67424 Federal Register / Vol. 75, No. 211 / Tuesday, November 2, 2010 / Notices 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4Stock/options orders may not trade at the same 

price as a Customer order in the option leg, unless 

satisfying the Customer order first, even though the 

Customer order cannot satisfy all the terms of the 

Stock/option order. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63187; File No. SR– 

NYSEAmex–2010–100] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

NYSE Amex LLC Amending Rule 

900.3NY(h) To Define Stock/Complex 

Orders, Rule 963NY(d) To Update and 

Clarify the Priority of Complex Orders, 

Eliminate Rule 963.1NY, and Amend 

Rule 980NY To Establish a Complex 

Order Auction 

October 27, 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 October 

20, 2010, NYSE Amex LLC (the 

‘‘Exchange’’ or ‘‘NYSE Amex’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. 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 proposes to amend 

Rule 900.3NY(h) to define Stock/ 

Complex Orders, amend Rule 963NY(d) 

to update and clarify the priority of 

Complex Orders, eliminate Rule 

963.1NY, and amend Rule 980NY to 

establish a Complex Order Auction. The 

text of the proposed rule change is 

available on the Exchange’s Web site at 

http://www.nyse.com, on the 

Commission’s Web site at http:// 

www.sec.gov, at 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 

self-regulatory organization 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 those 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 parts 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 this filing is to update 

and streamline the rules governing open 

outcry trading of Complex Orders, 

including the definition of a Stock/ 

Complex Order, and to adopt new rules 

to provide for a Complex Order Auction 

(‘‘COA’’) in the Electronic Complex 

Order rules. The filing also clarifies the 

minimum trading and quoting 

increment permissible for Complex 

Orders. 

Stock/Complex Orders 

NYSE Amex proposes to amend Rule 

900.3NY(h) to define Stock/Complex 

Orders as orders for the purchase or sale 

of a Complex Order coupled with an 

order to buy or sell a stated number of 

units of an underlying stock or a 

security convertible into the underlying 

stock (‘‘convertible security’’) 

representing either the same number of 

units of the underlying stock or 

convertible security as are represented 

by the options leg of the Complex Order 

with the least number of contracts, or 

(B) the number of units of the 

underlying stock necessary to create a 

delta neutral position, but in no case in 

a ratio greater than 8 options contracts 

per unit of trading of the underlying 

stock or convertible security established 

for that series by the Clearing 

Corporation, as represented by the 

options leg of the Complex Order with 

the least number of options contracts. 

Revision to Complex Order Open 

Outcry Rules 

NYSE Amex proposes to amend Rule 

963NY(d) and to delete Rule 963.1NY. 

The Exchange proposes to adopt a 

provision based on Chicago Board 

Options Exchange (‘‘CBOE’’) Rule 6.45(e) 

to describe the priority of Complex 

Orders in open outcry. The new 

language does not change the process of 

executing a Complex Order or alter the 

priority of quotes and orders; rather, it 

streamlines and updates the rule text. 

Currently, when executing a Complex 

Order, contra sided complex trading 

interest in the Trading Crowd has 

priority over individual orders and 

quotes in the leg markets at the same net 

debit or credit price, except when 

individual Customer orders in the 

Consolidated Book are present in all of 

the leg markets. When there are 

Customer orders present in all legs at 

the same net debit or credit price, the 

Complex Order must first trade with the 

individual Customer orders, and may 

then trade against complex trading 

interest in the crowd. Complex Orders 

trading against contra side complex 

trading interest in the Trading Crowd 

must otherwise trade at least one leg at 

a price that is at least one minimum 

price variation better than individual 

Customer orders in the Consolidated 

Book.4

The proposed rule change will not 

alter these procedures or priorities. 

In addition, the Exchange is clarifying 

that Stock/Complex Orders (involving 

two or more options legs and a stock 

leg) may be executed at a net debit or 

credit price with another ATP Holder 

without giving priority to equivalent 

bids (offers) in the individual series legs 

that are represented in the Trading 

Crowd or Customer limit orders in the 

Consolidated Book, provided at least 

one options leg of the order betters the 

corresponding Customer bid (offer) in 

the Consolidated Book by at least one 

minimum trading increment. 

NYSE Amex also proposes to 

eliminate Rule 963.1NY. The proposed 

Rule 963NY(d) describes priority for all 

Complex Orders and Stock/option 

orders, while Rule 963.1NY only 

describes the procedures for executing 

complex transactions; it does not define 

or describe any execution priority, 

obligation, or privilege that was not 

already described in other rules. 

