[Federal Register: August 18, 2009 (Volume 74, Number 158)]
[Notices]
[Page 41777-41778]
[DOCID:fr18au09-90]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60477; File No. SR-Phlx-2009-67]

Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Firm Proprietary Facilitation Orders

August 11, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934,\1\ notice is hereby given that on August 5, 2009, NASDAQ OMX
PHLX, Inc. (``Phlx'' or the ``Exchange'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
by the Phlx. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to waive the Firm Proprietary Options
Transaction Charge for members executing facilitation orders \2\ when
such members are trading in their own proprietary account.
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    \2\ A facilitation occurs when a floor broker holds an options
order for a public customer and a contra-side order for the same
option series and, after providing an opportunity for all persons in
the trading crowd to participate in the transaction, executes both
orders as a facilitation cross. See Exchange Rule 1064.
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    While changes to the Exchange's fee schedule pursuant to this
proposal are effective upon filing, the Exchange has designated this
proposal to be effective for trades settling on or after August 11,
2009.
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/
Filings/, at the principal office of the Exchange, and at the
Commission's Public Reference Room.

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

    In its filing with the Commission, Phlx 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 Phlx 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, Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to encourage firm
facilitation transactions, raise additional revenue for the Exchange
and create incentive for Member Organizations to continue to facilitate
customer order flow. Currently, the Firm Proprietary Options
Transaction Charge is $.24 per contract. This fee applies to firm
proprietary orders (``F'' account type) in equity options products. In
addition, Firm Proprietary Options Transaction Charges is capped in the
aggregate for one billing month at $75,000 per member organization
(``Monthly Firm Cap''), except for orders of joint back-office
(``JBO'') participants.\3\
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    \3\ A JBO participant is a Member, Member Organization or non-
member organization that maintains a JBO arrangement with a clearing
broker-dealer (``JBO Broker'') subject to the requirements of
Regulation T Section 220.7 of the Federal Reserve System. See also
Exchange Rule 703. JBO participant orders are excluded from the
definition of Firm Proprietary because the Exchange is unable to
differentiate orders of a JBO participant from orders of its JBO
Broker and therefore is unable to aggregate the JBO participant's
orders for purposes of the defining Firm Proprietary transactions.
JBO participant orders may employ the F-account type and qualify for
the firm proprietary charge, but would not be eligible for the
Monthly Firm Cap.
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    The Exchange is proposing to waive the $.24 Firm Proprietary
Options Transaction Charge for members executing facilitation orders
pursuant to Exchange Rule 1064 when such members are trading in their
own proprietary account.\4\ The Exchange desires to waive the Firm
Proprietary Options Transaction Charge for member transacting
proprietary trades in their own account to encourage member firms to
facilitate additional customer order flow.
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    \4\ The waiver would not apply to orders where a member is
acting as agent on behalf of a non-member.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of
fees is consistent with Section 6(b) of the Act \5\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \6\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members. The Exchange believes that
the waiver of the Firm Proprietary Options Transaction Charge is
equitable because it uniformly applies to all member organizations.
This waiver is consistent with the current fee schedule and industry
fee assessments of member firms that allow for different rates to be
charged for different order types originated by dissimilarly classified
market participants.\7\ For example, the Exchange assesses different
transaction fees applicable to the execution of Principal Acting as
Agent Orders (``P/A Orders'') \8\ and Principal Orders (``P Orders'')
\9\ sent to the Exchange via the Intermarket Option Linkage
(``Linkage'') under the Plan for the Purpose of Creating and Operating
an Intermarket Option Linkage (the ``Plan''). The Exchange charges
$0.45 per option

