67498 Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 

9 15 U.S.C. 78f(b)(8). 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(2). 

12 15 U.S.C. 78s(b)(2)(B). 

13 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. 73152 

(September 19, 2014), 79 FR 57632. 

and orderly market and protect 

investors and the public interest 

because the Service Fee may result in a 

more efficient use of Exchange 

resources, which would benefit all 

market participants. 

The Exchange believes that the 

Service Fee is reasonable, equitable and 

not unfairly discriminatory because 

ATP Holders would have the option, as 

they do today, to perform the Post-Trade 

Adjustments themselves and the Service 

Fee would only apply if ATP Holders 

elected to rely on the Exchange to 

perform these adjustments for them. 

Moreover, the Service Fee would apply 

equally to all market participants who 

opt to rely on the Exchange to perform 

the Post-Trade Adjustments. In fact, the 

Exchange believes that the proposed 

Service Fee would incentivize ATP 

Holders to process their own Post-Trade 

Adjustments going forward. 

Finally, the Exchange believes that it 

is subject to significant competitive 

forces, as described below in the 

Exchange’s statement regarding the 

burden on competition. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act,9 the Exchange does not believe 

that the proposed rule change would 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

The proposed rule Service Fee is not 

intended to address any competitive 

issues among exchanges or ATP Holders 

but rather to more efficiently use the 

Exchange’s employee time and 

resources, which may ultimately benefit 

ATP Holders. 

The Exchange notes that it operates in 

a highly competitive market in which 

market participants can readily favor 

competing venues, and imposing the 

Service Fee may enable the Exchange to 

improve efficiency and ensure the fair 

and reasonable use of Exchange 

resources. In such an environment, the 

Exchange must continually review, and 

consider adjusting, its fees and credits 

to remain competitive with other 

exchanges. For the reasons described 

above, the Exchange believes that the 

proposed Service Fee reflects this 

competitive environment. 

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 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 10 of the Act and 

subparagraph (f)(2) of Rule 19b–4 11

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

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 

under Section 19(b)(2)(B) 12 of the Act to 

determine whether the proposed rule 

change 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 email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEMKT–2014–87 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEMKT–2014–87. This 

file number should be included on the 

subject line if email 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 

10:00 a.m. and 3:00 p.m. Copies of such 

filing also will be available for 

inspection and copying at the principal 

offices 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– 

NYSEMKT–2014–87, and should be 

submitted on or before December 4, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Kevin M. O’ Neill, 

Deputy Secretary. 

[FR Doc. 2014–26843 Filed 11–12–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73545; File No. SR–Phlx– 

2014–54] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing of Amendment No. 1 and Order 

Granting Accelerated Approval of a 

Proposed Rule Change, as Modified by 

Amendment No. 1, To Add a New 

Complex Order Process Called 

Legging Orders 

November 6, 2014. 

I. Introduction 

On September 10, 2014, NASDAQ 

OMX PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend its rules governing the trading of 

complex orders on the Exchange to 

adopt ‘‘legging orders.’’ The proposed 

rule change was published for comment 

in the Federal Register on September 

25, 2014.3 The Commission received no 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 67499 

4Amendment No. 1 revises the proposal to: (i) 

modify proposed Phlx Rule 1080.08(f)(iii)(C)(4)(vi) 

to provide that, in the event the Exchange receives 

a PIXL Order for the account of a public customer 

that is paired with another order for the account of 

a public customer pursuant to Phlx Rule 

1080(n)(vi), the Exchange will remove any resting 

legging orders in those options series; (ii) add a 

proposed Phlx Rule 1080.08(f)(iii)(C)(4)(xii) to 

provide that a legging order will be removed when 

the legging order is on the Exchange’s book at a 

price that is not at the minimum increment for that 

series and that is more aggressive than the same 

side Phlx Best Bid or Offer (‘‘PBBO’’) and an away 

market moves to lock the PBBO (which is also the 

NBBO); (iii) provide that the proposal will be 

implemented within 30 days of Commission 

approval and that the Exchange will notify 

members of implementation by issuing an Options 

Trader Alert; and (iv) the Exchange expects to 

implement the new functionality on a symbol by 

symbol bases over the course of a week to mitigate 

risks associated with the rollout of new technology; 

and (v) make certain non-substantive clarifications 

to the rule text. 

