
[Federal Register Volume 77, Number 133 (Wednesday, July 11, 2012)]
[Notices]
[Pages 40930-40935]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-16876]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67352; File No. SR-Phlx-2012-83]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Establish 
Distributor Fees for Two Related Options Market Data Products

July 5, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given 
that, on June 22, 2012, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Phlx proposes to establish distributor fees for two related options 
market data products, PHLX Depth of Market and PHLX Orders. PHLX Depth 
of Market includes full depth of quotes and orders, imbalance 
information and last sale data for options listed on PHLX, and PHLX 
Orders provides pricing information for options orders on the PHLX 
limit order book.
    The text of the proposed rule change is available at http://nasdaqomxphlx.cchwallstreet.com/nasdaqomxphlx/phlx/, at Phlx's 
principal office, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to establish distributor 
fees for the PHLX Depth of Market (``PHLX Depth'') and PHLX Orders 
options data products. PHLX Depth is a data product that provides: (i) 
Order and quotation information for individual quotes and orders on the 
PHLX book; (ii) last sale information for trades executed on PHLX; and 
(iii) an Imbalance Message as described in prior rule filings.\3\ PHLX 
Depth provides data that enhances the ability to analyze market 
conditions, and to create and test trading models and analytical 
strategies. PHLX Depth of Market is useful for gaining comprehensive 
insight into the trading activity in a particular option series on the 
PHLX market.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 66967 (May 11, 
2012); 77 FR 29440 (May 17, 2012).
---------------------------------------------------------------------------

    PHLX Orders is a real-time full limit order book data feed that 
provides pricing information for orders on the PHLX limit order book. 
PHLX Orders is currently provided as part of the Top of PHLX Options 
Plus Orders (``TOPO Plus Orders'') data product; PHLX Orders data is 
identical to the ``Orders'' portion of the TOPO Plus Orders product. 
PHLX Orders provides real-time information to enable users to keep 
track of the single order book(s), single and complex orders,\4\ 
imbalance information, and Complex Order Live Auction (``COLA'') \5\ 
for all symbols listed on PHLX. It is a compilation of data for limit 
orders residing on the Exchange's limit order book for options traded 
on the Exchange that the Exchange provides through a real-time data 
feed. The Exchange updates the information upon receipt of each 
displayed limit

[[Page 40931]]

order or change to any order resting on the book.
---------------------------------------------------------------------------

    \4\ A Complex Order is an order involving the simultaneous 
purchase and/or sale of two or more different options series in the 
same underlying security, priced as a net debit or credit based on 
the relative prices of the individual components, for the same 
account, for the purpose of executing a particular investment 
strategy. See Exchange Rule 1080 08(a)(i).
    \5\ See Exchange Rule 1080 08(e).
---------------------------------------------------------------------------

    Market data users should be free to choose the data elements they 
use and purchase. Some users seek to view the full depth of market, 
others the orders on the limit book, and still others just the top of 
the market. The market functions most effectively when it includes 
numerous participants employing varied trading strategies requiring 
different use of market data products. Thus, the PHLX Orders product is 
designed for users that want the order book information provided in 
TOPO Plus Orders but don't need the entire TOPO Plus Orders data set. 
PHLX Orders complements the Top of PHLX Options or ``TOPO'' product 
that contains the best priced quotes and orders in the PHLX market. The 
Depth Data product is designed for users that want a full range of data 
available from the PHLX options market, and that are willing to pay for 
the extra technology, telecommunications bandwidth, and other 
requirements of processing such data. The Exchange makes all data 
products equally available to all market participants.
    PHLX is proposing to establish distributor fees for the Depth Data 
and Orders Data products. PHLX classifies distributors as either 
``internal'' or ``external,'' depending upon whether the receiving 
entity transmits the data only to Subscribers within its own corporate 
organization or those outside that organization.\6\ Currently, PHLX 
assesses distributor fees for TOPO of $2,000 per month for internal 
distribution and $2,500 per month for external distribution. PHLX 
assesses distributor fees for TOPO Plus Orders of $4,000 per month for 
internal distribution and $5,000 per month for external distribution. 
PHLX is hereby proposing to assess fees for Depth Data of $4,000 per 
month for internal distribution and $4,500 per month for external 
distribution. Additionally, PHLX is proposing to assess fees for PHLX 
Orders of $3,000 per month for internal distribution and $3,500 per 
month for external distribution. Offering the PHLX Orders feed 
separately from the TOPO feed allows customers to access the specific 
data they need and at a lower price. PHLX Orders distributors will pay 
$1000 or $1500 per month less than TOPO Plus Orders distributors 
currently pay.
---------------------------------------------------------------------------