contract for P Orders sent to the Exchange and $.30 per contract for P/
A Orders.\10\ The Exchange believes that waiving the Firm Proprietary
Options Transaction Charge for members executing facilitation orders
pursuant to Exchange Rule 1064 when such members are trading in their
own account is consistent with rate differentials that exist in the
current fee schedule and serves to encourage members to facilitate
customer order flow.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
    \7\ NYSE Amex currently charges different rates to different
market participants in assessing its firm facilitation fee. See
Securities Exchange Act Release No. 60378 (July 23, 2009), 74 FR
38245 (July 31, 2009) (SR-NYSEAmex-2009-38).
    \8\ A P/A order is an order for the principal account of a
specialist (or equivalent entity on another participant exchange
that is authorized to represent public customer orders), reflecting
the terms of a related unexecuted Public Customer order for which
the specialist is acting as agent. See Exchange Rule 1083(k)(i).
    \9\ A Principal Order is an order for the principal account of
an Eligible Market Maker and is not a P/A Order. See Exchange Rule
1083(k)(ii).
    \10\ See Securities Exchange Act Release No. 60210 (July 1,
2009), 74 FR 32989 (July 9, 2009) (SR-Phlx-2009-53).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.

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

    No written comments were either solicited or received.

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

    Because the foregoing rule change established or changes a due,
fee, or other charge imposed by the Exchange, it has become effective
pursuant to Section 19(b)(3)(A) of the Act \11\ and subparagraph (f)(2)
of Rule 19b-4 \12\ thereunder. At any time within 60 days of the filing
of the proposed rule change, the Commission may summarily abrogate 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.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number SR-Phlx-2009-67 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 submission should refer to File Number SR-Phlx-2009-67. This file
number should be included on the subject line if e-mail 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 inspection and
copying 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 Phlx. 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 with to make available publicly. All
submissions should refer to File Number SR-Phlx-2009-67 and should be
submitted on or before September 8, 2009.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-19733 Filed 8-17-09; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 80, Number 247 (Thursday, December 24, 2015)]
[Notices]
[Pages 80416-80419]
[FR Doc No: 2015-32391]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76697; File No. SR-Phlx-2015-106]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Regarding
Trading Halts

December 18, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 9, 2015, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to delete obsolete rule language and amend
outdated references relating to Exchange Rule 1047, Trading Rotations,
Halts and Suspensions.\3\
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    \3\ The Exchange proposes to re-title the rule ``Trading
Halts.''
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    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com/, at the principal
office of the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of the proposed rule change is to update the Exchange's
rules by ensuring the rules accurately reflect how trading halts occur
on the Exchange's fully electronic trading system, the Phlx XL II
system (``System'').\4\ Rule 1047 is now outdated in certain ways and
lacks specificity in certain ways. Primarily, as explained below, the
rule does not accurately reflect under what circumstances the halt will
automatically be imposed by the System versus manually declared by an
official. The Exchange proposes to delete obsolete rule language and
amend outdated references in order to remove confusion that may result
from having outdated rules in the Exchange's rulebook and ensure that
the rulebook accurately reflects member obligations. Furthermore, the
Exchange is reorganizing the rule to flow in a more logical fashion. In
addition, the Exchange proposes to harmonize certain language in Rule
1047 with comparable rules of its affiliates, as described in further
detail below.\5\
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    \4\ In May 2009, the Exchange enhanced the system and adopted
corresponding rules referring to the system as ``Phlx XL II.'' See
Securities Exchange Act Release No. 59995 (May 28, 2009), 74 FR
26750 (June 3, 2009) (SR-Phlx-2009-32). The Exchange is proposing to
define the term ``System'' in proposed subparagraph (b)(iii);
previously, only the term ``Trading System'' was used and defined in
current subparagraph (a)(iv).
    \5\ See Nasdaq Options Market (``NOM'') Chapter V, Section 3 and
BX Options Chapter V, Section 3.
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    First, the Exchange proposes to delete the existing text of
paragraph (a) under Rule 1047 which governs opening and closing trading
rotations. Paragraph (a) is obsolete because the Exchange no longer
relies on manual trading rotations to open and close trading on the
Exchange.\6\ A trading rotation, as described in current Rule 1047.01,
is a series of very brief time periods during each of which bids,
offers and transactions in only a single, specified

