29792 Federal Register / Vol. 75, No. 102 / Thursday, May 27, 2010 / Notices 

16 17 CFR 240.19b–4(f)(6). 

17 17 CFR 240.19b–4(f)(6)(iii). 

18See id. Pursuant to Rule 19b–4(f)(6)(iii) under 

the Exchange Act, the Exchange is required to give 

the Commission written notice of its intent to file 

a 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. 

19For 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. 78(f). 

20 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 61862 

(April 16, 2010), 75 FR 20016. 4See Securities Exchange Act Release No. 50728 

(November 23, 2004), 69 FR 69982 (December 1, 

2004) (SR–Phlx–2004–74). 

A proposed rule change filed under 

Rule 19b–4(f)(6) 16 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),17 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest.18 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 is 

merely deleting a rule that is duplicative 

of other rules in its rulebook.19 The 

Exchange has represented that the 

deletion of the rule will not limit the 

Exchange’s authority to require its 

members and member organizations to 

provide needed information. 

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 rulecomments@sec.gov. Please include File 

Number SR–NYSEAMEX–2010–45 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–NYSEAMEX–2010–45. 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 

publicly available. All submissions 

should refer to File Number SR– 

NYSEAMEX–2010–45 and should be 

submitted on or before June 17, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–12746 Filed 5–26–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62147; File No. SR–Phlx– 

2010–43] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Order 

Approving a Proposed Rule Change 

Relating to Quote Spread Parameters 

and Batching of Violations 

May 21, 2010. 

On March 26, 2010, NASDAQ OMX 

PHLX, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change relating to quote spread 

parameters and batching of violations. 

The proposed rule change was 

published for comment in the Federal 

Register on April 16, 2010.3 The 

Commission did not receive any 

comment letters on the proposed rule 

change. This order approves the 

proposed rule change. 

The Exchange proposed to update 

Advice F–6 to reflect language requiring 

options quoted electronically to be 

quoted with a $5 quote spread after the 

opening that was previously 

inadvertently omitted from Advice F–6. 

With respect to the proposed changes to 

Advice F–6, the Exchange represented 

that those who are quoting verbally (in 

open outcry) must, throughout the 

trading day, comply with the regular 

quote spread parameters that apply at 

the opening. The language of quote 

spreads not exceeding $5 after the 

opening for those quoting options 

electronically was inadvertently not 

incorporated into Advice F–6 in a 

previous rule filing.4 The Exchange 

proposed to correct this oversight by 

inserting this language regarding 

electronically quoted options into 

Advice F–6. 

The Exchange also proposed to amend 

the Exchange’s fine schedule applicable 

to Advice F–6, which is administered 

pursuant to the Exchange’s minor rule 

plan (‘‘MRP’’). As amended, the fine 

schedule would now consist of Warning 

Letters for the first three violations, and 

three fines thereafter ($250, $500 and 

$1,000). A seventh violation would 

result in referral to the Exchange’s 

Business Conduct Committee (‘‘BCC’’) 

for disciplinary action. In addition, the 

Exchange proposed that the fine 

schedule would be administered on a 

one-year running calendar basis, such 

that violations within one year of the 

last ‘‘occurrence’’ would count as the 

next ‘‘occurrence.’’ Currently, the fine 

schedule is administered on a two-year 

running calendar basis. 

Finally, the Exchange proposed 

amendments to Rules 960.2 and 970 to 

permit the aggregation or ‘‘batching’’ of 

quote spread parameter violations. Phlx 

notes that quoting on the Exchange has 

become entirely electronic; thus, when 

there is a quoting error, the error can 

affect every series that a firm is quoting, 

generating multiple instances of quote 

spread violations. The Exchange 

believes that, rather than taking each 


wwoods2 on DSK1DXX6B1PROD with NOTICES
Federal Register / Vol. 75, No. 102 / Thursday, May 27, 2010 / Notices 29793 

5Confidential letters from Stephen M. Pettibone, 

Managing Director Surveillance, Phlx, to Michael 

Gaw, Assistant Director, Division of Trading and 

Markets, and Tina Barry, Assistant Director, Office 

of Compliance Inspections and Examinations, 

Commission, dated October 6, 2009 and December 

30, 2009. 

6See letter from Charles Rogers, Chief Regulatory 

Officer, Phlx, to Tina Barry, Assistant Director, 

Office of Compliance Inspections and Examinations 

and Michael Gaw, Assistant Director, Division of 

Trading and Markets, Commission, dated February 

18, 2010. 

7 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78f(b)(1) and 78f(b)(6). 10 17 CFR 240.19d–1(c)(2). 