    \6\ See PHLX Fee Schedule, Section IX. Multiple exchanges use 
similar internal external classifications, including the NASDAQ 
Options Market, the Chicago Board Options Exchange (``CBOE''), and 
the International Securities Exchange (``ISE'').
---------------------------------------------------------------------------

    In addition, PHLX fees compare favorably with fees assessed by 
other exchanges for similar products:

                                                   Depth Feeds
----------------------------------------------------------------------------------------------------------------
            Exchange:                    PHLX                 NOM                 ISE                CBOE
----------------------------------------------------------------------------------------------------------------
                                      PHLX depth             ITTO           Depth of market      BBO data feed
----------------------------------------------------------------------------------------------------------------
Top of market...................  No................  No................  Yes...............  Yes.
Depth of market.................  Full depth........  Full depth........  Top 5 levels......  No.
Depth of orders only............  No................  No................  No................  No.
Trades..........................  Yes...............  Yes...............  No................  Yes.
Imbalance.......................  Yes...............  Yes...............  No................  No.
Complex orders..................  No................  No................  No................  Yes.
Internal........................  $4,000............  $1,500............  $5,000............  $3,500.
External........................  $4,500............  $2,000............  $5,000............  $3,500.
----------------------------------------------------------------------------------------------------------------


                                                                      Orders Feeds
--------------------------------------------------------------------------------------------------------------------------------------------------------
             Exchange:                        PHLX                    PHLX                    ISE                    BATS                   CBOE
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                        TOPO plus orders           PHLX orders          Spread book feed       Multicast PITCH         BBO data feed
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top of market......................  Yes...................  No....................  No...................  No...................  Yes.
Depth of market....................  No....................  No....................  No...................  No...................  No.
Depth of orders only...............  Yes...................  Yes...................  No...................  Yes..................  No.
Trades.............................  Yes...................  Yes...................  No...................  Yes..................  Yes.
Imbalance..........................  Yes...................  Yes...................  No...................  No...................  No.
Complex orders.....................  Yes...................  Yes...................  Yes..................  No...................  Yes.
Internal Distributor Fee...........  $4,000................  $3,000................  $3,000...............  0....................  $3,500.
External Distributor Fee...........  $5,000................  $3,500................  $3,000...............  0....................  $3,500.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As set forth in more detail below, PHLX believes that the proposed 
fees are consistent with the Act in that they are fair and reasonable 
and provide for an equitable allocation of fees among PHLX members and 
other users of PHLX products.
2. Statutory Basis
    PHLX believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act,\7\ in general, and with Section 
6(b)(4) of the Act,\8\ in particular, in that it provides an equitable 
allocation of reasonable fees among Subscribers and recipients of PHLX 
data. In adopting Regulation NMS, the Commission granted self-
regulatory organizations and broker-dealers increased authority and 
flexibility to offer new and unique market data to the public. It was 
believed that this authority would expand the amount of data available 
to consumers, and also spur innovation and competition for the 
provision of market data.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Commission concluded that Regulation NMS--by deregulating the 
market in proprietary data--would itself further the Act's goals of 
facilitating efficiency and competition:

    [E]fficiency is promoted when broker-dealers who do not need the 
data beyond the prices, sizes, market center identifications of the 
NBBO and consolidated last sale information are not required to 
receive (and pay for) such data. The Commission also

[[Page 40932]]

believes that efficiency is promoted when broker-dealers may choose 
to receive (and pay for) additional market data based on their own 
internal analysis of the need for such data.\9\
---------------------------------------------------------------------------

    \9\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 
FR 37496 (June 29, 2005).