option contract can be made.\7\ The Exchange's opening process that
replaced trading rotations is set forth in Rule 1017.\8\ Thus far, the
Exchange maintained references to rotations for two reasons. The Phlx
XL II System was phased-in over a period of time such that the
Exchange's rules needed to reflect both the existing manual processes
as well as the ``new'' systems; \9\ the rules no longer need to do so.
Secondly, the term ``trading rotation'' is still sometimes used to
cover automated openings, including on other options exchanges;
nevertheless, the Exchange believes it is clearer, at this time, not to
use that term. In any event, option series on the Exchange open in an
automated fashion pursuant to Rule 1017. In addition, the Exchange now
simply stops trading in an option rather than relying on a closing
rotation,\10\ as currently provided for in paragraph (a), which is a
manual process conducted by the specialist.\11\ Accordingly, current
paragraph (a) is being updated. The Exchange believes that it is
clearer to eliminate the reference to rotations from paragraph (a).
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    \6\ The exception is in the event an automated opening cannot
occur or a closing rotation is deemed necessary, in which case the
procedures in the Commentaries to Rule 1047 would be employed
pursuant to the authority in current Rule 1047(c), which is proposed
to become Rule 1047(b), Manual Rotations.
    \7\ Specialists used to always conduct manual trading rotations
pursuant to the following existing language: Taking each option in
which he is assigned in turn, the specialist should first open the
one or more series of such options having the nearest expiration,
then proceed to a series of options having the next most distant
expiration, and so forth, until all series have been opened. The
specialist shall determine which type of option should open first
(i.e., put or call options), and may alternate the opening of put
series and call series or may open all series of one type before
opening any series of the other type, depending on current market
conditions. Reverse and modified rotations could all be conducted.
See current Rule 1017.01(a) and (b). All rotations have been
replaced with an automated opening process. See supra note 4. A
manual rotation may occur but is unlikely. See supra note 6.
    \8\ See supra note 4.
    \9\ This is why the Exchange added to Rule 1047 the language
that an automated opening conducted pursuant to Rule 1017 is
considered a ``trading rotation.''
    \10\ In deleting existing paragraph (a), a reference to trading
rotations ``at the close of trading on the last trading day with
respect to expiring equity option contracts'' is also being deleted.
Any such rotation would be manual pursuant to existing Rule
1047.01(c). The Exchange also proposes to add introductory language
to the Commentaries to make it clearer that such Commentaries cover
manual rotations by specifically stating that in the event the
System is not available, a manual trading rotation may be held on
the opening and close of trading.
    \11\ The System automatically turns off trading at the close,
rather than relying on a manual process.
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    Additionally, the Exchange proposes to adopt as new paragraph (a) a
provision to reflect the fact that the System automatically halts
trading in an option on the Exchange in certain situations.
Specifically, an automated halt occurs following a halt or suspension
of trading of the underlying security \12\ in the primary market,\13\ a
regulatory halt on the primary market,\14\ a delayed opening of the
underlying security because of unusual circumstances,\15\ or a trading
pause on the primary market.\16\ With respect to a halt on the primary
market and delayed openings, Rule 1047(b)(i) and (ii) currently permit
a halt, but because the Exchange currently halts automatically, the
Exchange is now updating its rule to reflect such automatic halt.\17\
None of these reasons for a halt are new.
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    \12\ This rule currently uses both the terms ``underlying
security'' and ``underlying stock or Exchange-Traded Fund Share.''
Separately, the Exchange intends to harmonize that throughout its
rules. For purposes of this filing, the terms are interchangeable.
    \13\ This is currently in paragraph (b)(i).
    \14\ This provision is currently in Commentary .01(e) and
expressly references an automated trading halt. It is being deleted
from the commentary.
    \15\ This is currently in paragraph (b)(ii).
    \16\ This provision is not new; it is currently in paragraph (e)
and is being relocated to new paragraph (a).