Additionally, those procedures did not 

lay out procedures for all complex 

transactions; it narrowly described only 

simple Complex Orders with two option 

legs. The proposed rule change 

specifically eliminates the description 

of a ‘‘locked book market’’ in Rule 

963.1NY(f). This provision, which was 

based on NYSE Arca Rule 6.75, 

Commentary .01(f), was a description of 

a narrow circumstance, and was more 

appropriate when the Public Customer 

Book was maintained by an Order Book 

Official. At that time, the Order Book 

had priority to trade at a given price if 

it held an order. Paragraph (f) described 

a situation where the Order Book had 

orders at all of the prices where a 

Complex Order might trade, but the 

orders in the leg markets could not 

satisfy the terms of the Complex Order. 

The proposed new language addresses 

this and similar circumstances in a more 

clear manner. 


hsrobinson on DSK69SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 211 / Tuesday, November 2, 2010 / Notices 67425 

5For example, the Exchange could determine that 

a complex order with two option legs is eligible for 

a COA to the extent they are less than two ticks 

away from the ‘‘top of the book’’, which would be 

the best price considering the net prices available 

among Complex Orders in the Consolidated Book 

and the individual component legs in the 

Consolidated Book. All pronouncements, including 

changes hereto, regarding COA eligibility and 

Response Time Intervals will be announced to ATP 

Holders via Regulatory Circular. 

6See Securities Exchange Act Release No. 58361 

(August 14, 2008) 73 FR 49529 (August 21, 2008) 

(approving SR–Phlx–2008–50). 

Complex Order Auction 

Additionally, the Exchange proposes 

to adopt rules establishing a Complex 

Order Auction, based on rules approved 

for use by the CBOE. CBOE Rule 6.53(d) 

describes the process for a Complex 

Order RFR Auction. NYSE Amex 

proposes a similar auction under Rule 

980NY, with one priority change based 

on NASDAQ OMX PHLX (‘‘Phlx’’) Rule 

1080 Commentary .08(e)(vi)(A)(2). 

Proposed paragraph (d) of Rule 

980NY will describe the COA process. 

The proposed rule change will give the 

Exchange the authority to determine, on 

a class by class basis, which incoming 

orders are eligible for a COA based on 

marketability (defined as a number of 

ticks from the current market), size, and 

Complex Order type (‘‘COA-eligible 

orders’’).5

Upon receiving a COA-eligible order 

and a request by the ATP Holder 

representing the order that it be COA’d, 

the Exchange will send an RFR message 

to ATP Holders with an interface 

connection to NYSE Amex that have 

elected to receive such RFR messages. 

This RFR message will identify the 

component series, the size of the COA 

eligible order and any contingencies, if 

applicable. However, the RFR will not 

identify the side of the market (i.e., 

whether the COA-eligible order is to buy 

or sell). 

Market Makers with an appointment 

in the relevant options class, and ATP 

Holders acting as agent for orders 

resting at the top of the Consolidated 

Book in the relevant options series, may 

electronically submit responses (‘‘RFR 

Responses’’), and modify, but not 

withdraw the RFR response at any time 

during the request response time 

interval (the ‘‘Response Time Interval’’). 

RFR responses must be in a permissible 

ratio, and may be expressed on a net 

price basis in a one cent increment. In 

addition, RFR Responses will be visible 

to those who have subscribed to RFRs. 

The applicable Response Time Interval 

will be determined by the Exchange on 

a class by class basis, and, in any event, 

will not exceed one second. Proposed 

Rule 980NY(e)(3) also clarifies that the 

obligations of Rule 935NY, Order 

Exposure Requirements, are separate 

from the duration of the Response Time 

Interval. 

When the Response Time Interval 

expires, the COA-eligible order will be 

executed and allocated to the extent it 

is marketable, or route to the 

Consolidated Book to the extent it is not 

marketable. If executed, the rules of 

trading priority will provide that the 

COA-eligible order be executed based 

first on net price, and, at the same price: 

(i) Pre-existing interest in the leg 

markets: Individual orders and quotes 

in the leg markets resting in the 

Consolidated Book prior to the initiation 

of a COA will have first priority to trade 

against a COA-eligible order; 

(ii) Customer Complex interest 

received during the Auction: Customer 

Electronic Complex Orders resting in 

the Consolidated Book before, or that 

are received during, the Response Time 

Interval and Customer RFR Responses 

shall collectively have second priority 

to trade against a COA-eligible order. 

