[Federal Register Volume 75, Number 195 (Friday, October 8, 2010)]
[Notices]
[Pages 62441-62443]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-25395]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63034; File No. SR-Phlx-2010-124]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC To Send
Certain Information Over the Specialized Quote Feed
October 4, 2010.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on September 22, 2010, 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 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\ 15 U.S.C. 78a.
\3\ 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 is filing with the Commission a proposal to establish
a new non-fee liable administrative data feed. The text of the proposed
rule change is available at the Exchange, the Commission's Web site at
http://
[[Page 62442]]
www.sec.gov, the Commission's Public Reference Room, and http://www.nasdaq.com.
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
SQF is an interface that allows specialists, streaming quote
traders and remote streaming quote traders to connect and send quotes
into Phlx XL.\4\ SQF 5.0, the current version, today is the sole
interface used by market makers for sending quotes to the Exchange.\5\
Presently, quoting participants (users of SQF 5.0) do not receive
execution reports that happen against their quote or other information
that is relevant to their quoting application over SQF 5.0. The
Exchange is proposing to provide additional information than what is
currently provided by SQF 5.0 to quoting participants over SQF and that
the Exchange believes is relevant to their quoting application; the new
version will be called SQF 6.0.\6\
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\4\ See Securities Exchange Act Release No. 61878 (April 8,
2010), 75 FR 20023 (April 16, 2010) (SR-Phlx-2010-48). SQF operates
as an interface today, receiving quotations from quoting
participants and sending out messages related to a particular
participant's quotes.
\5\ Participants receive access through payment of a port fee.
\6\ Although SQF is not new, Phlx has not made a SQF-related
filing before because the Exchange believes that such a filing was
not required previously, as SQF operated as an interface rather than
a data feed. However, in conjunction with the new Commission
guidance for data feed changes and in light of the changes in SQF
6.0 that involve sending non-participant-specific messages, the
Exchange believes that it is now required to submit such a filing.
Also, the Exchange has submitted previous filings that reference
SQF. See e.g., Securities Exchange Act Release Nos. 61878 (April 8,
2010), 75 FR 20023 (April 16, 2010) (SR-Phlx-2010-48); and 61665
(March 5, 2010), 75 FR 11967 (March 12, 2010) (SR-Phlx-2010-25).
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SQF 6.0 will increase efficiency for interested participants by
allowing them to access in a single feed available to all participants,
rather than through accessing multiple feeds, information such as
execution reports and other relevant data. In order for participants to
access all of this information currently or for any that do not use SQF
6.0 in the future, they must rely on a risk management feed and the
TOPO/TOPO Plus Orders Exchange interfaces. Non quoting firms that would
like to receive the relevant information available over SQF will be
allowed to connect to the SQF interface, but not send quotes.
The set of data to be offered over this data feed is administrative
in nature or is used to attract liquidity to the Exchange in response
to an auction. The Exchange believes the data included in this feed is
necessary for participants who have written systems to interface with
the Exchange in the case of administrative messages or information
regarding auctions and used to attract liquidity.
Participants who have written interfaces to the Phlx system would
use the administrative data to determine the current state of the
trading system. For example, this data would show which symbols are
trading on the Phlx, the current state of an options symbol (i.e., open
for trading, trading, halted or closed from trading), as well as
similar information regarding complex order strategies. This
administrative data will also include the definition of complex order
strategies. All of this information is vital to a participant's quoting
application and by including this information on the interface used for
quoting, participants can streamline their respective system
architectures.
Phlx holds auctions throughout the day to open trading in an option
and following a trading halt in the option,\7\ following a market
exhaust event \8\ or quote exhaust event,\9\ and for complex orders
\10\ and will in the future hold PIXL Price Improvement Auctions.\11\
During these auction events, the Exchange advertises liquidity it has
available for immediate execution, but will only have available until
the conclusion of the auction. These auction notifications are
available on other data feeds and are made available to all exchange
participants. They are being added to SQF 6.0 for convenience purposes
so that market participants utilizing SQF 6.0 have an additional means
to access the notifications directly impacting their quoting behavior
and are not required to take other feeds simply to have access to
notifications.