    \17\ The similar provisions on NOM and BX will be updated to
reflect the difference between automated and manual halts.
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    Existing Rule 1047(e) refers to the ``primary listing market,''
which is not defined in Exchange rules, while the rest of Rule 1047
uses the term ``primary market.'' Rule 1000(b)(31) currently provides
that the term ``primary market'' in respect of an underlying stock or
Exchange-Traded Fund Share means the principal market in which the
underlying stock or Exchange-Traded Fund Share is traded. The Exchange
believes that this is not clear and proposes to change this definition
such that the term ``primary market'' means, in the case of securities
listed on The Nasdaq Stock Market, the market that is identified as the
listing market pursuant to Section X(d) of the approved national market
system plan governing the trading of Nasdaq-listed securities, and, in
the case of securities listed on another national securities exchange,
the market that is identified as the listing market pursuant to Section
XI of the Consolidated Tape Association Plan. This is the same
definition that is used in NOM and BX rules.\18\
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    \18\ See NOM Chapter I, Section 1(a)(47) and BX Options Chapter
I, Section 1(a)(48).
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    New paragraph (b) will address manual halts by Options Exchange
Officials (rather than automatic halts by the System).\19\
Specifically, trading on the Exchange in any options shall be halted
\20\ whenever an Options Exchange Official deems such action
appropriate in the interests of a fair and orderly market and to
protect investors. Among the factors that may be considered are that:
An occurrence of an act of God or other event outside the Exchange's
control; \21\ technical failure or failures of the Exchange's current
automated trading system or any other Exchange quotation, transaction
reporting, execution, order routing or other systems for trading
options, including, but not limited to, the failure of or a part of the
central processing system, a number of member or member organization
trading applications, or the electrical power supply to the system
itself or any related system; \22\ or other unusual conditions or
circumstances are present.\23\ The Exchange is proposing to delete the
language in existing Rule 1047(a)(iii) regarding issuer announcements,
because the Exchange believes that issuer announcements are handled by
the listing exchange for the underlying security, not the options
market. If the listing market were to halt an underlying security, the
options market would halt based on proposed Rule 1047(a).
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    \19\ The comparable NOM and BX rules reference regulatory
personnel more generally as ``Regulation'' while the Phlx rule is
more specific by referring to ``Options Exchange Officials.'' See
e.g., NOM Chapter V, Section 3(a). See also Phlx Rule 1(w).
    \20\ The Exchange is deleting the words ``or suspended'' because
that term does not normally apply to options trading but rather to
trading in the underlying security. See e.g., current Rule
1047(a)(i), which provides that trading in the underlying stock or
Exchange-Traded Fund Share has been halted or suspended in the
primary market. See also NOM Chapter V, Section 3(a)(i).
    \21\ This is the only new provision, and it is based on NOM
Chapter V, Section 3(a)(iii).
    \22\ This is in existing Rule 1047(a)(iv). The Exchange is
proposing to define the term ``System'' here, which is the same as
Trading System, for use throughout the Rule.
    \23\ This is in existing Rule 1047(a)(v).
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    Paragraph (b) will also reflect the fact that an Options Exchange
Official retains the authority to delay the opening, halt and reopen
after a halt to open where the underlying security has not opened or
current quotations are unavailable for any foreign currency, and to
conduct a closing rotation on the business day of expiration, or, in
the case of an option contract expiring on a day that is not a business
day, on the trading day prior to expiration where the underlying
security did not open or was halted, whenever such action is deemed
necessary in the interests of maintaining a fair and orderly market in
such class or series of options and to protect investors. This is
currently in Rule 1047(c). The Exchange is labelling this paragraph
with the title ``Manual Authority'' to retain the ability of Options
Exchange Officials to perform these duties in the unlikely event that
it becomes necessary.

