Federal Register / Vol. 75, No. 195 / Friday, October 8, 2010 / Notices 62441 

18The FIF Letter also raises concerns regarding 

the ISO Indicator on route reports. FINRA notes that 

firms are already required to indicate on route 

reports whether an order is routed as an Intermarket 

Sweep Order. FINRA also points out that the ISO 

indicator is not one of the proposed amendments 

in the proposed rule change and therefore should 

not affect the Commission’s consideration of the 

proposal. 

19FINRA’s OATS Reporting Technical 

Specifications outline detailed reporting 

requirements concerning the OATS rules, 

including, among other things, providing firms with 

record and file formats and transmission 

requirements. 

20See Wiesenberg Letter. 

21The commenter’s suggestion that FINRA re-file 

the proposed rule change would not address the 

addition of the Routed Order Type Indicator, as 

such requirement is contained in FINRA’s OATS 

Reporting Technical Specifications, not the 

proposed rule change. 

22See FINRA Response Letter. 

23 In approving the proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

24 15 U.S.C. 78s(b)(2). 

25 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

Specifically, the FIF Letter raises 

concerns regarding the November 10, 

2010 implementation date for the 

proposed rule changes given other 

regulatory initiatives with similar 

implementation timeframes. In response 

to these concerns, FINRA points out that 

the proposed amendments are to 

facilitate its surveillance efforts 

concerning firms’ compliance with 

amendments to Regulation SHO, which 

becomes effective November 10, 2010. 

FINRA believes that it is necessary that 

the implementation date of the 

proposed amendments coincide with 

the implementation date of the 

amendments to Regulation SHO. 

The FIF Letter also raises concerns 

with the amount of time allowed for 

testing prior to implementation of the 

proposed amendments. In response, 

FINRA has represented that it has 

moved up the testing timetable to allow 

firms to begin testing on October 11th, 

rather than on October 20th as initially 

proposed. 

The FIF Letter expresses concerns 

regarding the complexity of the 

proposed changes and cites the creation 

of certain route reports for post trade 

agency allocation as an example of such 

complexity. FINRA explains that the 

requirement to provide the price of a 

routed order on route reports does not 

change any of the reporting 

requirements for orders handled on an 

agency average price or post trade 

allocation basis. FINRA also states that 

it has published a new FAQ on its 

OATS Web site on this issue. 

Lastly, the FIF Letter indicates that 

there may be confusion regarding the 

proposed November 10th 

implementation date of the proposed 

rule change and the November 8th date 

when the changes will be available in 

the OATS production environment.18

FINRA clarifies that although the OATS 

field format changes will be placed in 

the production environment on 

November 8th, they will not be required 

to be populated until the proposed 

November 10th implementation date of 

the proposed rule change. FINRA also 

states that it has published a new FAQ 

on its OATS Web site to this effect. 

The Wiesenberg Letter raises an issue, 

not with respect to one of the proposed 

amendments in the proposed rule 

change, rather with respect to one of the 

proposed requirements in FINRA’s 

OATS Reporting Technical 

Specifications 19 related to the proposed 

rule change, the addition of the Routed 

Order Type Indicator. The commenter 

believes that the proposed requirement 

‘‘can be determined from [other OATS] 

information supplied’’ by the reporting 

member, ‘‘serve[s] no purpose’’ and 

‘‘provides no useful additional 

information.’’ 20 The commenter also 

generally questions whether such 

requirement is consistent with the Act 

and urges FINRA to reconsider the 

proposed requirement in FINRA’s OATS 

Reporting Technical Specifications and 

re-file the proposed rule change 21 or, in 

the alternative, that the Commission 

reject the proposal. FINRA disagrees 

with the commenter and responds that 

the Routed Order Type Indicator ‘‘helps 

FINRA to validate whether a price must 

be included on a Route Report, 

particularly since the order type of a 

route may not be the same as the order 

type of the parent order received from 

the firm.’’ 22

IV. Discussion and Commission’s 

Findings 

After careful review of the proposed 

rule change, the comment letters 

received and the FINRA Response 

Letter, the Commission believes that the 

proposed rule change is consistent with 

the requirements of the Act, and the 

rules and regulations thereunder that 

are applicable to a national securities 

association.23 In particular, the 

Commission believes that the proposed 

rule change is consistent with the 

provisions of Section 15A(b)(6) of the 

Act, in that it is designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, and, in general, to 

protect investors and the public interest. 

With regard to the comments 

received, the Commission believes that 

FINRA has adequately responded to the 

commenters’ concerns. Additionally, 

the Commission agrees with FINRA and 

believes that the proposed rule change 

to amend FINRA’s trade reporting and 

OATS rules, including changes relating 

to recent amendments to SEC 

Regulation SHO, will enhance FINRA’s 

surveillance for member compliance, 

including with SEC Regulation SHO. 

For the reasons discussed above, the 

Commission finds that the proposal is 

consistent with the Act. 

V. Conclusion 

It Is Therefore Ordered, pursuant to 

Section 19(b)(2) of the Act,24 that the 

proposed rule change (File No. SR– 

FINRA–2010–043) be and hereby is 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25331 Filed 10–7–10; 8:45 am] 

BILLING CODE 8011–01–P 

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. 

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:// 


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62442 Federal Register / Vol. 75, No. 195 / Friday, October 8, 2010 / Notices 

4See 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. 

5Participants receive access through payment of 

a port fee. 

6Although 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). 

7See Phlx Rule 1017. 8See Phlx Rule 1082(a)(ii)(B)(4). 9See Phlx Rule 1082(a)(ii)(B)(3). 10See Phlx Rule 1080.08(e). 11See Securities Exchange Act Release No. 62678 

(August 10, 2010), 75 FR 50021 (August 16, 2010) 

(SR–Phlx–2010–108). 

12 If PIXL is not operative at the time this filing 

becomes operative, it will be included once PIXL 

does becomes operative. 

13See 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. 

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

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. 

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); 

(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. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 


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Federal Register / Vol. 75, No. 195 / Friday, October 8, 2010 / Notices 62443 

14 15 U.S.C. 78f(b). 

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

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. 

18For 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). 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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. 

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. 

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

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 rulecomments@sec.gov. 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

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25395 Filed 10–7–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63028; File No. SR– 

NASDAQ–2010–099] 

Self-Regulatory Organizations; 

NASDAQ Stock Market LLC; Order 

Approving a Proposed Rule Change To 

Adopt a Definition of Professional and 

Require That All Professional Orders 

Be Appropriately Marked 

October 1, 2010. 

I. Introduction 

On August 6, 2010, The NASDAQ 

Stock Market (‘‘NASDAQ’’), 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 to amend Chapter I, Section 1 

(Definitions) of the rules of the Nasdaq 

Options Market (‘‘NOM’’) to adopt a 

definition of ‘‘Professional’’ and require 

that all Professional orders be 

appropriately marked by NOM 


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