    By removing ``unnecessary regulatory restrictions'' on the ability 
of exchanges to sell their own data, Regulation NMS advanced the goals 
of the Act and the principles reflected in its legislative history. If 
the free market should determine whether proprietary data is sold to 
broker-dealers at all, it follows that the price at which such data is 
sold should be set by the market as well. PHLX Depth Data and PHLX 
Orders are precisely the sort of market data products that the 
Commission envisioned when it adopted Regulation NMS.
    On July 21, 2010, President Barack Obama signed into law H.R. 4173, 
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 
(``Dodd-Frank Act''), which amended Section 19 of the Act. Among other 
things, Section 916 of the Dodd-Frank Act amended paragraph (A) of 
Section 19(b)(3) of the Act by inserting the phrase ``on any person, 
whether or not the person is a member of the self-regulatory 
organization'' after ``due, fee or other charge imposed by the self-
regulatory organization.'' As a result, all SRO rule proposals 
establishing or changing dues, fees, or other charges are immediately 
effective upon filing regardless of whether such dues, fees, or other 
charges are imposed on members of the SRO, non-members, or both. 
Section 916 further amended paragraph (C) of Section 19(b)(3) of the 
Act to read, in pertinent part, ``At any time within the 60-day period 
beginning on the date of filing of such a proposed rule change in 
accordance with the provisions of paragraph (1) [of Section 19(b)], the 
Commission summarily may temporarily suspend the change in the rules of 
the self-regulatory organization made thereby, if it appears to the 
Commission that such action is necessary or appropriate in the public 
interest, for the protection of investors, or otherwise in furtherance 
of the purposes of this title. If the Commission takes such action, the 
Commission shall institute proceedings under paragraph (2)(B) [of 
Section 19(b)] to determine whether the proposed rule should be 
approved or disapproved.''
    The decision of the United States Court of Appeals for the District 
of Columbia Circuit in NetCoalition v. SEC, No. 09-1042 (D.C. Cir. 
2010), although reviewing a Commission decision made prior to the 
effective date of the Dodd-Frank Act, upheld the Commission's reliance 
upon competitive markets to set reasonable and equitably allocated fees 
for market data. ``In fact, the legislative history indicates that the 
Congress intended that the market system `evolve through the interplay 
of competitive forces as unnecessary regulatory restrictions are 
removed' and that the SEC wield its regulatory power `in those 
situations where competition may not be sufficient,' such as in the 
creation of a `consolidated transactional reporting system.' '' 
NetCoalition, at 15 (quoting H.R. Rep. No. 94-229, at 92 (1975), as 
reprinted in 1975 U.S.C.C.A.N. 321, 323). The court's conclusions about 
Congressional intent are therefore reinforced by the Dodd-Frank Act 
amendments, which create a presumption that exchange fees, including 
market data fees, may take effect immediately, without prior Commission 
approval, and that the Commission should take action to suspend a fee 
change and institute a proceeding to determine whether the fee change 
should be approved or disapproved only where the Commission has 
concerns that the change may not be consistent with the Act.
    For the reasons stated above, PHLX believes that the proposed fees 
are fair and equitable, and not unreasonably discriminatory. As 
described above, the proposed fees are based on pricing conventions and 
distinctions that exist in PHLX's current fee schedule, and the fee 
schedules of other exchanges. These distinctions are each based on 
principles of fairness and equity that have helped for many years to 
maintain fair, equitable, and not unreasonably discriminatory fees, and 
that apply with equal or greater force to the current proposal.
    As described in greater detail below, if PHLX has calculated 
improperly and the market deems the proposed fees to be unfair, 
inequitable, or unreasonably discriminatory, firms can diminish or 
discontinue the use of their data because the proposed fee is entirely 
optional to all parties. Firms are not required to purchase proprietary 
data or to utilize any specific pricing alternative if they do choose 
to purchase proprietary data. PHLX is not required to make Depth-of-
Book or Orders data available or to offer specific pricing alternatives 
for potential purchases. PHLX can discontinue offering a pricing 
alternative (as it has in the past) and firms can discontinue their use 
at any time and for any reason (as they often do), including due to 
their assessment of the reasonableness of fees charged. PHLX continues 
to establish and revise pricing policies aimed at increasing fairness 
and equitable allocation of fees among Distributors and users.
    PHLX believes that the Depth Data and Orders Data product pricing 
promotes increased transparency by offering a pricing options resulting 
in fees based upon distributors' and users' different levels of usage 
of data elements. While PHLX may need to periodically adjust the 
distributor fees to reflect market forces, it continues to view the fee 
cap as a way for firms to make additional information available to the 
firms' clients, thereby increasing transparency in the market.