    The Exchange proposes to adopt new paragraph (c) to reflect more
specifically what happens when an option is halted. It will provide
that in the event the Exchange halts trading pursuant to paragraphs (a)
or (b), all trading in the affected option shall be halted. The
Exchange shall disseminate through its trading facilities and over OPRA
a symbol with respect to such option indicating that trading has been
halted, and a record of the time and duration of the halt shall be made
available to vendors.\24\ Furthermore, no member or member organization
or person associated with a member or member organization shall effect
a trade on the Exchange in any option in which trading has been halted
under the provisions of this Rule during the time in which the halt
remains in effect. This is also based on the provisions of NOM and
BX.\25\ The Exchange believes that the new language proposed in Rule
1047(c) is helpful and explanatory for participants.
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    \24\ This is new language that is the same as NOM and BX rules,
except it reflects the new automated halt process and thus is not
tied to Exchange staff halting an option. See NOM Chapter V, Section
3(b), and BX Options Chapter V, Section 3(b).
    \25\ See NOM Chapter V, Section 3(c), and BX Options Chapter V,
Section 3(c). Due to the differing terms that apply to membership
and participation on each exchange, the NOM and BX Options rules
refer to ``Options Participants'' while the Phlx rules refer to
``members and member organizations.''
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    The Exchange proposes to delete existing Rule 1047(d), which
provides that in the event that trading is halted in the underlying
security on the primary market for such security, the specialist may
halt trading in the option overlying such security, subject to the
approval of an Options Exchange Official within five minutes of the
halt in trading in the option. Paragraph (d) is made redundant as a
result of adopting paragraph (a) to address automated halts, and is
obsolete because it refers to specialists. Specialists cannot halt an
option. The type of control that specialists used to have over halts no
longer exists; once the System became more automated,\26\ there became
no physical method for specialists to activate a halt.
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    \26\ See supra note 4.
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    The Exchange proposes to delete current paragraph (e) because the
fact that trading in an option will be halted whenever trading in the
underlying security has been paused is now covered by new paragraph
(a)(i). In addition, the language in Rule 1047(e)(i) is now covered in
new paragraph (g) in a more streamlined form. Rule 1047(e)(ii), which
provides that the Exchange will maintain existing orders on the book,
accept orders, and process cancels, is now in new paragraph (f), as
explained further below.
    The Exchange also proposes to renumber current paragraph (f) as
paragraph (d) to improve the flow of the rule and align the paragraph
numbers with those of NOM and BX.\27\ The Exchange also proposes to
amend subparagraph (f)(ii) in order to update an outdated reference to
the Phlx XL system and use the general term ``System'' instead, as
explained above.
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    \27\ See NOM Chapter V, Section 3(d), and BX Options Chapter V,
Section 3(d).
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    The Exchange is proposing to renumber current paragraph (g) as new
paragraph (e) without any substantive change to track the comparable
provisions on NOM and BX.\28\
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    \28\ See NOM Chapter V, Section 3(e), and BX Options Chapter V,
Section 3(e).
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    The Exchange proposes to adopt new paragraph (f) to provide that
when a halt occurs, existing quotes will be cancelled; during a halt,
the Exchange will maintain existing orders on the book (but not
existing quotes), accept orders and quotes, and process cancels.\29\
This provision is not new; it is currently in paragraph (e) and is
being relocated to new paragraph (f), although it is also being
modified to add reference to accepting new quotes (not just orders) for
better clarity and understanding.
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    \29\ See also NOM Chapter V, Section 3(a)(vi)(B), which is
located within the provision that governs halts due to a pause in
the trading of the underlying security only; NOM and BX intend to
correct it to make clear that it applies to all halts.
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    The Exchange proposes to adopt new paragraph (g) to govern the
resumption of trading after a halt. Specifically, trading in an option
that has been the subject of a halt shall be resumed: (A) In the case
of a manual halt, upon the determination by an Options Exchange
Official that the conditions which led to the halt are no longer
present or that the interests of a fair and orderly market are best
served by a resumption of trading; or (B) in the case of an automatic
trading halt, the conditions which led to the halt are no longer
present, and, in either case, in no circumstances will trading be
resumed before the Exchange has received notification that the
underlying stock or Exchange-Traded Fund Share has resumed trading on
at least one exchange. If, however, trading has not been resumed on the
primary market for the underlying security after ten minutes have
passed since the underlying security was paused by the primary market,
trading in such options contracts may be resumed by the Exchange if the
underlying security has resumed trading on at least one exchange.\30\
This provision is modelled on the rules of NOM and BX.\31\ This
provision also specifies that options trading resumes pursuant to Rule
1017, which outlines the automated opening process.\32\
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    \30\ Rule 1047(b)(iv) currently contains a similar provision,
except that the current rule contains an ``and'' and thus requires
both conditions to be met to resume trading, and there is no
specific reference to the resumption of trading of the underlying on
at least one exchange. Presumably, the resumption of trading in the
underlying on one exchange is an example of a condition that led to
the options halt no longer being present, but the proposed language
is more specific and thus clearer. The resumption of trading after a
trading pause is currently in Rule 1047(e)(i).
    \31\ See NOM Chapter V, Section 4, and BX Options Chapter V,
Section 4. The Exchange believes that this provision containing an
``or'' is more appropriate because it is more flexible in terms of
permitting a resumption of trading.
    \32\ This is based on NOM Chapter V, Section 5.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act \33\ in general, and furthers the objectives of Section
6(b)(5) of the Act \34\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system and to protect
investors and the public interest, by deleting outdated or obsolete
provisions and generally providing clarity to the rules. The proposal
should result in a more accurate and understandable rule book. The
amendments should make clear that the Exchange now simply ceases
trading in an option rather than relying on a closing rotation, meaning
the option stops trading without a manual process.\35\ The proposal
also deletes the obligation of the specialist to halt trading, because
specialists cannot halt trading. These changes should promote just and
equitable principles of trade by updating the rule to delete outdated
and potentially confusing terms.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78f(b).
    \34\ 15 U.S.C. 78f(b)(5).
    \35\ See supra note 11.
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    Furthermore, the Exchange is amending the rule to reflect that
certain halts occur automatically while others are determined by
specified Exchange staff, Options Exchange Officials. The Exchange
believes it is more accurate to reflect that sometimes Exchange staff
employ discretion in determining whether to halt (new paragraph (b))
and sometimes the System automatically

