[Federal Register Volume 75, Number 142 (Monday, July 26, 2010)]
[Notices]
[Pages 43590-43591]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-18211]
[[Page 43590]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62534; File No. SR-Phlx-2010-95]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Relating
to Order Re-Entry
July 20, 2010.
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 July 12, 2010, 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 Exchange. Phlx has designated the
proposed rule change as constituting a rule change under Rule 19b-
4(f)(5) under the Act,\3\ which renders the proposal effective upon
filing with the Commission. 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.
\3\ 17 CFR 240.19b-4(f)(5).
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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 Rules 1017, Openings in Options, and
1082, Firm Quotations, to reflect a system enhancement that
automatically re-enters unexecuted contracts when, after trading at the
Exchange and/or routing, there are contracts remaining from the
initiating order.
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 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 change the manner in
which the PHLX XL[supreg] automated options trading system \4\ handles
unexecuted contracts following: (1) The end of the opening process; and
(2) the end of the ``quote exhaust'' and ``market exhaust'' auctions.
This new feature further automates the order handling process,
particularly at the opening of trading, for certain member
organizations routing order flow to the Exchange. The new feature is
optional and is available to any Exchange member upon request.
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\4\ This proposal refers to ``PHLX XL'' as the Exchange's
automated options trading system. 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 intends to submit a separate technical proposed rule change
that would change all references to the system from ``Phlx XL II''
to ``PHLX XL'' for branding purposes.
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Currently, at the end of the opening process, the PHLX XL system
cancels all unexecuted order interest priced through the opening price
level, and sends a cancellation notice to the member that originally
submitted the order. Similarly, at the end of the quote exhaust and
market exhaust auctions, the PHLX XL system cancels unexecuted order
volume that initiated such auction(s), and sends a cancellation notice
to the member that originally submitted the order.
The instant proposal would modify the PHLX XL system and
corresponding Exchange rules such that the PHLX XL system will, upon
the written instruction of the member that initially submitted the
order, re-submit unexecuted contracts following the opening process and
following the quote exhaust and market exhaust auctions.\5\ A re-
submitted order will be treated strictly as a new order, thus forgoing
any time/price priority it may have had when initially entered by the
member that originally submitted the order. Therefore, the time of
receipt of the new order will be recorded as of the time it is re-
submitted. Cancellation notices under the proposal will be stopped by
the system and will not reach the member that originally submitted the
order.
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\5\ The Exchange anticipates that a member's single written
instruction to re-submit unexecuted contracts would apply to all
orders in specified options following the receipt of the written
instruction by the Exchange. For purposes of this proposal, an e-
mail message is sufficient to satisfy the written instruction
requirement. The Exchange will publish an Options Trader Alert
(``OTA'') on its Web site describing where and to whom such written
instruction should be made.
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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. Specifically, the Exchange believes that the proposal
benefits customers by improving market efficiency through the enhanced
automation of the order entry process when a member has instructed the
Exchange to automatically re-submit unexecuted contracts following
routing to away markets.
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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
The proposed rule change effects a change in an existing order-
entry or trading system of a self-regulatory organization that: (i)
Does not significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) does not have the effect of limiting the access to or
availability of the system. Therefore, the proposal is effective upon
filing pursuant to section 19(b)(3)(A) \8\ of the Act and subparagraph
(f)(5) of Rule 19b-4 thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(5).
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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
[[Page 43591]]
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-2010-95 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-2010-95. 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, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of the
filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-Phlx-2010-95 and should be submitted on or before August
16, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-18211 Filed 7-23-10; 8:45 am]
BILLING CODE 8010-01-P