting an exchange from
unfairly discriminating against any person trying to obtain access
through a member to that exchange's quotations. Fair and efficient
access to the best displayed quotations of all options exchanges is
necessary to achieving best execution of those orders.\203\ Further,
fair and efficient access to the best displayed quotations of options
exchanges is necessary for compliance with the requirements of the
Trade-Through Rules. Specifically, options exchanges themselves must
have the ability to route orders for execution against the displayed
quotations of other exchanges. Indeed, the concept of intermarket
protection against trade-throughs is premised on the ability of options
exchanges to route orders to execute against, rather than trade
through, the quotations displayed by other options exchanges.\204\ In
this way, fair and efficient indirect access would, through the
enhancement of the ability to achieve best execution and the support of
compliance with the Trade-Through Rules, increase the efficiency of
executions across option markets.
---------------------------------------------------------------------------

    \203\ See NMS Adopting Release, supra note 4, at 37539.
    \204\ Id.
---------------------------------------------------------------------------

    The proposed access fee limit would apply equally to all national
securities exchanges, thereby promoting the NMS objective of equal
regulation of markets. A fee limitation is necessary to preclude
individual markets from having fee structures that take improper
advantage of the protection against trade-throughs in the Trade-Through
Rules. Precluding option markets from taking improper advantage of
trade-through protection and making sure that all option markets
compete under the same regulatory landscape should strengthen the
ability of option markets to compete on a more level playing field,
thereby promoting efficiency of execution across option markets by
reducing costs.
    The Commission solicits comments on these matters with respect to
the proposed amendments to Rules 610(a) and (c). Would the proposed
amendments have an adverse effect on competition that is neither
necessary nor appropriate in furtherance of the purposes of the
Exchange Act? Would the proposed amendments, if adopted, promote
efficiency, competition, and capital formation? Commenters are
requested to provide empirical data and other factual support for their
views if possible.

IX. Consideration of Impact on the Economy

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996, or ``SBREFA,'' \205\ the Commission must advise the Office
of Management and Budget as to whether the proposed regulation
constitutes a ``major'' rule. Under SBREFA, a rule is considered
``major'' where, if adopted, it results or is likely to result in: (1)
An annual effect on the economy of $100 million or more (either in the
form of an increase or a decrease); (2) a major increase in costs or
prices for consumers or individual industries; or (3) significant
adverse effect on competition, investment or innovation. If a rule is
``major,'' its effectiveness will generally be delayed for 60 days
pending Congressional review.
---------------------------------------------------------------------------

    \205\ Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996)
(codified in various sections of 5 U.S.C., 15 U.S.C. and as a note
to 5 U.S.C. 601).
---------------------------------------------------------------------------

    The Commission requests comment on the potential impact of the
proposed amendments to Rule 610 on the economy on an annual basis, on
the costs or prices for consumers or individual industries, and on
competition, investment or innovation. Commenters are requested to
provide empirical data and other factual support for their view to the
extent possible.

X. Regulatory Flexibility Act Certification

    The Regulatory Flexibility Act (``RFA'') \206\ requires Federal
agencies, in promulgating rules, to consider the impact of those rules
on small entities. Section 603(a) \207\ of the Administrative Procedure
Act,\208\ as amended by the RFA, generally requires the Commission to
undertake a regulatory flexibility analysis of all proposed rules, or
proposed rule amendments, to determine the impact of such rulemaking on
``small entities.'' \209\ Section 605(b) of the RFA specifically states
that this requirement shall not apply to any proposed rule or proposed
rule amendment, which if adopted, would not ``have a significant
economic impact on a substantial number of small entities.'' \210\
---------------------------------------------------------------------------

