68736 Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6)(iii). 

4SR–CHX–2014–15 was immediately effective 

upon filing, but is not yet operative. The Exchange 

anticipates that the changes effected under SR– 

CHX–2014–15 will become operative in the first 

quarter of 2015, pursuant to an Information 

Memorandum by the Exchange to its Participants 

published two weeks prior to such time. See 

Exchange Act Release No. 73150 (September 19, 

2014), 79 FR 57603 (September 25, 2014) (SR–CHX– 

2014–15) (‘‘Notice of Filing and Immediate 

Effectiveness of a Proposed Rule Change to Adopt 

the CHX Routing Services’’). 

5Market and cross orders are always handled 

Immediate Or Cancel (‘‘IOC’’). See CHX Article 1, 

Rule 2(a)(2) and (3); see also CHX Article 1, Rule 

2(d)(4). 

6See CHX Article 20, Rule 8(b). 

be submitted on or before December 9, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–27195 Filed 11–17–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73572; File No. SR–CHX– 

2014–18] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change Concerning 

Certain Order Types, Modifiers and 

Related Functionality 

November 10, 2014. 

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 

31, 2014, the Chicago Stock Exchange, 

Inc. (‘‘CHX’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘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 proposes to amend 

various CHX Rules to clarify the 

operation of certain order types, 

modifiers and LULD price sliding and to 

substantively modify the operation of 

the cross order type and Cross With Size 

order handling functionality. Aside 

from the proposed amendments to the 

cross order type and Cross With Size 

order handling functionality, the 

Exchange does not propose to 

substantively modify the operation of 

any other functionality. The Exchange 

has designated this proposal as noncontroversial and provided the 

Commission with the notice required by 

Rule 19b–4(f)(6)(iii) under the Act.3

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 

CHX included statements concerning 

the purpose of and basis for the 

proposed rule changes 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 

CHX 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 Exchange proposes to amend 

various CHX Rules to clarify the 

operation of certain order types, 

modifiers and LULD price sliding and to 

substantively modify the operation of 

the cross order type and Cross With Size 

order handling functionality. Aside 

from the proposed amendments to the 

cross order type and Cross With Size 

order handling functionality, the 

Exchange does not propose to 

substantively modify the operation of 

any other functionality. 

Amended CHX Article 1, Rule 1(pp) 

(Working Price) 

Under SR–CHX–2014–15, the 

Exchange adopted, inter alia, the term 

‘‘Working Price,’’ which is defined as 

‘‘the most aggressive price at which a 

resting limit order, as defined under 

Article 1, Rule 2(a)(1), can execute 

within the Matching System, in 

compliance with Rule 611 of Regulation 

NMS.’’ 4 While Rule 611 of Regulation 

NMS is one of the factors that determine 

the price at which an order for an NMS 

security could permissibly execute, 

other rules and plans such as Rule 201 

of Regulation SHO and LULD would 

also determine the most aggressive price 

at which an order could permissibly 

execute. Thus, the Exchange proposes to 

amend CHX Article 1, Rule 1(pp) to 

provide that ‘‘Working Price’’ means the 

most aggressive price at which a resting 

limit order can execute within the 

Matching System in compliance with 

‘‘CHX Rules and relevant securities law 

and regulations, including Rule 611 of 

Regulation NMS and Rule 201 

Regulation SHO.’’ 

Amended CHX Article 1, Rule 2(a)(1) 

(Limit Order) and CHX Article 1, Rule 

2(c) (Order Display Modifiers) 

Current CHX Rules imply, but do not 

explicitly state, that a limit order not 

marked Reserve Size or Do Not Display 

is fully displayable. Specifically, CHX 

Article 1, Rule 2(c) lists three order 

display modifiers, where paragraph 

(c)(1) defines ‘‘Always Quote,’’ which 

requires the unexecuted balance of an 

order priced at the CHX Best Bid or 

Offer (‘‘BBO’’) to be cancelled if it could 

not be displayed; paragraph (c)(2) 

defines ‘‘Do Not Display,’’ which 

requires the order to be fully hidden; 

and paragraph (c)(3) defines ‘‘Reserve 

Size,’’ which requires the order to be 

partially displayed and partially hidden. 