B. Self-Regulatory Organization's Statement on Burden on Competition

    PHLX does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended. Notwithstanding its 
determination that the Commission may rely upon competition to 
establish fair and equitably allocated fees for market data, the 
NetCoalition court found that the Commission had not, in that case, 
compiled a record that adequately supported its conclusion that the 
market for the data at issue in the case was competitive. PHLX believes 
that a record may readily be established to demonstrate the competitive 
nature of the market in question.
    There is intense competition between trading platforms that provide 
transaction execution and routing services and proprietary data 
products. Transaction execution and proprietary data products are 
complementary in that market data is both an input and a byproduct of 
the execution service. In fact, market data and trade execution are a 
paradigmatic example of joint products with joint costs. The decision 
whether and on which platform to post an order will depend on the 
attributes of the platform where the order can be posted, including the 
execution fees, data quality and price and distribution of it's data 
products. Without the prospect of a taking order seeing and reacting to 
a posted order on a particular platform, the posting of the order would 
accomplish little. Without trade executions, exchange data products 
cannot exist. Data products are valuable to many end Subscribers only 
insofar as they provide information that end Subscribers expect will 
assist them or their customers in making trading decisions.
    The costs of producing market data include not only the costs of 
the data

[[Page 40933]]

distribution infrastructure, but also the costs of designing, 
maintaining, and operating the exchange's transaction execution 
platform and the cost of regulating the exchange to ensure its fair 
operation and maintain investor confidence. The total return that a 
trading platform earns reflects the revenues it receives from both 
products and the joint costs it incurs. Moreover, an exchange's 
customers view the costs of transaction executions and of data as a 
unified cost of doing business with the exchange. A broker-dealer will 
direct orders to a particular exchange only if the expected revenues 
from executing trades on the exchange exceed net transaction execution 
costs and the cost of data that the broker-dealer chooses to buy to 
support its trading decisions (or those of its customers). The choice 
of data products is, in turn, a product of the value of the products in 
making profitable trading decisions. If the cost of the product exceeds 
its expected value, the broker-dealer will choose not to buy it. 
Moreover, as a broker-dealer chooses to direct fewer orders to a 
particular exchange, the value of the product to that broker-dealer 
decrease, for two reasons. First, the product will contain less 
information, because executions of the broker-dealer's orders will not 
be reflected in it. Second, and perhaps more important, the product 
will be less valuable to that broker-dealer because it does not provide 
information about the venue to which it is directing its orders. Data 
from the competing venue to which the broker-dealer is directing orders 
will become correspondingly more valuable.
    Thus, a super-competitive increase in the fees charged for either 
transactions or data has the potential to impair revenues from both 
products. ``No one disputes that competition for order flow is 
`fierce'.'' NetCoalition at 24. However, the existence of fierce 
competition for order flow implies a high degree of price sensitivity 
on the part of broker-dealers with order flow, since they may readily 
reduce costs by directing orders toward the lowest-cost trading venues. 
A broker-dealer that shifted its order flow from one platform to 
another in response to order execution price differentials would both 
reduce the value of that platform's market data and reduce its own need 
to consume data from the disfavored platform. Similarly, if a platform 
increases its market data fees, the change will affect the overall cost 
of doing business with the platform, and affected broker-dealers will 
assess whether they can lower their trading costs by directing orders 
elsewhere and thereby lessening the need for the more expensive data.
    Analyzing the cost of market data distribution in isolation from 
the cost of all of the inputs supporting the creation of market data 
will inevitably underestimate the cost of the data. Thus, because it is 
impossible to create data without a fast, technologically robust and 
well-regulated execution system, system costs and regulatory costs 
