[Federal Register Volume 75, Number 142 (Monday, July 26, 2010)]
[Notices]
[Pages 43594-43595]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-18166]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62530; File No. SR-Phlx-2010-96]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating
to Trading Halts in Options During a Trading Pause in the Underlying
Securities
July 19, 2010.
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 July 14, 2010, NASDAQ OMX PHLX, Inc. (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``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.
---------------------------------------------------------------------------
\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
The Exchange is filing with the Commission a proposal to amend Phlx
Rule 1047 (Trading Rotations, Halts and Suspensions) to enhance the
recently-implemented options halt rule whenever trading in the
underlying security has been paused by the primary listing market (the
``options halt rule'').\3\
---------------------------------------------------------------------------
\3\ The options halt rule is also known as the options pause
rule.
---------------------------------------------------------------------------
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, 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 this proposal is to amend Rule 1047 to enhance the
recently-implemented options halt rule to indicate that if trading has
not been resumed on the primary listing market for the underlying
security once ten minutes has passed after an underlying security was
paused, the Exchange may resume options trading if trading has resumed
on at least one national securities exchange; and that the Exchange
will continue certain processes during the halt (maintain booked
orders, accept orders, and process cancels).
On June 10, 2010, the Exchange filed an immediately effective
proposal to establish the options halt rule in new subsection (e) to
Rule 1047.\4\ Subsection (e) states that trading on the Exchange in any
option contract shall be halted whenever trading in the underlying
security has been paused by the primary listing market. The rule states
further that trading in such halted options contracts may be resumed
upon a determination by the Exchange that the conditions that led to
the pause are no longer present and that the interests of a fair and
orderly market are best served by a resumption of trading, which in no
circumstances will be before the Exchange has received notification
that the underlying security has resumed trading on at least one
exchange.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 62269 (June 10,
2010), 75 FR 34491, (June 17, 2010) (Phlx-2010-82)(notice of filing
and immediate effectiveness regarding options halt rule). The
Exchange proposed the options halt rule after consultation with
Commission staff regarding uniform market-wide trading pause
standards for certain individual stocks that experience rapid price
movement and for individual equity options overlying those stocks.
For a similar options halt rule proposed by another options
exchange, see Securities Exchange Act Release No. 62270 (June 10,
2010), 75 FR 34510, (June 17, 2010) (NASDAQ-2010-071) (notice of
filing and immediate effectiveness regarding options halt rule).
---------------------------------------------------------------------------
On the same day as the Exchange's options halt rule filing, Chicago
Board Options Exchange (``CBOE'') filed an options halt that is similar
to the Exchange's options halt rule but has some additional
elements.\5\ The Exchange's current filing is based on the CBOE filing.
---------------------------------------------------------------------------
\5\ The additional elements include the following: that if
trading has not been resumed on the primary listing market for the
underlying security once ten minutes passed after an underlying
security was paused, the Exchange may resume options trading if at
least one market has resumed trading in the underlying; and that the
Exchange will continue certain processes during the halt (maintain
booked orders, accept orders, and process cancels). See Securities
Exchange Act Release No. 62272 (June 10, 2010), 75 FR 34509, (June
17, 2010) (CBOE 2010-055).
---------------------------------------------------------------------------
The Exchange believes that it should continue certain processes and
procedures independently of an options trading halt. Specifically, the
Exchange proposes to state in Rule 1047(e)(ii) that during the options
halt, the Exchange will maintain existing orders on the book, accept
orders, and process cancels.
Moreover, the Exchange believes that it should have the ability to
resume options trading within certain parameters after an underlying
halt. Specifically, The Exchange proposes to state in subsection (e)(i)
that if trading has not been resumed on the primary listing market for
the underlying security after ten minutes have passed
[[Page 43595]]
since the underlying security was paused by the primary listing market,
the Exchange may resume trading in options contracts if the underlying
security has resumed trading on at least one national securities
exchange.\6\
---------------------------------------------------------------------------
\6\ No changes to the Exchange's trading processes are otherwise
contemplated by this proposal. For example, transactions that occur
between the time the pause is imposed on the listing market and the
halt is processed on PHLX may be nullified pursuant to Rule
1092(c)(iv)(B). And orders in the affected option that are received
during the halt on the Exchange will be treated as pre-opening
orders and will be included in the re-opening process upon the
resumption of trading on the listing market for the underlying
security pursuant to Rule 1017(h).
---------------------------------------------------------------------------
The Exchange believes that the proposals, individually and
together, enhance and strengthen the options halt rule and its
application. The proposals will be immediately implemented upon
effectiveness of the filing.
The Exchange believes that the options halt rule as amended ensures
that the Exchange has the ability to maintain fair and orderly markets
in options upon the imposition of a single stock trading pause by the
listing market for the underlying security.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \7\ in general, and furthers the objectives of Section
6(b)(5) of the Act \8\ 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, and to
remove impediments to and perfect the mechanisms of a free and open
market and a national market system. Specifically, the Exchange
believes that the proposal benefits customers by enhancing the current
options halt rule to clarify the circumstances under which the Exchange
may resume options trading, and that the Exchange will continue certain
order processing and cancellation functions during a halt.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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
The Exchange believes that the foregoing proposed rule change may
take effect upon filing with the Commission pursuant to Section
19(b)(3)(A) \9\ of the Act and Rule 19b-4(f)(6)(iii) thereunder \10\
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. The Exchange has asked the Commission to
waive the 30-day operative delay so that the proposal may become
operative upon filing. The Commission notes that the proposed rule
change clarifies certain aspects of the Exchange's rule regarding how
orders will be handled during options trading halts caused by a pause
in the trading of the underlying security and also clarifies when the
Exchange may resume trading when a trading pause in the underlying
security is prolonged for unknown reasons. The proposed rule change
does not raise any new substantive issues. For these reasons, the
Commission believes that the waiver of the 30-day operative delay is
consistent with the protection of investors and the public
interest.\11\
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6)(iii). 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.
\11\ For purposes only of waiving the 30-day operative delay of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition and capital formation. 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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-2010-96 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-2010-96. 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. 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-2010-96 and
should be submitted on or before August 16, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-18166 Filed 7-23-10; 8:45 am]
BILLING CODE 8010-01-P