[Federal Register Volume 76, Number 72 (Thursday, April 14, 2011)]
[Notices]
[Pages 21081-21083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-9061]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64284; File No. SR-Phlx-2011-48]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Update
Provisions Regarding the Dress Code and Trade Verification
April 8, 2011.
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 April 6, 2011, 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 is filing with the Commission a proposal to amend Phlx
Rule 1054 (Verification of Contracts and Reconciliation of Uncompared
Trades) and Regulation 6 (Dress) of Rule 60 (Order and Decorum Code)
\3\ to delete obsolete provisions and update and modernize these
sections.
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\3\ The Exchange's Order and Decorum regulations are part of the
Exchange's Options Floor Procedure Advices (``OFPAs'' or Advices''),
which may correspond to Exchange rules, and contain the Exchange's
minor rule plan (``MRP'' or ``Minor Rule Plan'') in respect of
options trading. The Minor Rule Plan consists of Advices with preset
fines, pursuant to Rule 19d-1(c) under the Act. 17 CFR 240.19d-1(c).
The Exchange is not, by this filing, amending the fine schedule for
Regulation 6 in OFPA.
Similarly to OFPAs, the Exchange also has Equity Floor
Procedure Advices (``EFPAs'') in respect of equity trading, which
are not amended by this filing.
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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
[[Page 21082]]
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 amend Rule 1054 and
Regulation 6 to delete obsolete provisions and update and modernize
these sections.
The Exchange's Order and Decorum regulations pursuant to Rule 60 of
the Option Floor Procedure Advices,\4\ with corresponding fine
schedules, were originally codified in 1989.\5\ The dress code in
Regulation 6 of Rule 60 in OFPA, which indicates dress norms for
individuals on the options floor (the ``Dress Code'') was omitted
inadvertently in the 1989 filing and was added the year thereafter.\6\
The last proposal in 2007 to amend the Dress Code adopted a business
casual code and indicated what business attire was deemed acceptable on
the trading floor.\7\
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\4\ Order and Decorum regulations relate to administration of
health, safety, welfare and general order and decorum on the
Exchange.
\5\ See Securities Exchange Act Release No. 27072 (August 8,
1989), 54 FR 32550 (SR-Phlx-89-41) (notice of filing and immediate
effectiveness).
\6\ See Securities Exchange Act Release No. 28499 (October 10,
1990), 55 FR 41290 (SR-Phlx-90-29) (approval order).
\7\ See Securities Exchange Act Release No. 55492 (March 20,
2007), 72 FR 14321 (March 27, 2007) (SR-Phlx-2006-61) (notice of
filing).
Regulation 6 currently states:
Acceptable Business Casual Dress (Men): Casual slacks
(i.e. khakis, dockers, corduroy fabric). Ties are optional,
but must be neat, clean, and properly tied. If a tie is torn or
frayed, you will be asked to remove it.
Traditional collared shirts, polo shirts, golf shirts
(shirts may be long or short sleeved). Shirts must be neat and
clean. All shirts must be tucked in. Shirts must be buttoned at
least to the second button from the top. Dress shoes,
casual shoes, loafers, athletic shoes and boots (note: pant legs may
not be tucked into boots). All shoes must be neat and clean.
Traditional business attire is always acceptable. Blazers
may be worn in lieu of trading jackets. Trading jackets or
blazers must be worn at all times on the trading floor.
Identification badges must be properly displayed at chest level.
Sweaters worn over a collared shirt, turtlenecks worn under
a collared shirt. Acceptable Business Casual Dress (Women):
Dresses or casual slacks (i.e. khakis, dockers, corduroy fabric).
Shirts, sweaters, shells, turtlenecks, blouses, polo
shirts, golf shirts (long or short sleeved). Dress shoes,
casual shoes, loafers, athletic shoes and boots (note: pant legs may
not be tucked into boots). All shoes must be neat and clean.
Inappropriate Casual Dress (Men & Women): Denim clothing of
any kind (i.e. pants, skirts, dresses, shirts, vests, blouses).
Sweat shirts, sweat pants, other sweat apparel of any kind
and sport jerseys. Shorts, gym shorts, skorts, culottes,
beach wear, workout attire or miniskirts. T-shirts of any
kind. Stirrup pants or other excessively tight or revealing
clothing (i.e. bike shorts, leggings, sheer blouses, stretch pants).
Tank tops, halter tops, tube tops, tops with spaghetti
straps, backless tops, crop tops (note: no bare midriffs).
Clothing with any inappropriate, or oversized logos (cartoon logos,
oversized sports logos or inappropriately suggestive logos).
Slippers, sandals of any kind or open toed shoes.
Military fatigues, cargo pants, surgical scrubs, bib overalls.
Clothing which is torn, soiled or in need of repair.
Clothing and/or accessories which disrupt business
operations or which draw excessive attention to an employee
Hats or headgear unless worn for religious purposes.