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\7\ See Phlx Rule 1017.
\8\ See Phlx Rule 1082(a)(ii)(B)(4).
\9\ See Phlx Rule 1082(a)(ii)(B)(3).
\10\ See Phlx Rule 1080.08(e).
\11\ See Securities Exchange Act Release No. 62678 (August 10,
2010), 75 FR 50021 (August 16, 2010) (SR-Phlx-2010-108).
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A participant's quoting application can receive these notifications
over the same interface it sends quotes to the Exchange, SQF, and can
now use the data to respond to auctions quickly and efficiently. This
data is not sent as a quote to the market because it represents
interest that is not immediately executable or, in the case of complex
orders, represents a complex strategy which is not disseminated by the
Options Price Reporting Authority.
Data proposed for SQF 6.0 will initially include the following:
(1) Options Auction Notifications (e.g., opening imbalance, market
exhaust, PIXL \12\ or other information currently provided on SQF 5.0);
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\12\ If PIXL is not operative at the time this filing becomes
operative, it will be included once PIXL does becomes operative.
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(2) Options Symbol Directory Messages (currently provided on SQF
5.0);
(3) System Event Messages (e.g., start of messages, start of system
hours, start of quoting, start of opening);
(4) Complex Order Strategy Auction Notifications (COLA);
(5) Complex Order Strategy messages;
(6) Option Trading Action Messages (e.g., halts, resumes); and
(7) Complex Strategy Trading Action Message (e.g., halts, resumes).
The Exchange currently provides Exchange members with execution
reports through two interfaces. Execution reports are made available to
all exchange participants on a Risk Management Feed known as ``RMP,''
as well as an interface replacing RMP known as the Clearing Trade
Interface or ``CTI.'' \13\ An additional difference between SQF 5.0 and
SQF 6.0 will be the inclusion of execution report messages on SQF 6.0
where none are currently sent over SQF 5.0 today. Execution reports are
being added to SQF 6.0 for convenience purposes so that market
participants utilizing SQF 6.0 have an additional means to receive
execution reports that are relevant to their quoting application and
are not required to take and integrate either of these feeds simply to
get execution reports. These messages are sent to the participants when
the quote they entered over the SQF interface executes.
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\13\ See Securities Exchange Act Release No. 62155 (May 24,
2010), 75 FR 30081 (May 28, 2010) (SR-Phlx-2010-67). The Exchange
assesses its members a Real-time Risk Management Fee of $.003 per
contract for receiving this information. The Exchange is not
proposing to amend this fee.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b)
[[Page 62443]]
of the Act \14\ in general, and furthers the objectives of Section
6(b)(5) of the Act \15\ 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, and, in general,
to protect investors and the public interest. The Exchange believes
that this proposal is in keeping with those principles by providing
data that is administrative in nature or that is used to attract
liquidity to the Exchange in response to an auction.
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\14\ 15 U.S.C. 78f(b).
\15\ 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 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, 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 \16\ and Rule 19b-
4(f)(6) \17\ thereunder.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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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The Exchange has asked the Commission to waive the 30-day operative
delay and designate the proposed rule change to become operative during
the week of October 11, 2010. The Exchange has represented that it is
important to the Exchange's internal technology roll-out to be able to
have SQF 6.0 in place by this time in order for other technological
plans to be implemented. The Exchange has also represented that the
proposed rule change is a non-controversial system change to data and
would not affect the execution of trades. The Exchange has argued that
the prompt implementation of the proposal would extend the benefits and
new features of SQF 6.0 to its users promptly. On the basis of the
Exchange's representations, the Commission believes that waiving the
30-day operative delay is consistent with the protection of investors
and the public interest. Therefore, the Commission designates the
proposed rule change as operative on October 11, 2010.\18\
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\18\ For purposes only of waiving the 30-day operative delay,
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 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 e-mail to [email protected]. Please include
File Number SR-Phlx-2010-124 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-2010-124. 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 website (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 website 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-2010-124 and should be submitted on or before October 29, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-25395 Filed 10-7-10; 8:45 am]
BILLING CODE 8011-01-P