5According to the Exchange, the term ‘‘cPBBO’’ 

means the best net debit or credit price for a 

Complex Order Strategy based on the PBBO for the 

individual options components of such Complex 

Order Strategy, and, where the underlying security 

is a component of the Complex Order, the National 

Best Bid and/or Offer for the underlying security. 

See Notice supra, note 3, at n.3 (citing Phlx Rule 

1080.08(a)(iv)). 

6See proposed Phlx Rule 1080.08(f)(iii)(C). 

7See id. Under the proposal, legging orders are 

also not routable and are limit orders with a timein-force of DAY. See id. 

8See Notice, supra note 3, at 57632. 

9See proposed Phlx Rule 1080.08(f)(iii)(C)(1). The 

Exchange represents that there can be only one 

legging order on the same side of the market in a 

series. See Notice, supra note 3, at 57633. 

10See proposed Phlx Rule 1080.08(f)(iii)(C)(1). 

See Notice, supra note 3, at 57633 for an example 

of how legging orders would be generated. 

11See proposed Phlx Rule 1080.08(f)(iii)(C)(1). 

12See id. 

13See proposed Phlx Rule 1080.08(f)(iii)(C)(1). 

See also Notice, supra note 3, at 57633. Under the 

proposal, two legging orders relating to the same 

complex order can be generated, but only one of 

those can execute as part of the execution of a 

particular complex order. See id. 

14See proposed Phlx Rule 1080.08(f)(iii)(C)(2). 

15See id. 

16See Notice, supra note 3, at 57632–33. 

17See id. at 57633. 

18See id. at n.17. 

19See proposed Phlx Rule 1080.08(f)(iii)(C)(3) 

and Notice, supra note 3, at 57634. 

20See Notice, supra note 3, at 57634. 

21See proposed Phlx Rule 1080.08(f)(iii)(C)(3). 

comment letters regarding the proposed 

rule change. On November 5, 2014, the 

Exchange filed Amendment No. 1 to the 

proposal.4 The Commission is 

publishing this notice to solicit 

comments on Amendment No. 1 from 

interested persons and is approving the 

proposed rule change, as modified by 

Amendment No. 1, on an accelerated 

basis. 

II. Description 

A. Legging Orders 

The Exchange proposes to adopt Phlx 

Rule 1080.08(f)(iii)(C) relating to the 

generation and execution of ‘‘legging 

orders.’’ Under the proposal, a legging 

order is a limit order on the regular 

order book in an individual series that 

represents one leg of a two-legged 

complex order (which improves the 

cPBBO) 5 to buy or sell an equal 

quantity of two option series resting on 

the Exchange’s Complex Order Book 

(‘‘CBOOK’’).6 Phlx proposes that legging 

orders are firm orders that are included 

in the Exchange’s displayed best bid or 

offer.7 According to the Exchange, 

legging orders are designed to increase 

the opportunity for complex orders to 

execute by ‘‘legging’’ into the market, 

whereby all of the legs of the complex 

order execute against the best bids or 

offers on the Exchange for the 

individual options series.8

B. Generation of Leg Orders 

The Exchange proposes that legging 

orders may be automatically generated 

on behalf of Complex Orders resting on 

the top of the CBOOK so that they are 

represented at the best bid and/or offer 

on the Exchange for the individual 

legs.9 Phlx proposes that a legging order 

may be automatically generated for one 

leg of a Complex Order at a price: (i) 

that matches or improves upon the best 

Phlx displayed bid or offer; and (ii) at 

which the net price can be achieved 

when the other leg is executed against 

the best displayed bid or offer (other 

than against a legging order).10 The 

Exchange proposes not to generate 

legging orders when the Exchange or a 

particular option has not opened, is 

halted or is otherwise not available for 

trading.11 The Exchange also proposes 

to not generate a legging order for 

complex order strategies that are not 

available for trading.12

To determine whether a Legging 

Order may be generated, the Exchange 

proposes to evaluate the CBOOK when 

a Complex Order enters the CBOOK and 

at a regular time interval to be 

determined by the Exchange (which 

interval shall not exceed 1 second) 