    \206\ 5 U.S.C. 601 et seq.
    \207\ 5 U.S.C. 603(a).
    \208\ 5 U.S.C. 551 et seq.
    \209\ Although Section 601(b) of the RFA defines the term
``small entity,'' the statute permits agencies to formulate their
own definitions. The Commission has adopted definitions for the term
small entity for the purposes of Commission rulemaking in accordance
with the RFA. Those definitions, as relevant to this proposed
rulemaking, are set forth in Rule 0-10, 17 CFR 240.0-10. See
Securities Exchange Act Release No. 18452 (January 28, 1982), 47 FR
5215 (February 4, 1982) (File No. S7-879).
    \210\ See 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    The proposed amendment to Rule 610(a) of Regulation NMS would
prohibit a national securities exchange or national securities
association from imposing unfairly discriminatory terms that would
prevent or inhibit any person from obtaining efficient access through a
member of such exchange or association to the quotations in a listed
option. In addition, proposed Rule 610(c)(2) would prohibit a national
securities exchange from imposing, or permitting to be imposed, any fee
or fees for the execution of an order against any quotation that is the
best bid or best offer of such exchange in a listed option that exceeds
or accumulates to more than $0.30 per contract. As such, only national
securities exchanges registered with the Commission under Section 6 of
the Exchange Act and national securities associations registered with
the Commission under Section 15A of the Exchange Act would be subject
to the proposed amendments to Rules 610(a) and (c). None of the
national securities exchanges registered under Section 6 of the
Exchange Act or national securities associations registered with the
Commission under Section 15A of the Exchange Act that would be subject
to the proposed amendments are ``small entities'' for purposes of the
RFA.\211\ Accordingly, the Commission preliminarily does not believe
that the proposed amendments to Rule 610 would have a significant
economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \211\ See 17 CFR 240.0-10(e). Paragraph (e) of Rule 0-10 states
that the term ``small business,'' when referring to an exchange,
means any exchange that has been exempted from the reporting
requirements of Rule 601 of Regulation NMS, 17 CFR 242.601, and is
not affiliated with any person (other than a natural person) that is
not a small business or small organization as defined in Rule 0-10.
Under this standard, none of the exchanges subject to the proposed
amendments to Rule 610 is a ``small entity'' for the purposes of the
RFA. The Financial Industry Regulatory Authority or ``FINRA'' (f/k/a
the National Association of Securities Dealers or ``NASD'') is not a
small entity as defined by 13 CFR 121.201.
---------------------------------------------------------------------------

    The Commission invites commenters to address whether the proposed
rules would have a significant economic impact on a substantial number
of small entities, and, if so, what would be the nature of any impact
on small entities. The Commission requests that commenters provide
empirical data to support the extent of such impact.

XI. Statutory Authority

    Pursuant to the Exchange Act and particularly, Sections 2, 3(b), 5,
6, 11A, 15, 15A, 17(a) and (b), 19, and 23(a) thereof, 15 U.S.C. 78b,
78c(b), 78e, 78f, 78k-1, 78o, 78o-3, 78q(a) and (b), 78s, and 78w(a),
the Commission proposes to amend Rule 610 of Regulation NMS, as set
forth below.

Text of Proposed Rule

List of Subjects in 17 CFR Part 242

    Brokers, Reporting and recordkeeping requirements, Securities.

    In accordance with the foregoing, Title 17, Chapter II, of the Code
of Federal Regulations is proposed to be amended as follows.

PART 242--REGULATIONS M, SHO, ATS, AC, AND NMS AND CUSTOMER MARGIN
REQUIREMENTS FOR SECURITY FUTURES

    1. The authority citation for part 242 continues to read as
follows:

    Authority:  15 U.S.C. 77g, 77q(a), 77s(a), 78b, 78c, 78g(c)(2),
78i(a), 78j, 78k-1(c), 78l, 78m, 78n, 78o(b), 78o(c), 78o(g),
78q(a), 78q(b), 78q(h), 78w(a), 78dd-1, 78mm, 80a-23, 80a-29, and
80a-37.
    2. Amend Sec.  242.610 by revising paragraphs (a) and (c) to read
as follows:

Sec.  242.610  Access to quotations.

    (a) Quotations of an SRO trading facility. A national securities
exchange or national securities association shall not impose unfairly
discriminatory terms that prevent or inhibit any person from obtaining
efficient access through a member of the national securities exchange
or national securities association to the quotations in an NMS security
displayed through its SRO trading facility.
* * * * *
    (c) Fees for access to quotations. (1) A trading center shall not
impose, nor permit to be imposed, any fee or fees for the execution of
an order against a protected quotation of the trading center or against
any other quotation of the trading center that is the best bid or best
offer of a national securities exchange or the best bid or best offer
of a national securities association in an NMS stock that exceed or
accumulate to more than the following limits:
    (i) If the price of a protected quotation or other quotation is
$1.00 or more, the fee or fees cannot exceed or accumulate to more than
$0.003 per share; or
    (ii) If the price of a protected quotation or other quotation is
less than $1.00, the fee or fees cannot exceed or accumulate to more
than 0.3% of the quotation price per share.
    (2) A national securities exchange shall not impose, nor permit to
be imposed, any fee or fees for the execution of an order against a
quotation that is the best bid or best offer of such exchange in a
listed option that exceed or accumulate to more than $0.30 per
contract.
* * * * *

    By the Commission.

    Dated: April 14, 2010.
Elizabeth M. Murphy,
Secretary.

    Note:  The following appendix will not appear in the Code of
Federal Regulations.

