[Federal Register Volume 77, Number 98 (Monday, May 21, 2012)]
[Notices]
[Pages 30038-30040]
[FR Doc No: 2012-12195]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66992; File No. SR-Phlx-2012-62]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to PSX Rule
3301(f)(8) Concerning the Processing of the Price To Comply Order

May 15, 2012.
    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 May 4, 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.
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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 clarify how the processing of a Price to
Comply Order under PSX Rule 3301(f)(8) operates based on the method of
entry. The Exchange will implement the change effective May 14, 2012.
    The text of the proposed rule change is below. Proposed new
language is in italics; proposed deletions are in brackets.
* * * * *

3301. Definitions

    The following definitions apply to the Rule 3200 and 3300 Series
for the trading of securities on PSX.
    (a)-(e)
    (f) The term ``Order Type'' shall mean the unique processing
prescribed for designated orders that are eligible for entry into the
System, and shall include:
    (1)-(6) No change.
    (7) Reserved.
    (8) ``Price to Comply Order'' are orders that, if, at the time of
entry, a Price to Comply Order would lock or cross the quotation of an
external market, the order will be priced to the current low offer (for
bids) or to the current best bid (for offers) and displayed at a price
one minimum price increment lower than the offer (for bids) or higher
than the bid (for offers). The displayed and undisplayed prices of a
Price to Comply order entered through an OUCH port may be adjusted once
or multiple times depending upon [the method of order entry and] the
election of the member firm and changes to the prevailing NBBO. The
displayed and undisplayed prices of a Price to Comply order entered
through a RASH port may be adjusted multiple times, depending upon
changes to the prevailing NBBO.
    (9)-(11) No change.
    (g)-(i) No change.
* * * * *

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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Phlx is proposing to clarify the effect that the methods of order
entry have on the processing of Price to Comply Orders, as described in
PSX Rule 3301(f)(8).\3\ Price to Comply Orders allow members to quote
aggressively and still comply with the locked and crossed markets
provisions of Regulation NMS.\4\
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    \3\ ``Price to Comply Order'' is an order such that, if, at the
time of entry, it would lock or cross the quotation of an external
market, the order will be priced to the current low offer (for bids)
or to the current best bid (for offers) and displayed at a price one
minimum price increment lower than the offer (for bids) or higher
than the bid (for offers).
    \4\ 17 CFR 242.610.
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    As part of the launch of its PSX equities market in October 2010,
Phlx adopted many substantially similar equities rules to that of its
sister exchange The NASDAQ Stock Market LLC (``NASDAQ''), including the
Price to Comply Order type under PSX Rule 3301(f)(8).\5\ NASDAQ amended
its definition of the Price to Comply Order type under NASDAQ Rule
4751(f)(7) in June 2008.\6\ Prior to June 2008, if at the time of entry
on NASDAQ a Price to