following a change in the National Best 

Bid/Offer (‘‘NBBO’’) or PBBO in any 

component of a complex order eligible 

to generate legging orders to determine 

whether legging orders may be 

generated.13 Under the proposal, a 

legging order may be generated and 

executed in an increment other than the 

minimum increment for that series and 

will be ranked on the order book at its 

generated price and displayed at a price 

that is rounded, down for legging orders 

to buy and up for legging orders to sell, 

to the nearest minimum increment 

allowable for that series.14

The Exchange proposes to adopt Phlx 

Rule 1080.08(f)(iii)(C)(2) to provide that 

legging orders will not be generated if: 

(i) The price of the legging order would 

lock or cross the best bid or offer of 

another exchange; (ii) there is an 

auction on either side of the market in 

the series or a ‘‘Posting Period’’ under 

Phlx Rule 1080(p) regarding 

‘‘Acceptable Trade Range’’ on the same 

side in progress in the series; (iii) the 

price of the complex order is outside of 

the Acceptable Complex Execution 

(‘‘ACE’’) Parameter under Phlx Rule 

1080.08(i); (iv) there is already a legging 

order in that series on the same side of 

the market at the same price (unless it 

has priority based on the participant 

type, under existing Exchange rules); (v) 

the complex order is an all-or-none 

order; or (vi) the generated legging order 

for a complex order would immediately 

cause resting legging orders to be 

removed pursuant to section proposed 

Phlx Rule 1080.08(f)(iii)(C)(4)(ix).15

The Exchange proposes that it may 

limit the number of legging orders 

generated on an objective basis and may 

remove existing legging orders to 

maintain a fair and orderly market in 

time of extreme volatility or 

uncertainty.16 The Exchange represents 

that it will determine the options for 

which, if any, legging orders will be 

available and will communicate this to 

its participants.17 Phlx represents that it 

would not limit the generation of 

legging orders on the basis of the 

entering participant or the participant 

category of the order (e.g., professional 

or public customer).18

C. Execution of Legging Orders 

The Exchange proposes that legging 

orders would be executed only after all 

other executable orders (including any 

non-displayed size) and quotes at the 

same price are executed in full pursuant 

to the Phlx priority rules applicable to 

Phlx XL non-Complex Orders, rather 

than based on the time of receipt of the 

Complex Order.19 As a result, the 

Exchange states the generation of 

legging orders will not affect the 

existing priority, or execution 

opportunities, currently provided to 

participants in the regular market in any 

way.20 Under the proposal, when a 

legging order is executed, the other leg 

of the complex order will be 

automatically executed against the 

displayed best bid or offer on the 

Exchange and any other legging order 

based on that complex order will be 

removed.21

Phlx believes that legging orders will 

provide additional execution 

opportunities for complex orders 

without negatively impacting investors 


tkelley on DSK3SPTVN1PROD with NOTICES
67500 Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 

22See Notice, supra note 3, at 57634. 

23See Notice, supra note 3, at 57637. 

24See Phlx Rule 1080(o). 

25See proposed Phlx Rule 1080.08(f)(iii)(C)(4). 

See also Notice, supra note 3, at 57634–57636 for 

examples illustrating the removal of legging orders 

and supra note 4 describing Amendment No. 1 to 

the proposal. 

26See supra note 4 describing Amendment No. 1 

to the proposal. 

27See id. 

28 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). 

29 15 U.S.C. 78f(b)(5). 

30See Securities Exchange Act Release Nos. 

66234 (January 25, 2012), 77 FR 4852 (January 31, 

2012) (order approving File No. SR–ISE–2011–82); 

69419 (April 19, 2013), 78 FR 24449 (April 25, 

2013) (order approving File No. SR–BOX–2013–01); 

and 69987 (July 15, 2013), 78 FR 43254 (July 19, 

2013) (order approving File No. SR–CBOE–2013– 

026). 

31See infra note 6 and accompanying text. 

32See infra note 14 and accompanying text. 

33See infra note 19 and accompanying text. 

34See infra note 20 and accompanying text. 

