[Federal Register Volume 75, Number 114 (Tuesday, June 15, 2010)]
[Notices]
[Pages 33869-33871]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-14362]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62234; File No. SR-Phlx-2010-78]
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Trading Halts in Foreign Currency Options Under Rule 133
June 7, 2010.
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 June 1, 2010, NASDAQ OMX PHLX, Inc. (``Phlx'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
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 amend Rule 133, Trading Halts Due to
Extraordinary Market Volatility, to delete a parenthetical exception
for trading in foreign currency options. The text of the proposed rule
change is available on the Exchange's Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings, 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 those 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 parts of such
statements.
[[Page 33870]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Currently, Rule 133 provides that trading in securities (other than
FCOs) shall halt on the Exchange and shall not reopen for the time
periods described in the rule if the Dow Jones Industrial Average
reaches certain levels below its closing value on the previous trading
day. When the Exchange added the parenthetical exceptions regarding
FCOs to Rule 133 in 1997, all FCOs trading on the Exchange were
physically settled options that traded on a different system than the
system on which equity and index options traded.\3\ The Exchange has
since delisted all physical delivery FCOs.
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\3\ It was therefore a straightforward and simple process to
halt trading in equity and index options without also being required
to halt the FCOs that traded on a separate system. Due to an
oversight, the text of Rule 133 was not also amended when U.S.
dollar-settled FCOs were originally listed to make clear that U.S.
dollar-settled FCOs, unlike physical delivery FCOs, would indeed
halt if the circuit breaker provisions were triggered and equity and
index options trading were halted.
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In 2006 the Exchange began listing and trading U.S. dollar-settled
FCOs.\4\ Unlike the physical delivery FCOs which the Exchange also
listed at the time, the U.S. dollar-settled FCOs trade on the same
platform as the Exchange's equity and equity index options.
Consequently, due to trading system limitations when U.S. dollar-
settled FCOs were first listed by the Exchange, it was not feasible to
halt trading in equity and equity index options without also halting
trading in U.S. dollar-settled FCOs. The proposing release for the U.S.
dollar-settled FCOs therefore stated that ``[i]n the event of system-
wide trading halts in equity and equity index options required by
Exchange Rule 133 (the `circuit breaker' rule), Trading Halts Due to
Extraordinary Market Volatility, trading in U.S. dollar-settled FCO
also would be halted.'' \5\ The Exchange is now updating Rule 133 to
reflect that, consistent with the Exchange's proposed rule change to
list and trade the U.S. dollar-settled FCOs, trading U.S. dollar-
settled FCOs is also halted in the event equity and index options
trading is halted pursuant to Rule 133.
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\4\ See Securities Exchange Act Release No. 54989 (December 21,
2006), 71 FR 78506 (December 29, 2006) (approving SR-Phlx-2006-34).
\5\ See Securities Exchange Act Release No. 54652 (October 25,
2006), 71 FR 64597 (November 2, 2006), footnote 33.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \6\ in general, and furthers the objectives of Section
6(b)(5) of the Act \7\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest,
by clarifying in Exchange Rule 133 that trading in U.S. dollar-settled
FCO also halts when trading in equity and equity index options halts
pursuant to that rule.
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\6\ 15 U.S.C. 78f(b).
\7\ 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
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: (i) Does not
significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) by its terms, does not become operative for 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, it has become effective pursuant to Section
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the self-regulatory organization to submit to the
Commission written notice of its 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. The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \10\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \11\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay.
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\10\ 17 CFR 240.19b 4(f)(6).
\11\ 17 CFR 240.19b 4(f)(6)(iii).
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The Commission believes that waiver of the operative delay is
consistent with the protection of investors and the public interest
because the proposed rule change would immediately conform Phlx Rule
133 to the Exchange's practice since 2006. As noted above, when the
Exchange began listing and trading U.S. dollar-settled FCOs in 2006, it
stated in its notice of the proposed rule change that the trading halts
in Rule 133 would apply to U.S. dollar-settled FCOs.\12\ However, at
that time, the Exchange did not amend Rule 133 to make clear that U.S.
dollar-settled FCOs, unlike physical delivery FCOs, would halt if the
circuit breaker provisions were triggered. As such, the Commission
believes that the current proposed rule change raises no new regulatory
issues and waiver of the operative delay will allow the Exchange to
immediately clarify in its rules its current practice with regard to
trading halts and FCOs. For these reasons, the Commission designates
the proposal operative upon filing.\13\
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\12\ See supa note 5 and accompanying text.
\13\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.
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 protected]. Please include
File Number SR-Phlx-2010-78 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary,
[[Page 33871]]
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-1090.
All submissions should refer to File Number SR-Phlx-2010-78. 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 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 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 Number SR-Phlx-2010-78 and should be
submitted on or before July 6, 2010.
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\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-14362 Filed 6-14-10; 8:45 am]
BILLING CODE 8011-01-P