affect the price of market data. It would be equally misleading, 
however, to attribute all of the exchange's costs to the market data 
portion of an exchange's joint product. Rather, all of the exchange's 
costs are incurred for the unified purposes of attracting order flow, 
executing and/or routing orders, and generating and selling data about 
market activity. The total return that an exchange earns reflects the 
revenues it receives from the joint products and the total costs of the 
joint products.
    Competition among trading platforms can be expected to constrain 
the aggregate return each platform earns from the sale of its joint 
products, but different platforms may choose from a range of possible, 
and equally reasonable, pricing strategies as the means of recovering 
total costs. For example, some platforms may choose to pay rebates to 
attract orders, charge relatively low prices for market information (or 
provide information free of charge) and charge relatively high prices 
for accessing posted liquidity. Other platforms may choose a strategy 
of paying lower rebates (or no rebates) to attract orders, setting 
relatively high prices for market information, and setting relatively 
low prices for accessing posted liquidity. In this environment, there 
is no economic basis for regulating maximum prices for one of the joint 
products in an industry in which suppliers face competitive constraints 
with regard to the joint offering. This would be akin to strictly 
regulating the price that an automobile manufacturer can charge for car 
sound systems despite the existence of a highly competitive market for 
cars and the availability of after-market alternatives to the 
manufacturer-supplied system.
    The market for market data products is competitive and inherently 
contestable because there is fierce competition for the inputs 
necessary to the creation of proprietary data and strict pricing 
discipline for the proprietary products themselves. Numerous exchanges 
compete with each other for listings, trades, and market data itself, 
providing virtually limitless opportunities for entrepreneurs who wish 
to produce and distribute their own market data. This proprietary data 
is produced by each individual exchange, as well as other entities, in 
a vigorously competitive market.
    Broker-dealers currently have numerous alternative venues for their 
order flow, including nine existing SRO markets (plus two more expected 
this year), as well as various forms of alternative trading systems 
(``ATSs''). Each SRO market competes to produce transaction reports via 
trade executions. Competitive markets for order flow, executions, and 
transaction reports provide pricing discipline for the inputs of 
proprietary data products.
    The large number of SROs, BDs, and ATSs that currently produce 
proprietary data or are currently capable of producing it provides 
further pricing discipline for proprietary data products. Each SRO, 
ATS, and BD is currently permitted to produce proprietary data 
products, and many currently do or have announced plans to do so, 
including NASDAQ, CBOE, ISE, NYSE Amex, and NYSEArca.
    Any ATS or BD can combine with any other ATS, BD, or multiple ATSs 
or BDs to produce joint proprietary data products. Additionally, order 
routers and market data vendors can facilitate single or multiple 
broker-dealers' production of proprietary data products. The potential 
sources of proprietary products are virtually limitless.
    Market data vendors provide another form of price discipline for 
proprietary data products because they control the primary means of 
access to end Subscribers. Vendors impose price restraints based upon 
their business models. For example, vendors such as Bloomberg and 
Thomson Reuters that assess a surcharge on data they sell may refuse to 
offer proprietary products that end Subscribers will not purchase in 
sufficient numbers. Internet portals, such as Google, impose a 
discipline by providing only data that will enable them to attract 
``eyeballs'' that contribute to their advertising revenue. Retail 
broker-dealers, such as Schwab and Fidelity, offer their customers 
proprietary data only if it promotes trading and generates sufficient 
commission revenue. Although the business models may differ, these 
vendors' pricing discipline is the same: they can simply refuse to 
purchase any proprietary data product that fails to provide sufficient 
value. PHLX and other producers of proprietary data products must 
understand and respond to these varying business models and pricing 
disciplines in order to market proprietary data products successfully.
    In addition to the competition and price discipline described 
above, the market for proprietary data products is