35See infra note 16 and accompanying text. 

36See infra note 18 and accompanying text. 

in the regular market.22 Phlx also 

believes that legging orders may 

facilitate additional executions and 

enhance execution quality for investors 

in the regular market by improving the 

price and/or size of the PBBO and by 

providing additional execution 

opportunities for resting orders on the 

regular book.23

D. Removal of Legging Orders 

The Exchange proposes to adopt Phlx 

Rule 1080.08(f)(iii)(C)(4) to provide that 

a legging order will be removed from the 

Exchange’s regular limit order book 

automatically if: (i) The price of the 

legging order is no longer at the 

Exchange’s displayed best bid or offer 

on the regular limit order book; (ii) 

execution of the legging order would no 

longer achieve the net price of the 

complex order when the other leg is 

executed against the Exchange’s best 

displayed bid or offer on the regular 

limit order book (other than another 

legging order); (iii) the complex order is 

executed in full or in part; (iv) the 

complex order is cancelled or modified; 

(v) the price of the complex order is 

outside of the ACE Parameter of Phlx 

Rule 1080.08(i); (vi) the Exchange 

receives a Qualified Contingent Cross 

Order 24 which includes a component in 

which a legging order exists, an order 

that will trigger an auction under Phlx 

rules in a component in which there is 

a legging order (whether a buy order or 

a sell order), or a PIXL Order for the 

account of a public customer paired 

with an order for the account of a public 

customer pursuant to Phlx Rule 

1080(n)(vi); (vii) a legging order is 

generated by a different complex order 

in the same leg at a better price or the 

same price for a participant with a 

higher priority; (viii) a complex order is 

marketable against the cPBBO where a 

legging order is present and has more 

than one leg in common with the 

existing complex order that generated 

the legging order; (ix) a complex order 

becomes marketable against multiple 

legging orders; (x) a complex order 

consisting of an unequal quantity of 

components is marketable against the 

cPBBO where a legging order is present 

but cannot be executed due to 

insufficient size in at least one of the 

components of the cPBBO; (xi) an 

incoming all-or-none order is entered 

onto the order book at a price which is 

equal to or crosses the price of a legging 

order; or (xii) when the legging order is 

on the book at a price which is not at 

the minimum price variation and which 

is more aggressive than the same side 

PBBO, and an away market moves to 

lock the PBBO (which is also the 

NBBO).25

Finally, the Exchange proposes to 

implement the proposed rule change 

within 30 days of approval by the 

Commission, and represents that it will 

notify Exchange members of 

implementation by issuing an Options 

Trader Alert.26 The Exchange expects to 

implement the new functionality on a 

symbol by symbol basis over the course 

of a week in order to mitigate risks 

associated with the rollout of new 

technology.27

III. Discussion 

After careful review, the Commission 

finds that the proposed rule change, as 

modified by Amendment No. 1, is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.28 In particular, the 

Commission finds that the proposed 

rule change, as amended, is consistent 

with Section 6(b)(5) of the Act,29 which 

requires, among other things, that the 

rules of a national securities exchange 

be designed to prevent fraudulent and 

manipulative acts and practices, 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 believes that legging 

orders could facilitate the execution of 

complex orders resting on the 

Exchange’s CBOOK by increasing the 

opportunities for eligible complex 

orders to execute against interest in the 

regular market on the Exchange’s 

regular order book, thereby benefitting 

investors seeking to execute complex 

orders. In addition, the Commission 

believes that legging orders could 

benefit participants in the regular 

market by providing additional 

liquidity, and potentially more favorable 

executions, for regular market interest. 