The allocation of a COA-eligible order 

against the Customer Electronic 

Complex Orders resting in the 

Consolidated Book shall be on a Size 

Pro Rata basis; 

(iii) Non-Customer Complex trading 

interest: Non-Customer interest, 

comprised of Electronic Complex 

Orders resting in the Consolidated Book, 

Electronic Complex Orders placed in 

the Consolidated Book during the 

Response Time Interval, and RFR 

Responses, will collectively have third 

priority. The allocation of COA-eligible 

orders against these contra sided orders 

will be on a Size Pro Rata basis; 

(iv) Trading Interest that improves the 

derived Complex Best Bid/Offer. 

Individual orders and quotes in the leg 

markets that cause the derived Complex 

Best Bid/Offer to be improved during 

the COA, and which match the best RFR 

Response and/or Complex Orders 

received during the Response Time 

Interval, will be filled after Complex 

Orders and RFR Responses at the same 

net price.6 Allocations within the first 

category above (individual orders and 

quotes in the leg markets in the 

Consolidated Book) shall be in time, 

with Customer orders having priority 

ahead of non-customer orders and 

quotes at the same price. Allocations 

within the second category above 

(Customer Electronic Complex Orders 

resting in the Consolidated Book and 

Customer RFR responses) shall be based 

on a Size Pro Rata basis when multiple 

Customer Complex Orders or RFR 

responses exist at the same price. 

Allocations within the third category 

(non-Customer Electronic Complex 

Orders in the Consolidated Book and 

non-Customer RFR responses) shall be 

based on a Size Pro Rata basis when 

multiple non-Customer interests exist at 

the same price. Allocations among the 

fourth category (individual orders or 

quotes in the leg markets that cause the 

derived BBO to be improved) shall be 

filled on a Customer order/size pro rata 

basis. 

The following is an example of a 

COA: assume the Exchange’s derived 

complex market, based on individual 

series orders and quotes in the 

Consolidated Book, is offered at $1.15 

for 20 contracts. In addition, assume a 

Customer Electronic Complex Order 

resting in the Consolidated Book is 

offered at $1.15 for five contracts and 

two non-Customer orders resting in the 

Consolidated Book are offered at $1.15 

for five contracts each (for a total of 10 

contracts). A COA eligible order is then 

received to buy the complex strategy 

100 times paying $1.15. COA will 

auction the order. An RFR message is 

sent to subscribers indicating the 

Complex Order series and the size of 

100 contracts (but not the side of the 

market). The Response Time Interval for 

submitting RFR Responses will be for no 

more than one second. Before the 

conclusion of the Response Time 

Interval, the following RFR Responses 

on the other side are received: Customer 

RFR Responses to sell five at $1.14 and 

five at $1.15; and non-Customer RFR 

Responses to sell 15 at a price of $1.13, 

35 at a price of $1.14, and 100 at a price 

of $1.15. The execution of the COA 

eligible order will proceed as follows: 

• 15 contracts get filled at $1.13 

(against non-Customer RFR Responses). 

• 40 contracts get filled at $1.14 (five 

contracts against Customer RFR 

Responses, then 35 contracts against 

non-Customer RFR Responses); and 

• 45 contracts get filled at $1.15 (20 

contracts against the individual series 

legs in the Consolidated Book, then 10 

contracts against Customer Electronic 

Complex Orders in the Consolidated 

Book and Customer RFR Responses 

allocated on a Size Pro Rata basis. The 

non-Customer interest is allocated on a 

Size Pro Rata basis as follows: 1 contract 

((5/110) × 15) for each of the nonCustomer Electronic Complex Orders 

resting in the Consolidated Book before 

the COA began, and 13 contracts ((100/ 

110) × 15) against the non-Customer 

RFR Response. 

The proposed rule change also 

describes the handing of unrelated 

incoming Electronic Complex Orders 

that may be received prior to the 

expiration of the COA. Specifically, the 

proposed rule change provides the 

following: 


hsrobinson on DSK69SOYB1PROD with NOTICES
67426 Federal Register / Vol. 75, No. 211 / Tuesday, November 2, 2010 / Notices 

• An incoming Electronic Complex 

Order received prior to the expiration of 

the Response Time Interval for a 

pending COA (the ‘‘original COA’’) that 

is on the opposite side of the original 

COA eligible order and is marketable 

against the starting price of the original 

COA eligible order will be ranked in 

price time with RFR Responses by 

account type. The original COA-eligible 

order will be executed and allocated as 

described in proposed subparagraph 

(e)(6) of Rule 980NY. Any remaining 

balance of either the initiating COA 

eligible order or the incoming Electronic 

Complex order will be placed in the 

Consolidated Book and ranked as 

described in subparagraph (b) of Rule 

980NY. 