Given that there is no order modifier 

requiring that an order be fully 

displayable, it can be inferred from CHX 

Article 1, Rule 2(c) that limit orders are 

fully displayable, unless marked 

otherwise. 

In the interest of clarity, the Exchange 

proposes to amend CHX Article 1, Rule 

2(a)(1) to add a sentence to the current 

definition of ‘‘limit order’’ to provide 

that ‘‘all limit orders are fully 

displayable, unless marked Do Not 

Display, as defined under paragraph 

(c)(2), or Reserve Size, as defined under 

paragraph (c)(3).’’ Moreover, since order 

display modifiers are only relevant for 

orders that post to the CHX Book 5 and 

the CHX Book only contains resting 

limit orders,6 the Exchange proposes to 

amend CHX Article 1, Rule 2(c) to 

provide that ‘‘one or more order display 

modifiers may be applied to limit 

orders, subject to the requirements of 

Article 20, Rule 5, so long as the 

modifier is compatible with other 

applicable order modifiers/terms.’’ 

Amended CHX Article 1, Rule 2(b)(1)(A) 

(BBO Intermarket Sweep Order (‘‘ISO’’)) 

Current CHX Article 1, Rule 2(b)(1)(A) 

defines BBO ISO and provides, in 

pertinent part, that a BBO ISO is a limit 

order modifier that marks an order as 

required by SEC Rule 600(b)(30) that is 

to be executed against any orders at the 


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7CHX Article 1, Rule 1(e) defines ‘‘BBO’’ as ‘‘the 

best bid and/or offer displayed in the Exchange’s 

Matching System.’’ 

8The definition further provides that upon 

receipt of a BBO ISO, the Matching System will not 

check the validity of the order against the National 

Best Bid or Offer (‘‘NBBO’’) based on the 

assumption that the order sender has satisfied 

Protected Quotations of external markets as 

required by Rule 600(b)(30) of Regulation NMS. 

9The Exchange notes that the current definition 

of BBO ISO has remained substantively unchanged 

since it was initially approved by the Commission 

in 2007. See Exchange Act Release 54550 

(September 26, 2006), 71 FR 59563 (October 10, 

2006) (SR–CHX–2006–05) (‘‘Order Approving 

Proposed Rule Change and Amendment No. 1 

Thereto and Notice of Filing and Order Granting 

Accelerated Approval to Amendment No. 2 Thereto 

to Implement a New Trading Model’’). 

10See CHX Article 1, Rule 2(a)(1). 

11See CHX Article 1, Rule 2(b)(1)(A). 

12 Id. 

13CHX Only is triggered based on the price of 

Protected Quotations of external markets relative to 

the price of the CHX Only order. See CHX Article 

1, Rule 2(b)(1)(C). LULD Price Sliding is triggered 

based on the price of the relevant price bands 

relative to the price of the limit order. See CHX 

Article 20, Rule 2A(b). 

14See CHX Article 1, Rule 2(d)(1) defining ‘‘Day’’ 

order. The Exchange is also proposing to amend the 

definition of Day order to include more specificity 

as to its functionality, as discussed in detail below. 

15 If Buy Order A were not marked BBO ISO, Buy 

Order A would be permitted to execute against the 

full size of Sell Order A and the unexecuted balance 

of 300 shares of Buy Order A would be posted to 

the CHX Book, provided that the execution and 

display of the order would be consistent with 

Regulation NMS. 

16See Exchange Act Release No. 69538 (May 8, 

2013), 78 FR 28671 (May 15, 2013) (SR–CHX–2013– 

10) (‘‘Notice of Filing and Immediate Effectiveness 

of a Proposed Rule Change to Consolidate All CHX 

Order Types, Modifiers, and Related Terms under 

One Rule and to Clarify the Basic Requirements of 

All Orders Sent to the Matching System’’). 