Appendix

                               Table 1--Range of Charges for Accessing Quotations*
----------------------------------------------------------------------------------------------------------------
                                              Equity options                           Index options
                                --------------------------------------------------------------------------------
                                                          Classes not                             Classes not
            Exchange             Classes included in      included in      Classes included       included in
                                   minimum quoting      minimum quoting   in minimum quoting    minimum quoting
                                   increment pilot      increment pilot     increment pilot     increment pilot
----------------------------------------------------------------------------------------------------------------
NYSE Amex......................  $0.00 to $0.42.....  $0.00 to $0.82....  $0.00 to $0.64....  $0.00 to $1.04.
NYSE Arca......................  $0.45..............  $0.00 to $0.81....  $0.45 to $0.67....  $0.00 to $1.03.
BOX............................  -$0.147 to $0.10...  -$0.547 to -$0.30.  -$0.147 to $0.32..  -$0.547 to -$0.08.
CBOE...........................  $0.004 to $0.45....  $0.004 to $0.85...  $0.004 to $0.60...  $0.004 to $1.00.
ISE............................  $0.0035 to $0.43...  $0.0035 to $0.83..  $0.0035 to $0.65..  $0.0035 to $1.05.
NOM............................  $0.35 to $0.45.....  -$0.20 to $0.45...  $0.35 to $0.45....  -$0.20 to $0.45.
Nasdaq OMX Phlx................  $0.0035 to $0.56...  $0.0035 to $1.01..  $0.30 to $0.45....  $0.30 to $0.45.
----------------------------------------------------------------------------------------------------------------
* As noted above, the Commission has not included BATS in its revenue impact calculations. See supra note 184.

                                  Table 2--Range of Charges for Providing Side
----------------------------------------------------------------------------------------------------------------
                                              Equity options                           Index options
                                --------------------------------------------------------------------------------
                                                          Classes not                             Classes not
            Exchange             Classes included in      included in      Classes included       included in
                                    minimum quoting     minimum quoting   in minimum quoting    minimum quoting
                                   increment pilot      increment pilot     increment pilot     increment pilot
----------------------------------------------------------------------------------------------------------------
NYSE Amex......................  $0.00 to $0.42.....  $0.00 to $0.82....  $0.00 to $0.64....  $0.00 to $1.04.
NYSE Arca......................  -$0.30 to -$0.25...  $0.00 to $0.81....  -$0.25 to $-0.08..  $0.00 to $1.03.
BOX............................  $0.053 to $0.40....  $0.553 to $0.80...  $0.053 to $0.62...  $0.553 to $1.02.
CBOE...........................  $0.004 to $0.45....  $0.004 to $0.85...  $0.004 to $0.60...  $0.004 to $1.00.
ISE............................  $0.0035 to $0.43...  $0.0035 to $0.83..  $0.0035 to $0.65..  $0.0035 to $1.05.
NOM............................  -$0.25.............  $0.00 to $0.30....  -$0.25............  $0.00 to $0.30.
Nasdaq OMX Phlx................  $0.0035 to $0.56...  $0.0035 to $1.01..  $0.30 to $0.45....  $0.30 to $0.45.
----------------------------------------------------------------------------------------------------------------

                                           Table 3--Estimates of Potential Revenue Impact on Options Exchanges
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                $0.30 Cap          $0.30 Cap
                                                                 Annual           $0.30 cap          $0.30 cap        estimated % of   estimated revenue
                         Exchange                           transaction fee     estimated % of   estimated revenue  revenues impacted  loss  ($Millions)
                                                              revenues \1\    revenues impacted  loss  ($Millions)    assuming make       assuming make
                                                              ($Millions)                                           rebate reductions  rebate reductions
--------------------------------------------------------------------------------------------------------------------------------------------------------
NYSE Amex................................................               66.5                0.2                0.1                0.2                0.1
NYSE Arca................................................              114.8               26.0               29.8               12.5               14.4
BOX \2\..................................................                4.0                0.0                  0                0.0                0.0
CBOE.....................................................              314.5                7.6               23.9                7.6               23.9
ISE......................................................              264.9                0.1                0.3                0.1                0.3
NOM......................................................               38.3               11.0                4.2                0.0                0.0
Nasdaq OMX Phlx..........................................              180.4                8.9               16.1                8.9               16.1
                                                          ----------------------------------------------------------------------------------------------
    Total................................................              983.4                7.6               74.4                5.6              54.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The transaction fee revenue amounts are based on either an exchange's 2008 Annual Report, an exchange's 2009 unaudited financial results from
  information circulars, or annualized from the exchange's latest 2009 10-Q.
\2\ Financial data on annual transaction fees are not available for BOX. Therefore, Commission staff annualized its December 2009 fee revenue estimate.

[FR Doc. 2010-9016 Filed 4-19-10; 8:45 am]
BILLING CODE 8011-01-P