The Commission notes that it previously 

approved proposals by other options 

exchanges to implement legging 

orders.30

Under the proposal, legging orders 

will be firm orders that represent one 

leg of a two-legged complex order 

involving a one-to-one ratio resting on 

the top of the CBOOK.31 The 

Commission notes that, on Phlx, legging 

orders may be generated and executed 

in an increment other than the 

minimum increment for that options 

series and will be ranked on the order 

book at its generated price and 

displayed at a price that is rounded, 

down for legging orders to buy and up 

for legging orders to sell, to the nearest 

minimum increment allowable for that 

series.32 The Commission also notes that 

a legging order will be executed only 

after all other executable orders 

(including any non-displayed size) and 

quotes at the same price are executed in 

full pursuant to the Exchange’s priority 

rules applicable to non-complex 

orders.33 Accordingly, the Exchange 

represents that the generation of a 

legging order will not affect the existing 

priority, or execution opportunities, 

currently provided to market 

participants in the regular market in any 

way.34

As noted above, the Exchange 

represents that it will carefully manage 

and curtail the number of legging orders 

being generated so that they do not 

negatively impact system capacity and 

performance.35 Phlx represents, further, 

that it may curtail the number of leg 

orders on an objective basis, such as by 

limiting the number of leg orders 

generated in a particular option, and 

that it will not limit the generation of 

leg orders on the basis of the entering 

participant or the participant category of 

the order (i.e., professional or public 

customer).36

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether Amendment No. 1 is 

consistent with the Act. Comments may 

be submitted by any of the following 

methods: 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 67501 

37See supra note 4 for a description of 

Amendment No. 1. 38 15 U.S.C. 78s(b)(2). 39 Id. 40 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

Phlx–2014–54 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2014–54. This file 

number should be included on the 

subject line if email 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 20549–1090 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filing also will be available for 

inspection and copying at the principal 

offices 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– 

2014–54, and should be submitted on or 

before December 4, 2014. 

V. Accelerated Approval of Proposed 

Rule Change, as Modified by 

Amendment No. 1 

The Commission finds good cause for 

approving the proposed rule change, as 

amended by Amendment No. 1, prior to 

the 30th day after the date of 

publication of notice in the Federal 

Register. Amendment No. 1 revises the 

proposal to, among other things, provide 

for two instances whereby the Exchange 

will remove legging orders to ensure 

that legging orders are removed when 

public customer orders are crossed 

through the Exchange’s PIXL auction 

pursuant to Phlx Rule 1080(n)(vi) and to 

ensure that legging orders are removed 

consistent with Phlx Rule 1084 

governing order protection.37 The 

Commission notes that the revisions are 

designed to provide market participants 

with more specificity regarding the 

operation and implementation of the 

Exchange’s legging order functionality. 

Accordingly, the Commission finds 

good cause for approving the proposed 

rule change, as amended, on an 

accelerated basis, pursuant to Section 

19(b)(2) of the Act.38

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,39 that the 

proposed rule change (SR–Phlx–2014– 

54), as amended, be, and hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.40

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26809 Filed 11–12–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73540; File No. SR– 

NASDAQ–2014–099] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Cancel-Replacement and Route Timer 

November 6, 2014. 

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 October 

28, 2014, The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’ 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 NASDAQ. 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 

NASDAQ proposes to add specificity 

to the Exchange’s options trading rules. 

The NASDAQ Options Market (‘‘NOM’’) 

is Nasdaq’s facility for executing and 

routing standardized equity and index 

options. The Exchange proposes to 

define cancel-replacement orders and 

also describe a route timer in Chapter 

VI, entitled ‘‘Trading Systems.’’ 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://

www.nasdaq.cchwallstreet.com, at the 

principal office of 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 

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, Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing to amend 

Chapter VI to add additional specificity 

to its rules. The Exchange proposes to 

amend Section 1, Definitions, to define 

a cancel- replacement order. The 

Exchange proposes to amend Section 

11, Order Routing, to add greater 

specificity to the Rulebook concerning a 

route timer. 

Cancel-Replacement Orders 

A market participant today has the 

option of either sending in a cancel 

order and then separately sending in a 

new order which serves as a 

replacement of the original order (two 

separate messages) or sending a single 

cancel-replacement order in one 

message. 

If an order is submitted to the System 

and then subsequently a cancel order is 

sent to the System cancelling the 

original order, the original order will be 

cancelled by the System provided the 

original order was not already filled 

partially or in its entirety. A subsequent 

replacement order would be treated as 

a new order by the System and will not 

retain the priority of the cancelled 

order. 

An order that is entered as one single 

message (‘‘cancel-replacement order’’) 


tkelley on DSK3SPTVN1PROD with NOTICES