Exchange’s BBO 7 (including any 

Reserve Size or undisplayed orders at or 

better than that price) as soon as the 

order is received by the Matching 

System, with any unexecuted balance of 

the order to be immediately cancelled (if 

the order is IOC) or placed in the 

Matching System.8 While the definition 

accurately describes the BBO ISO 

functionality, the Exchange now 

proposes to replace this portion of the 

definition of BBO ISO with more 

efficient language that also provides 

specificity regarding how the 

unexecuted balance of a BBO ISO would 

be handled depending on the state of 

the CHX Book.9

The proposed language begins by 

providing that an incoming BBO ISO 

shall execute against the CHX Book at 

prices not to exceed the more restrictive 

of its limit price or the contra-side 

displayed BBO. Although this can be 

inferred from current CHX Rules, which 

provide that a limit order cannot 

execute at a price more aggressive than 

its limit price 10 and a limit order 

marked BBO ISO could not execute at 

a price more aggressive than the 

Exchange’s BBO,11 the Exchange 

submits that the proposed language 

more succinctly describes the interplay 

between the limit order and BBO ISO 

pricing limitations. 

The proposed language continues by 

providing that any unexecuted balance 

of the BBO ISO shall be immediately 

cancelled if -1- marked IOC or -2- the 

incoming BBO ISO sell (buy) order 

could execute against any resting 

order(s) priced below (above) the 

displayed best bid (offer), regardless of 

the attached order duration modifier(s). 

While the first cancellation scenario is 

already explicitly stated in the current 

definition of BBO ISO,12 the second 

cancellation scenario is only implied 

from the fact that a BBO ISO cannot 

execute at prices more aggressive than 

the contra-side displayed BBO. If an 

incoming BBO ISO cannot permissibly 

execute against resting orders on the 

CHX Book and since the Exchange’s 

price sliding functionalities (i.e., CHX 

Only and LULD) are not triggered by the 

state of the CHX BBO,13 the only 

alternative is to cancel the unexecuted 

balance of the BBO ISO. The following 

Example 1 illustrates how the second 

cancellation scenario arises: 

Example 1. Assume that the displayed best 

offer on the CHX Book with respect to 

security XYZ is $10.02 and there is only one 

sell order at the displayed best offer for 100 

shares (‘‘Sell Order A’’). Assume further that 

there is only one other resting sell order for 

100 shares of security XYZ priced at $10.03/ 

share (‘‘Sell Order B’’). Assume then that the 

Matching System receives a buy limit order 

for 500 shares of security XYZ priced at 

$10.03/share marked BBO ISO and Day 

(‘‘Buy Order A’’).14

In this Example 1, Buy Order A would 

execute against the full size Sell Order A at 

$10.02/share, which would result in Buy 

Order A being decremented by 100 shares. 

However, pursuant to the BBO ISO 

instruction, the remaining 400 shares of Buy 

Order A would be immediately cancelled, 

notwithstanding the Day order designation, 

because Buy Order A would not be permitted 

to execute against Sell Order B at $10.03/

share and Buy Order A could not post to the 

CHX Book at its limit price because that 

would result in a locked book, which the 

Exchange never permits.15

The proposed language also provides 

that if the unexecuted balance of the 

BBO ISO would not be cancelled, it 

shall be ranked on the CHX Book, 

pursuant to CHX Article 20, Rule 8(b), 

and displayed at its limit price, subject 

to CHX Article 20, Rule 8(b)(6). 

Although the current definition of BBO 

ISO does not explicitly provide that a 

BBO ISO could only be displayed at its 

limit price, this fact can be inferred from 

CHX Article 20, Rule 8(b)(1)–(3), which 

provides that limit orders shall be 

ranked at each price point up to its limit 

price. 

The proposed language concludes by 

providing that a limit order marked BBO 

ISO may not be marked Do Not Display, 

as defined under CHX Article 1, Rule 

2(c)(2). Given that one of the purposes 

of the BBO ISO is to post a new 

displayed BBO on the CHX Book, the 

Exchange believes it important to clarify 

that a BBO ISO could not be fully 

hidden. Aside from the foregoing 

proposed amendments, the Exchange 

does not propose to amend any other 

part of the CHX Article 1, Rule 

2(b)(1)(A) nor substantively amend the 

current operation of the BBO ISO in any 

way. 