halts (new paragraph (a)), which should both promote just and equitable
principles of trade by tailoring the halt processes for options to the
particular situations triggering a halt, consistent with the
maintenance of fair and orderly markets. This restructuring and
resulting renumbering should make the rule clearer. The Exchange
believes that the situations listed in new paragraph (a) appropriately
result in an automatic halt rather than relying on an Options Exchange
Official, because those situations are objective and do not require the
discretion or expertise of an Options Exchange Official. Accordingly,
the Exchange believes automatic halts are appropriate and consistent
with the Act.
    In addition, the Exchange believes that the proposal to amend the
definition of primary market is consistent with promoting just and
equitable principles of trade. It is based on a more precise
definition, tied to the market where the underlying security is listed,
which is commonly understood to be the meaning of the term.
    The Exchange believes that the proposed language regarding manual
halts due to an occurrence of an act of God or other event outside the
Exchange's control should promote just and equitable principles of
trade by providing for a manual halt in serious, unanticipated
circumstances. The Exchange also believes that the new language in
paragraph (c) should promote just and equitable principles of trade by
indicating when a halt has occurred and making clear that no trading is
permitted during a halt. Furthermore, the Exchange believes that the
language in new paragraph (f) that the Exchange will maintain existing
orders on the book (but not existing quotes), accept orders and quotes
and process cancels should promote just and equitable principles of
trade by making it clear to market participants what occurs during a
halt. Similarly, the proposed language in new paragraph (g) regarding
the resumption of trading after a halt should promote just and
equitable principles of trade by stating with specificity the
conditions under which trading resumes.
    Overall, the proposal is intended to help members understand how
trading halts operate, which should also promote just and equitable
principles of trade, consistent with the Act.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposal raises neither
intra-market nor inter-market competition issues because it merely
deletes obsolete provisions and adds specificity.