[[Page 40934]]

also highly contestable because market entry is rapid, inexpensive, and 
profitable. The history of electronic trading is replete with examples 
of entrants that swiftly grew into some of the largest electronic 
trading platforms and proprietary data producers: Archipelago, BATS 
Trading and Direct Edge.
    Regulation NMS, by deregulating the market for proprietary data, 
has increased the contestability of that market. While broker-dealers 
have previously published their proprietary data individually, 
Regulation NMS encourages market data vendors and broker-dealers to 
produce proprietary products cooperatively in a manner never before 
possible. Multiple market data vendors already have the capability to 
aggregate data and disseminate it on a profitable scale, including 
Bloomberg and Thomson Reuters.
    The court in NetCoalition concluded that the Commission had failed 
to demonstrate that the market for market data was competitive based on 
the reasoning of the Commission's NetCoalition order because, in the 
court's view, the Commission had not adequately demonstrated that the 
proprietary data at issue in the case is used to attract order flow. 
PHLX believes, however, that evidence not before the court clearly 
demonstrated that availability of data attracts order flow.
    Competition among platforms has driven PHLX continually to improve 
its platform data offerings and to cater to customers' data needs. For 
example, PHLX has developed and maintained multiple delivery mechanisms 
(IP, multi-cast, and compression) that enable customers to receive data 
in the form and manner they prefer and at the lowest cost to them. PHLX 
has created new products like Depth Data, TOPO and TOPO Plus Orders, 
because offering data in multiple formatting allows PHLX to better fit 
customer needs. PHLX offers data via multiple extranet providers, 
thereby helping to reduce network and total cost for its data products. 
PHLX has developed an online administrative system to provide customers 
transparency into their data feed requests and streamline data usage 
reporting.
    Despite these enhancements and a dramatic increase in message 
traffic, PHLX's fees for market data have remained flat. In fact, as a 
percent of total Subscriber costs, PHLX data fees have fallen relative 
to other data usage costs--including bandwidth, programming, and 
infrastructure--that have risen. The same holds true for execution 
services; despite numerous enhancements to PHLX's trading platform, 
absolute and relative trading costs have declined. Platform competition 
has intensified as new entrants have emerged, constraining prices for 
both executions and for data.
    The vigor of competition for proprietary information is significant 
and the Exchange believes that this proposal itself clearly evidences 
such competition. PHLX is offering a new pricing model in order to keep 
pace with changes in the industry and evolving customer needs. It is 
entirely optional and is geared towards attracting new customers, as 
well as retaining existing customers.
    The Exchange has witnessed competitors creating new products and 
innovative pricing in this space over the course of the past year. PHLX 
continues to see firms challenge its pricing on the basis of the 
Exchange's explicit fees being higher than the zero-priced fees from 
other competitors such as BATS. In all cases, firms make decisions on 
how much and what types of data to consume on the basis of the total 
cost of interacting with PHLX or other exchanges. Of course, the 
explicit data fees are but one factor in a total platform analysis. 
Some competitors have lower transactions fees and higher data fees, and 
others are vice versa. The market for this Depth-of-Book information is 
highly competitive and continually evolves as products develop and 
change.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\10\ At any time within 60 days of the 
filing of the proposed rule change, the Commission summarily may 
temporarily suspend such rule change if it appears to the Commission 
that such action is necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2012-83 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2012-83. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-Phlx-2012-83 and should be 
submitted on or before August 1, 2012.


[[Page 40935]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-16876 Filed 7-10-12; 8:45 am]
BILLING CODE 8011-01-P