Amended CHX Article 1, Rule 2(b)(2)(B) 

(Cross With Satisfy) and Rule 2(b)(2)(C) 

(Cross With Yield) 

CHX Article 1, Rule 2(b)(2)(B) and (C) 

provides definitions for Cross With 

Satisfy and Cross With Yield, 

respectively, which are cross order 

modifiers that have been deactivated 

since June 27, 2011, pursuant to the 

Exchange’s authority under CHX Article 

20, Rule 4(b). In a previous Rule 19b– 

4 filing, the Exchange represented that 

it would only enable these order 

modifiers pursuant to a clarifying Rule 

19b–4 filing.16

The Exchange does not intend to 

amend the functionality of the Cross 

With Satisfy and Cross With Yield 

modifiers in the near future and, thus, 

the Exchange now proposes to delete 

Cross With Satisfy and Cross With Yield 

from its rulebook. If the Exchange 

decides to provide similar functionality 

in the future, the Exchange will propose 

new order modifiers pursuant to a Rule 

19b–4 filing. 

Incidentally, the Exchange proposes 

to delete all references to Cross With 

Satisfy and Cross With Yield in the CHX 

Rules, which, in addition to CHX 

Article 1, Rule 2(b)(2)(A) and (B), 

includes references to Cross With Yield 

and/or Cross With Satisfy under CHX 

Article 1, Rule 2(g)(1); Article 20, Rule 

8(e)(2) and (4); and paragraph .02 of the 

Interpretations and Policies of CHX 

Article 20, Rule 8. 

Amended CHX Article 1, Rule 2(d)(1) 

(Day) 

CHX Article 1, Rule 2(d)(1) defines 

‘‘Day’’ as a modifier that requires an 

order to be in effect only for the day on 

which it is submitted to the Exchange. 

While this accurately describes the Day 

modifier, the Exchange also currently 

permits order senders to provide 

specific instructions concerning Day 


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17The Exchange has four trading sessions during 

each trading day, which include the early session, 

which is from 6:00 a.m. to 8:30 a.m.; the regular 

trading session, which is from 8:30 a.m. to 3:00 

p.m.; the late trading session, which is from 3:00 

p.m. to 3:15 p.m.; and the late crossing session, 

which is from 3:15 p.m. to 4:00 p.m., during which 

time only cross orders may be executed. See CHX 

Article 20, Rule 1(b); see also paragraph .03(a) of 

the Interpretations and Policies of CHX Article 20, 

Rule 1. All times are in Central Time. 

18 Id. 

19As proposed above, the Working Price of an 

order is defined as the ‘‘most aggressive price at 

which a resting limit order, as defined under Article 

1, Rule 2(a)(1), can execute within the Matching 

System, in compliance with CHX Rules and 

relevant securities laws and regulations, including 

Rule 611 of Regulation NMS and Rule 201 of 

Regulation SHO.’’ 

20See CHX Article 1, Rule 2(a)(2). 

21See CHX Article 1, Rule 2(g)(1). 

22See CHX Article 1, Rule 2(b)(3)(B). 

23See supra note 4. 

24See supra note 4. Market and cross orders are 

always handled IOC. See CHX Article 1, Rule 

2(a)(2) and (3). 

25See supra note 4. 

26See CHX Article 1, Rule 2(b)(1)(C). 

27See supra note 4. 

orders as to which trading sessions 

under a trading a day the order would 

be effective. Thus, the Exchange 

proposes to amend CHX Article 1, Rule 

2(d)(1) to add language that reflects this 

current functionality. Specifically, the 

proposed language provides that an 

order sender may identify a limit order 

marked Day to be effective during 

specified trading sessions only, as 

described under CHX Article 20, Rule 

1,17 provided that -1- the identified 

trading session are consecutive and 

valid and -2- the order is received 

during one of the trading sessions for 

which it is identified as being effective. 

Moreover, a limit order marked Day 

without a specified trading session 

identifier will be considered effective 

upon receipt and every subsequent valid 

trading session for the remainder of the 

trading day. 

Specifically, the consecutive and 

valid requirement means that the 

identified effective trading sessions, if 

more than one are identified, must be 

consecutive (i.e., early, regular and late; 

early and regular; or regular and late) 

and that each trading session has to be 

valid, in that a Day order cannot be 

identified as being effective during the 

late crossing session.18 The requirement 

that the trading session be received by 

the Matching System during one of the 

trading sessions for which it is 

identified as being effective is meant to 

prohibit order senders from submitting 

orders to the Matching System during a 

trading session for which the order is 

not effective. For example, if the 

Matching System receives a Day order 

identified as regular trading session 

only during the early session, the order 

shall be rejected from the Matching 

System. 

