
[Federal Register: January 29, 2010 (Volume 75, Number 19)]
[Notices]               
[Page 4888-4889]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29ja10-121]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61405; File No. SR-Phlx-2009-101]

 
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Order 
Approving a Proposed Rule Change Relating to Collection of Exchange 
Fees

January 21, 2010.

I. Introduction

    On December 8, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend Exchange Rule 909, Security for Exchange 
Fees and Other Claims, to require member organizations to provide a 
clearing account number at the National Securities Clearing Corporation 
(``NSCC'') for purposes of permitting the Exchange to debit any 
undisputed or final fees, fines, charges and/or other monetary 
sanctions or monies owed to the Exchange.\3\ The proposed rule change 
was published for comment in the Federal Register on December 17, 
2009.\4\ The Commission

[[Page 4889]]

received no comments on the proposal. This order approves the proposed 
rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(l).
    \2\ 17 CFR 240.19b-4.
    \3\ This includes, among other things, fines which result from: 
Violation of Rule 60, Order and Decorum; violations of the Minor 
Rule Plan pursuant to Rule 970; monetary sanctions imposed by the 
Business Conduct Committee relating to a Letter of Caution; and 
monetary sanctions imposed by a Hearing Panel in connection with 
Disciplinary Violations. See also Notice, infra note 4, for further 
information regarding disciplinary and non-disciplinary sanctions.
    \4\ See Securities Exchange Act Release No. 61141 (December 10, 
2009), 74 FR 67003 (December 17, 2009) (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposal

    Currently, Phlx Rule 909 requires member organizations and 
applicants for registration to provide and maintain a security deposit, 
unless the member organization maintains excess net capital of at least 
the amount established by the Exchange. The Exchange proposes to 
eliminate the requirement to provide and maintain a security deposit 
and would instead require member organizations and applicants to 
provide a clearing account number for an account at NSCC in order to 
permit the Exchange to debit undisputed or final fees, fines, charges 
and/or other monetary sanctions or monies owed to the Exchange or other 
charges related to Rule 924.\5\ Additionally, the Exchange proposes to 
amend the title of Rule 909 from ``Security for Exchange Fees and Other 
Claims'' to ``Collection of Exchange Fees and Other Claims'' in order 
to more accurately describe the proposed rule.
---------------------------------------------------------------------------

    \5\ Phlx Rule 924 (Obligations of Members and Member 
Organizations to the Exchange) states, among other things, that 
members and member organizations shall be liable for such fees, 
fines, dues, penalties and other amounts imposed by the Exchange.
---------------------------------------------------------------------------

    Under the proposal, the Exchange would send a monthly invoice to 
each member organization on approximately the fourth through sixth 
business day of the month following the month in which the charges were 
incurred.\6\ In addition, the Exchange would send a file to the 
member's clearing firm which will indicate the amounts to be debited 
from each member. If a member is self-clearing, no such file would be 
sent, since the member would receive the invoice indicating the amount 
to be debited. If a member disputes an invoice in writing to the 
Exchange's designated staff by the fifteenth of the month, and the 
amount in dispute is at least $10,000 or greater, the Exchange would 
not include the disputed amount in the debit.\7\
---------------------------------------------------------------------------

    \6\ For example, invoices for the month of October might be sent 
on November 5.
    \7\ If the fifteenth day is not a business day, then the member 
would have until the following business day.
---------------------------------------------------------------------------

    The Exchange then would send a file to NSCC on approximately the 
twenty-third of the month following the month in which the charges were 
incurred to initiate the debit of the appropriate amount. Once NSCC 
receives the file from the Exchange, NSCC would debit the amount 
indicated from the clearing members' account.\8\
---------------------------------------------------------------------------

    \8\ If the member clears through an Exchange clearing member, 
the estimated transactions fees owed to the Exchange are typically 
debited by the clearing member on a daily basis using daily 
transaction detail reports provided by the Exchange to the clearing 
member in order to ensure adequate funds have been escrowed.
---------------------------------------------------------------------------

    The Exchange would provide members with a thirty-day period, upon 
Commission approval of this proposal, to provide an NSCC number to the 
Phlx Membership Department if the member has not already provided one 
in the past.\9\
---------------------------------------------------------------------------

    \9\ The Exchange noted that many of its members have already 
provided voluntarily the Exchange with an NSCC clearing account 
number, and those members' accounts are currently being debited on a 
monthly basis. See Notice, supra note 4, at note 10.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    The Commission has carefully reviewed the proposed rule change and 
finds that it is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\10\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\11\ in that 
it is designed to promote just and equitable principles of trade, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \10\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission notes that Phlx would only initiate a debit for an 
undisputed or final fee, fine, charge, or other monetary sanction or 
money owed to the Exchange. In addition, because members would receive 
invoices approximately two weeks before any funds are debited, members 
would have a means to monitor the accuracy of their invoices and, if 
necessary, would have time to contact the Exchange staff prior to 
amounts being debited.
    Further, the Exchange has informed the Commission that the vast 
majority of the Exchange's members already voluntarily participate in 
the automatic-debit program, which the proposed rule would make 
mandatory. Those members that do not currently participate will have 
thirty days from approval of this proposal to provide the NSCC number 
to the Exchange. Finally, the Commission notes that no comments were 
received regarding the proposal.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change, (SR-Phlx-2009-101), be, and 
hereby is, approved.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(2).
    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-1848 Filed 1-28-10; 8:45 am]
BILLING CODE 8011-01-P