Comply Order would create a violation of SEC Rule 610(d) by locking or
crossing the protected quote of an external market or would cause a
violation of SEC Rule 611 by trading through such a protected quote,
the order was converted by the NASDAQ system to a Non-Displayed Order,
as defined in NASDAQ Rule 4751(e)(3),\7\ and re-priced to the current
low offer (for bids) or to the current best bid (for offers).
Thereafter, such Non-Displayed Orders were cancelled by the NASDAQ
system if the market moved through the price of the order after the
order was accepted.
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    \5\ Securities Exchange Act Release No. 62877 (September 9,
2010), 75 FR 56633 (September 16, 2010) (SR-Phlx-2010-79).
    \6\ Securities Exchange Act Release No. 57910 (June 3, 2008), 73
FR 32776 (June 10, 2008) (SR-NASDAQ-2008-049).
    \7\ ``Non-Displayed Order'' is a limit order that is not
displayed in the NASDAQ system, but nevertheless remains available
for potential execution against all incoming orders until executed
in full or cancelled. Phlx's definition of Non-Displayed Order under
Rule 3301(e)(2) mirrors in substance that of NASDAQ's definition.
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    The June 2008 amendment changed how the NASDAQ Price to Comply
Order operates so that a locking or crossing order is no longer
converted to a Non-Displayed Order, but rather is displayed at the most
aggressive price possible, one minimum price increment worse than the
locking price. NASDAQ also added language to the rule, subsequently
mirrored in PSX Rule 3301(f)(8), which noted that NASDAQ may adjust the
displayed and undisplayed prices of a Price to Comply Order once or
multiple times, depending on the method of order entry and changes to
the National Best Bid and Offer (``NBBO''). In its discussion of the
rule change, NASDAQ explained that the displayed and undisplayed price
of an individual order may be modified one or more times depending upon
the manner of order entry into the system. In particular, if a member
chooses to enter a Price to Comply Order via NASDAQ's RASH protocol,
the order is priced upon entry and may be adjusted multiple times in
response to changes in the prevailing NBBO to move the displayed price
closer to the original entered price and display the best possible
price consistent with the provisions of Regulation NMS. In addition,
each time the displayed price is adjusted, the order will receive a new
timestamp for purposes of determining its price/time priority according
to NASDAQ's existing processing rules. If a Price to Comply Order is
entered via NASDAQ's OUCH protocol, however, the order will be repriced
only upon entry and the order is not repriced in the event the
prevailing NBBO changes. The PSX Price to Comply Order operates in the
same manner as the NASDAQ Price to Comply Order.
    Phlx is proposing to amend PSX Rule 3301(f)(8) to clarify the
effect that the method of order entry has on the processing of the
Price to Comply Order. As noted above, the method of entry of a Price
to Comply Order determines whether the order is repriced once or
multiple times. This will continue to be the case under the amended
rule; however, an OUCH subscriber will be afforded the choice to have
its Price to Comply Order be subject to repricing either only once or
multiple times. Member firms will designate each OUCH protocol order
port to use either the single or multiple repricing functionality for
Price to Comply Orders entered via that port.\8\ A RASH subscriber will
continue to have all Price to Comply Orders repriced multiple times,
when appropriate. The methodology for repricing Price to Comply Orders
will not vary based on how the order is entered. Like RASH-entered
Price to Comply Orders, each time the OUCH-entered order is repriced it
will receive a new timestamp for purposes of determining its price/time
priority. As such, a repriced Price to Comply order is treated as a new
order in terms of priority and, as such, there is no guarantee that the
OUCH-entered Price to Comply Order will receive priority when it
becomes actionable after repricing.
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    \8\ In the absence of designation from a member firm, Phlx will
default the member's OUCH port(s) to single repricing.
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    Phlx believes that the new functionality and related rule change
will serve to reduce the order traffic received using the OUCH
protocol. Phlx notes that, in certain cases, a member will submit a
Price to Comply Order at an aggressive price that it anticipates will
be at the NBBO. Often such an order is not submitted at the NBBO and is
not executed after repricing because the market does not move to the
adjusted order price. In these cases, the member firm will typically
submit additional aggressive orders, which likewise are not executed.
Because the OUCH protocol is used by member firms that are able to
submit a large volume of orders, Phlx believes that offering such firms
the ability to have Phlx reprice their Price to Comply Orders multiple
times will serve to reduce the excessive volume of orders entered into
the system which are ultimately canceled.
    As noted, Phlx will continue to offer OUCH subscribers an
alternative to the multiple repricing functionality so that such member
firms may elect to have their locked or crossed Price to Comply Orders
repriced only once, consistent with the current process. Phlx believes
that this will accommodate member firms that seek the certainty of
repricing at most once or whose trading systems depend on the existing
repricing mechanism.
    Phlx is also making a technical change to PSX Rule 3301(f) to add
an omitted subsection (7) to the numbering under the rule, noting that
it is reserved for future use.
2. Statutory Basis
    Phlx believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\9\ in general, and with Section
6(b)(5) of the Act \10\ in particular, in that the proposal 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 regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, 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. Phlx believes this proposal
is consistent with the Exchange Act and, specifically, Rules 610 and
611of Regulation NMS in that it is designed to prevent orders from
locking and crossing market or trading through protected quotes, while
also promoting a more efficient market. In this regard, Phlx believes
that the proposed rule change will promote the efficient use of the
Exchange by reducing the number of orders entered into the market and
ultimately canceled. As noted, OUCH users tend to enter a relatively
large number of aggressive orders that are ultimately canceled after
repricing. The proposed rule change will reduce the excessive order
traffic experienced by the Exchange due to these cancelled orders and
promote the more efficient use of the market by providing OUCH
subscribers, who tend to enter the greatest number of such cancelled
orders, an option to have the Exchange reprice a single order multiple
times. Phlx also believes that permitting a high volume user the option
to continue to have the Exchange reprice its Price to Comply Order only
upon order entry, when appropriate, will ensure member firms with
internal systems that act in reliance of this function will continue to
operate without disruption.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).

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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

    Written comments were neither solicited nor 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 after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) \12\
thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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 Commission notes that 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 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.

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-Phlx-2012-62 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 No. SR-Phlx-2012-62. 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 such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-Phlx-2012-62 and should be
submitted on or before June 11, 2012.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-12195 Filed 5-18-12; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 251 (Tuesday, December 31, 2013)]
[Notices]
[Page 79714]
[FR Doc No: 2013-31238]

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SECURITIES AND EXCHANGE COMMISSION

Proposed Collection; Comment Request

Upon Written Request Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.

Extension:
    Rule 425, OMB Control No. 3235-0521, SEC File No. 270-462.

    Notice is hereby given, that pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') is soliciting comments on the collection of
information summarized below. The Commission plans to submit this
existing collection of information to the Office of Management and
Budget for extension and approval.
    Rule 425 (17 CFR 230.425) under the Securities Act of 1933 (15
U.S.C. 77a et seq.) requires the filing of certain prospectuses and
communications under Rule 135 (17 CFR 230.135) and Rule 165 (17 CFR
230.165) in connection with business combination transactions. The
purpose of the rule is to permit more oral and written communications
with shareholders about tender offers, mergers and other business
combination transactions on a more timely basis, so long as the written
communications are filed on the date of first use. Approximately 1,680
issuers file communications under Rule 425 at an estimated 0.25 hours
per response for a total of 420 annual burden hours (0.25 hours per
response x 1,680 responses).
    Written comments are invited on: (a) Whether the collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (b) the accuracy of the agency's estimate of the burden
imposed by the collection of information; (c) ways to enhance the
quality, utility, and clarity of the information collected; and (d)
ways to minimize the burden of the collection of information on
respondents, including through the use of automated collection
techniques or other forms of information technology. Consideration will
be given to comments and suggestions submitted in writing within 60
days of this publication.
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid control number.
    Please direct your written comment to Thomas Bayer, Director/Chief
Information Officer, Securities and Exchange Commission, c/o Remi
Pavlik-Simon, 100 F Street NE., Washington, DC 20549 or send an email
to<EMAIL_ADDRESS>
    Dated: December 24, 2013.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-31238 Filed 12-30-13; 8:45 am]
BILLING CODE 8011-01-P