11 15 U.S.C. 78s(b)(2). 

12 17 CFR 240.19d–1(c)(2). 

13 17 CFR 200.30–3(a)(12) and 200.30–3(a)(44). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

event to the BCC as a fourth violation 

under the current rule, such violations 

should be batched together and treated 

as one violation. This way, pursuant to 

the revised rules, the firm would receive 

a warning letter for the first three 

batched violations before being subject 

to a monetary fine. The Exchange 

further noted that it could, in any 

particular situation, deem the violations 

to be egregious rather than ‘‘minor’’ and 

refer the matter directly to the BCC for 

disciplinary action. The Exchange 

believes that this approach is 

appropriate because the relevant 

warning letters or monetary fines should 

serve as a deterrent against future 

violations, while recognizing that a 

single programming error can have a 

widespread effect. In addition, the 

Exchange believes that Advice F–6 (and 

its corresponding rule) is appropriate for 

batching because the automated 

surveillance for quote spread parameter 

compliance,5 as well as the issuance of 

sanctions pursuant to the minor rule 

plan,6 will be conducted daily. 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.7 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,8 which requires, 

among other things, that the rules of a 

national securities exchange be 

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. The Commission also 

believes that the proposal is consistent 

with Sections 6(b)(1) and 6(b)(6) of the 

Act,9 which require that the rules of an 

exchange enforce compliance with, and 

provide appropriate discipline for, 

violations of Commission and Exchange 

rules. Furthermore, the Commission 

believes that the proposed changes to 

the MRP should strengthen the 

Exchange’s ability to carry out its 

oversight and enforcement 

responsibilities as a self-regulatory 

organization in cases where full 

disciplinary proceedings are unsuitable 

in view of the minor nature of the 

particular violation. In addition, the 

Commission finds that the proposal is 

consistent with the public interest, the 

protection of investors, or otherwise in 

furtherance of the purposes of the Act, 

as required by Rule 19d–1(c)(2) under 

the Act,10 which governs minor rule 

violation plans. 

The Commission believes that the 

Exchange’s proposal to amend Advice 

F–6 to add rule text referencing quote 

spread parameters for options that are 

quoted electronically is appropriate 

because the text was inadvertently 

omitted. In addition, the Commission 

believes that batching of violations of 

the quote spread parameter rule, under 

the MRP, reasonably addresses quoting 

violations on an electronic market, 

where one inadvertent error can 

potentially result in multiple quotes that 

fall outside the quote spread parameters. 

The Exchange has represented it will 

conduct automated surveillance for 

quote spread parameter compliance on 

a daily basis, and will issue sanctions 

for quote spread violations pursuant to 

the MRP also on a daily basis. The 

Commission further notes that pursuant 

to Rules 960.2(f)(ii) and 970.01, the 

batching program will continue to 

require that the violations be 

determined based on an exceptionbased surveillance program. Any further 

proposal by the Exchange to permit the 

batching of violations of any Exchange 

rule would be subject to Commission 

approval. 

In approving this proposed rule 

change, the Commission in no way 

minimizes the importance of 

compliance with Exchange rules and all 

other rules subject to the imposition of 

fines under the MRP. The Commission 

believes that the violation of any selfregulatory organization’s rules, as well 

as Commission rules, is a serious matter. 

However, the MRP provides a 

reasonable means of addressing rule 

violations that do not rise to the level of 

requiring formal disciplinary 

proceedings, while providing greater 

flexibility in handling certain violations. 

The Commission expects that the 

Exchange will continue to conduct 

surveillance with due diligence and 

make a determination based on its 

findings, on a case-by-case basis, 

whether a fine of more or less than the 

recommended amount is appropriate for 

a violation under the MRP, whether it 

might not be appropriate to batch a 

series of actions as a single violation 

under the MRP, or whether a violation 

or series of violations may require 

formal disciplinary action. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act 11 and Rule 

19d–1(c)(2) under the Act,12 that the 

proposed rule change (SR–Phlx–2010– 

43) be, and hereby is, approved and 

declared effective. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–12748 Filed 5–26–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62146; File No. SR–FINRA– 

2010–023] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Update Certain CrossReferences and Make a NonSubstantive Technical Change to a 

FINRA Rule 

May 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 May 4, 

2010, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) 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 FINRA. FINRA has 

designated the proposed rule change as 

constituting a ‘‘non-controversial’’ rule 

change under paragraph (f)(6) of Rule 

19b–4 under the Act,3 which renders 

the proposal effective upon receipt of 

this filing by the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 


wwoods2 on DSK1DXX6B1PROD with NOTICES