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The Exchange does not propose by this filing to eliminate its
Regulation 6. Rather, in light of the Exchange options market combining
on-floor auction trading with an extensive electronic market, the
Exchange proposes to eliminate the specifics of the Dress Code from
Regulation 6 and set forth a procedure whereby the Exchange will
communicate the specifics of the Dress Code to members \8\ and post
them on the options floor. The Exchange believes that in this way it
would be able to address obsolete or unused Dress Code requirements \9\
and most efficiently address any needed changes and updates, subject to
notification of Exchange members regarding such requirements.
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\8\ This includes, per current use, members, member
organizations, participants, and participant organizations. As such,
the Exchange is deleting obsolete or unused references to Floor
Manager, Post Supervisor, and Firm Representative from Regulation 6.
\9\ As an example, the current Dress Code discusses items that
are essentially out of use such as skorts and culottes.
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Specifically, the Exchange proposes to amend Regulation 6 to
indicate that the Dress Code outlining acceptable and unacceptable
dress for members and their staff, as well as any changes to the Dress
Code, will be communicated to members by the Exchange in writing.\10\
In addition, to further provide notification to on-floor traders, the
Dress Code will be posted on the options trading floor of the Exchange.
Moreover, to make sure that members have proper notification regarding
changes, the Exchange proposes that changes to the Dress Code will only
be effective three business days after such changes are communicated to
Exchange members. By communicating guidelines as needed regarding
acceptable apparel while on the trading floor, the Exchange intends to
encourage the membership (and their associated persons) to comply with
the Dress Code requirements.
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\10\ The Exchange intends to communicate the Dress Code to
members within one week of the date of effectiveness of this
proposal.
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Rule 1054 regarding the procedure for verification and
reconciliation of options trades has been in existence for more than
thirty years.\11\ During that time the rule has seen little substantive
(material) modification.\12\ As such, the rule still has obsolete
legacy language discussing the printing and distribution of carbon copy
trade contracts. The Exchange therefore proposes to eliminate reference
to obsolete or unused language in Rule 1054, particularly in light of
having both on-floor and electronic markets, while preserving most of
the rule.
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\11\ Rule 1054 was formerly known as Rule 1074. See Securities
Exchange Act Release No. 13591 (June 2, 1977) (SR-PBW-76-10)
(approval order regarding, among things, renumbering Rule 1074 as
1054).
Rule 1054 states: At the time of execution, a carbon copy trade
contract will be printed and distributed by the Exchange to the
respective purchasing and selling members. Promptly upon receipt of
such contract, a member organization which is a clearing member of
the Options Clearing Corporation shall be obligated to verify the
information shown on the contract, to reconcile all uncompared
trades and advisory trades shown on the uncompared trade contract
and to report all reconciliations, corrections and adjustments to
the Exchange in accordance with such procedures as may be
established by the Exchange from time to time. Such reconciliation
report shall be filed with the Exchange prior to such cut-off hour
as the Exchange may prescribe and shall be binding on the clearing
member on whose behalf it is filed. The Exchange will consider all
trades as executed and compared as of such cut-off hour.
\12\ The last modification of the rule, as an example, was for
the purpose of deleting Commentary .01 to Rule 1054 relating to use
of certain technology for the trading of Dell options. See
Securities Exchange Act Release No. 42143 (November 16, 1999), 64 FR
66224 (SR-Phlx-99-22) (November 24, 1999) (notice of filing and
immediate effectiveness).
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Specifically, after eliminating reference to carbon copy trade
contracts, the Exchange proposes to state that a member organization
which is a clearing member of the Options Clearing Corporation shall be
obligated to compare all trades made through or on behalf of such
member as soon as possible after such trades are made or after
receiving notification thereof. In addition, as currently required by
the rule, such member would have to reconcile all uncompared trades and
advisory trades and report all reconciliations, corrections and
adjustments to the Exchange in accordance with such procedures as
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may be established by the Exchange from time to time. The current rule
requirement that such reconciliation report shall be filed with the
Exchange prior to such cut-off hour as the Exchange may prescribe and
shall be binding on the clearing member on whose behalf it is filed is
not changed.
The Exchange believes that the proposed Rule 1054 changes not only
deletes obsolete provisions and updates the rule but also brings the
rule into conformity with current options trading practices.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \13\ in general, and furthers the objectives of Section
6(b)(5) of the Act \14\ 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, by deleting
obsolete provisions and updating and modernizing its Regulation 6
regarding the Exchange's Dress Code and Rule 1054 regarding
verification and reconciliation of options trades.
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\13\ 15 U.S.C. 78f(b).
\14\ 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 Exchange believes that the foregoing proposed rule change may
take effect upon filing with the Commission pursuant to Section
19(b)(3)(A) \15\ of the Act and Rule 19b-4(f)(6)(iii) thereunder \16\
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.
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 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.
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At any time within 60 days of the filing of such 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 e-mail to [email protected]. Please include
File Number SR-Phlx-2011-48 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-2011-48. 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-2011-48 and should be submitted on or before May 5,
2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Cathy Ahn,
Deputy Secretary.
[FR Doc. 2011-9061 Filed 4-13-11; 8:45 am]
BILLING CODE 8011-01-P