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \36\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\37\
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    \36\ 15 U.S.C. 78s(b)(3)(a)(iii).
    \37\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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    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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-Phlx-2015-106 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2015-106. 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
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal offices 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-2015-106,
and should be submitted on or before January 14, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\38\
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    \38\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-32391 Filed 12-23-15; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 153 (Wednesday, August 8, 2012)]
[Notices]
[Pages 47467-47469]
[FR Doc No: 2012-19382]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67579; File No. SR-FINRA-2012-038]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Extend the Pilot Period of Amendments to FINRA
Rule 11892 Governing Clearly Erroneous Transactions

August 2, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 23, 2012, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA is proposing to amend FINRA Rule 11892 (Clearly Erroneous
Transactions in Exchange-Listed Securities) to extend the effective
date of the pilot, which is currently scheduled to expire on July 31,
2012, until February 4, 2013.
    The text of the proposed rule change is available on FINRA's Web
site at http://www.finra.org, at the principal office of FINRA 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, FINRA 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 self-regulatory organization 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
    FINRA proposes to amend FINRA Rule 11892.02 to extend the effective
date of the amendments set forth in File No. SR-FINRA-2010-032 (the
``pilot''), which are currently scheduled to expire on July 31,
2012,\3\ until February 4, 2013.
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    \3\ See Securities Exchange Act Release No. 66254 (January 26,
2012), 77 FR 5084 (February 1, 2012) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2012-005).
---------------------------------------------------------------------------

    The pilot was drafted in consultation with other self-regulatory
organizations (``SROs'') and Commission staff to provide for uniform
treatment: (1) Of

clearly erroneous execution reviews in Multi-Stock Events involving
twenty or more securities; and (2) in the event transactions occur that
result in the issuance of an individual stock trading pause by the
primary listing market and subsequent transactions that occur before
the trading pause is in effect for transactions otherwise than on an
exchange.\4\ FINRA also implemented additional changes to the Rule as
part of the pilot that reduce the ability of FINRA to deviate from the
objective standards set forth in the Rule.\5\
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    \4\ See Securities Exchange Act Release No. 62885 (September 10,
2010), 75 FR 56641 (September 16, 2010) (``Order Approving File No.
SR-FINRA-2010-032''). See also Securities Exchange Act Release No.
65101 (August 11, 2011), 76 FR 51097 (August 17, 2011) (Notice of
Filing and Immediate Effectiveness of File No. SR-FINRA-2011-039).
    \5\ See Order Approving File No. SR-FINRA-2010-032.
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    The extension proposed herein would allow the pilot to continue to
operate without interruption while FINRA, the other SROs and the
Commission further assess the effect of the pilot on the marketplace,
including whether additional measures should be added, whether the
parameters of the rule should be modified or whether other initiatives
should be adopted in lieu of the current pilot.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\6\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade and, in general, to protect investors and the
public interest. FINRA believes that the proposed rule change is
consistent with the clearly erroneous rules of other SROs and will
promote the goal of transparency and uniformity across markets
concerning reviews of potentially clearly erroneous executions in
various contexts.
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    \6\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

    Additionally, extension of the pilot to February 4, 2013 will allow
the pilot to continue to operate without interruption while FINRA, the
other SROs and the Commission further assess the effect of the pilot on
the marketplace and coordinate the duration of the pilot with the
implementation of the National Market System Plan to Address
Extraordinary Market Volatility.\7\
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    \7\ See Securities Exchange Act Release No. 67091 (May 31,
2012), 77 FR 33498 (June 6, 2012) (Order Approving, on a Pilot
Basis, the National Market System Plan To Address Extraordinary
Market Volatility).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA 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.

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

    FINRA has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act\10\ and Rule 19b-
4(f)(6)(iii) thereunder.\11\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires FINRA to give the Commission written notice of FINRA's
intent to file the proposed rule change along with a brief
description and text of the proposed rule change, at least five
business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. FINRA
has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii) \13\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. FINRA has asked the
Commission to waive the 30-day operative delay so that the proposal may
become operative immediately upon filing.
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest, as
it will allow the pilot program to continue uninterrupted, thereby
avoiding the investor confusion that could result from a temporary
interruption in the pilot program. For this reason, the Commission
designates the proposed rule change to be operative upon filing.\14\
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    \14\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    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.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml ); or
     Send an Email to<EMAIL_ADDRESS>Please include
File No. SR-FINRA-2012-038 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-FINRA-2012-038. 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 Commissions 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. Copies of such filing also will
be available for inspection and copying at the principal office of the

FINRA. 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-
FINRA-2012-038 and should be submitted by August 29, 2012.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-19382 Filed 8-7-12; 8:45 am]
BILLING CODE 8011-01-P