• Incoming COA-eligible orders that 

are received prior to the expiration of 

the Response Time Interval for the 

original COA that are on the same side 

of the market, that are price [sic] equal 

to the original COA-eligible order will 

join the COA. A message with the 

updated size will be published. The 

new order will be ranked and executed 

with the initiating COA-eligible order in 

price time order. Any remaining balance 

of either the initiating COA eligible 

order and/or the incoming Electronic 

Complex order will be placed in the 

Consolidated Book and ranked as 

described in subparagraph (b) of Rule 

980NY. 

• Incoming COA-eligible orders 

received during the Response Time 

Interval for the original COA-eligible 

order that are on the same side of the 

market, and that are priced worse than 

the initiating order, will join the COA. 

The new order(s) will be ranked and 

executed with the initiating COAeligible order in price time order. Any 

remaining balance of either the 

initiating COA eligible order and/or the 

incoming Electronic Complex order(s) 

will be placed in the Consolidated Book 

and ranked as described in 

subparagraph (b) of Rule 980NY. 

• An incoming COA eligible order 

that is received prior to the expiration 

of the Response Time Interval for the 

original COA that is on the same side of 

the market and at a better price than the 

original COA eligible order, will cause 

the auction to end. The initiating COAeligible order will be executed in 

accordance with subparagraph (e)(6). 

The COA-eligible order that caused the 

auction to end will then be executed in 

accordance with subparagraph (e)(6), 

and any unexecuted portion will either 

be (i) placed in the Consolidated Book, 

or (ii) if marketable, initiate another 

COA. 

Proposed Commentary .04 states that 

a pattern or practice of submitting 

unrelated orders that cause a COA to 

conclude early will be deemed conduct 

inconsistent with just and equitable 

principles of trade. Dissemination of 

information related to COA-eligible 

orders to third parties will also be 

deemed as conduct inconsistent with 

just and equitable principles of trade. 

Finally, NYSE Amex is proposing the 

RFR Responses can be modified but not 

withdrawn at any time before the end of 

the Response Time Interval. RFR 

Responses are firm only with respect to 

COA-eligible orders and RFR Responses 

received during the Response Time 

Interval. Any RFR response not 

accepted to trade, either in whole or in 

a permissible ratio, would expire at the 

end of the Response Time Interval and 

would not be eligible to trade with the 

Consolidated Book. 

Complex Order Minimum Increments 

NYSE Amex is proposing to revise 

and clarify the minimum increments 

that are permissible for bids and offers 

on Complex Orders. The Exchange 

believes these changes will facilitate the 

orderly execution of Complex Orders in 

open outcry and via the Consolidated 

Book and the COA mechanism. With 

respect to minimum increments, 

currently Rules 963.1NY and 980NY 

provide that the Complex Orders may 

generally be expressed in any 

increments regardless of the minimum 

increment otherwise appropriate to the 

individual legs of the order. Thus, for 

example, a Complex Order could be 

entered at a net debit or credit price of 

$1.03 even though the standard 

minimum increment for the individual 

series is generally $0.05 or $0.10. The 

Exchange is proposing to clarify in Rule 

963NY and 980NY that Complex Orders 

entered onto the Exchange, and/or 

resting in the Consolidated Book may be 

expressed on a net price basis in a 

multiple of the minimum increment 

(i.e., $0.01, $0.05, or $0.10, as 

applicable) or in a one-cent increment 

as determined by the Exchange on a 

class-by-class basis. 

NYSE Amex represents that any 

Customer Electronic Complex Orders 

entered to the NYSE Amex System must 

comply with the order exposure 

requirements of Rule 935NY, which 

prohibits an order entry firm from 

executing as principal against an order 

it represents as agent, unless the agency 

order is first exposed on the Exchange 

for at least one (1) second, or the order 

entry firm has been bidding or offering 

on the Exchange for at least one (1) 

second prior to receiving an agency 

order that is executable against such bid 

or offer. 

NYSE Amex notes that all 

components of a Complex Order, a 

Stock/option order, or a Stock/Complex 

Order must be entered into the NYSE 

Amex System and displayed at a total or 

net debit or credit, and that all 

components of a Complex Order, a 

Stock/option order, or a Stock/Complex 

Order, including the stock component of 

a Stock/option order or Stock/Complex 

Order, must be traded as a complete 

package. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with and 

furthers the objectives of Section 6(b)(5) 

of the Act, in that it is designed to 

promote just and equitable principles of 

trade, 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. In 

particular, investors will have greater 

opportunities to manage risk with the 

Exchange defining Stock/Complex 

Orders, by the Exchange revising the 

coverage of Rule 963(d) to clarify its 

applicability, and with the removal of 

ambiguity by deleting Rule 963.1NY. 

The proposed adoption of rules 

governing a Complex Order Auction 

will facilitate the execution of Complex 

Orders while providing opportunities 

for price improvement. 

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 that is 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 solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

the proposed rule change, or 


hsrobinson on DSK69SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 211 / Tuesday, November 2, 2010 / Notices 67427 

7 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Options Floor Procedure Advices (‘‘OFPAs’’ or 

‘‘Advices’’) generally correspond to Exchange rules. 

For example, OFPA B–3 is a corresponding Advice 

to Rule 1014 Commentary .01 and OFPA A–10 is 

a corresponding Advice to Rule 1063. OFPAs are 

part of the Exchange’s minor rule plan (‘‘MRP’’ or 

‘‘Minor Rule Plan’’), which consists of Advices with 

preset fines, pursuant to Rule 19d–1(c) under the 

Act. 17 CFR 240.19d–1(c). See Securities Exchange 

Act Release No. 50997 (January 7, 2005), 70 FR 

2444 (January 13, 2005) (SR–Phlx–2003–40) 

(approval order establishing Floor Broker 

Management System in OFPA C–2 and Rule 1063). 

The Exchange is not proposing to change the fines 

in any Advices. 

4An ROT is a regular member or a foreign 

currency options participant of the Exchange 

located on the trading floor who has received 

permission from the Exchange to trade in options 

for his own account. See Rule 1014(b)(i). 

5An SQT is an ROT who has received permission 

from the Exchange to generate and submit option 

quotations electronically in options to which such 

SQT is assigned. An SQT may only submit such 

quotations while such SQT is physically present on 

the floor of the Exchange. See Rule 1014(b)(ii)(A). 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be 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 rulecomments@sec.gov. Please include File 

Number SR–NYSEAmex–2010–100 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–2010–100. 

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 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 the filing will 

also be available for inspection and 

copying at the Exchange’s principal 

office. 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–2010–100 and 

should be submitted on or before 

November 23, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–27659 Filed 11–1–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63192; File No. SR–Phlx– 

2010–145] 

Self-Regulatory Organizations; The 

NASDAQ OMX PHLX LLC; Notice of 

Filing of Proposed Rule Change To 

Establish Remote Specialists 

October 27, 2010. 

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 October 

14, 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, 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. 

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 

Exchange Rule 501 (Specialist 

Appointment), Rule 506 (Allocation 

Application), Rule 507 (Application for 

Approval as an SQT or RSQT and 

Assignment in Options), Rule 1014 

(Obligations and Restrictions Applicable 

to Specialists and Registered Options 

Traders), and Rule 1020 (Registration 

and Functions of Options Specialists) to 

allow certain Exchange members to act 

as option specialists that are not 

physically present on the option trading 

floor. The Exchange also proposes to 

amend Options Floor Procedure 

Advices A–7 (Responsibility To Cancel), 

A–10 (Specialist Trading With Book), 

B–3 (Trading Requirements), and E–1 

(Required Staffing of Options Floor) 3 to 

conform them with the proposed rule 

changes. 

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, on the 

Commission’s Web site at http:// 

www.sec.gov; 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 this proposal is to 

amend Exchange Rules 501, 506, 507, 

1014, and 1020 and Option Floor 

Procedure Advices A–7, A–10, B–3, and 

E–1 to allow certain Exchange members 

to act as option specialists that are not 

physically present on the option trading 

floor. 

Background 

There are several types of market 

makers on the Exchange, including 

Registered Options Traders (‘‘ROTs’’),4

Streaming Quote Traders (‘‘SQTs’’),5

Remote Streaming Quote Traders 


hsrobinson on DSK69SOYB1PROD with NOTICES