Amended CHX Article 1, Rule 2(a)(2) 

(Cross Order) and Rule 2(g)(1) (Cross 

With Size) 

Current CHX Article 1, Rule 2(a)(2) 

defines cross order, in pertinent part, as 

an order to buy and sell the same 

security at a specific price better than 

the best bid and offer displayed in the 

Matching System. The Exchange now 

proposes to require cross orders to be 

priced better than the Working Price 19

of all resting orders on the CHX Book, 

as opposed to merely the ‘‘best bid and 

offer displayed in the Matching 

System.’’ 20 As proposed, a cross order 

would now have to be priced better than 

any order resting on the CHX Book, 

including limit orders marked Do Not 

Display, as all resting orders have a 

Working Price. 

Current CHX Article 1, Rule 2(g)(1) 

defines the Cross With Size order 

handling functionality, which is a 

special order handling functionality for 

cross orders that meet its price and size 

requirements. As for the current price 

requirement, the rule requires the cross 

order to be at a price equal to or better 

than the best bid or offer displayed in 

the Matching System. In order to be 

consistent with the proposed 

amendment to the cross order type, the 

Exchange now proposes to amend the 

price requirement of the Cross With Size 

modifier to require that the cross be of 

a price equal to or better than the 

Working Price of all orders resting on 

the CHX Book, as opposed to merely the 

‘‘best bid or offer displayed in the 

Matching System.’’ 21 As proposed, a 

cross order, in order to be eligible for 

Cross With Size handling, would now 

have to be priced at or better than any 

order resting on the CHX Book, 

including limit orders marked Do Not 

Display, as all resting orders have a 

Working Price. 

Moreover, the Exchange proposes to 

eliminate the prohibition against cross 

orders marked ISO from being eligible 

for Cross With Size handling 

functionality. Given that, from a 

mechanical standpoint, the ISO 

modifier only relieves the Exchange 

from checking the incoming ISO against 

the NBBO,22 a cross order marked ISO 

is identical to a simple cross order in 

every other way. Thus, the Exchange no 

longer believes it appropriate to prohibit 

cross orders marked ISO from being 

eligible for Cross With Size handling. 

Amended CHX Article 20, Rule 2A(b) 

(LULD Price Sliding) 

Under SR–CHX–2014–15, the 

Exchange, inter alia, amended CHX 

Article 20, Rule 2A(b)(1) to modify the 

LULD Price Sliding functionality so as 

to expand the applicability of LULD 

Price Sliding from fully displayable 

orders only to all limit orders, regardless 

of the attached order display modifier.23

However, in doing so, the Exchange 

inadvertently overlooked certain 

paragraphs under Rule 2A(b), which 

currently describe LULD Price Sliding 

in the context of displayed prices only. 

Thus, the Exchange now proposes to 

make the following amendments to CHX 

Article 20, Rule 2A(b)(1) to comport the 

rule to the amendments effected under 

SR–CHX–2014–15, which permits all 

limit orders to be eligible for LULD 

Price Sliding: 

• Amend paragraph (b)(1)(A) to 

replace the phrase ‘‘that would be 

displayed at a price’’ with the more 

inclusive ‘‘with a limit price’’; 

• Eliminate the sentence which 

states, ‘‘an ineligible incoming buy (sell) 

order that would post at a price above 

(below) the Upper (Lower) Price Band 

shall be cancelled,’’ because only limit 

orders may post the CHX Book and all 

limit orders will be eligible for LULD 

Price Sliding; 24

• Amend paragraph (b)(1)(B) to 

replace the phrase ‘‘displayed at a 

price’’ with the more inclusive 

‘‘priced’’; 

• Eliminate the sentence which 

states, ‘‘an ineligible resting buy (sell) 

order that, at the time of entry, was 

posted at a price at or below (above) the 

Upper (Lower) Price Band, but, due to 

movements in the Price Band, would 

now be posted at a price above (below) 

the Upper (Lower) Price Band, shall be 

cancelled,’’ because all resting orders 

will be eligible for LULD Price 

Sliding; 25 and 

• Amend paragraph (b)(1)(C) to 

replace the term ‘‘displayed’’ with the 

more inclusive ‘‘priced’’ and ‘‘price slid 

to.’’ 

Moreover, the Exchange proposes to 

amend paragraph (b)(2)(A), which 

addresses the interplay between LULD 

Price Sliding and CHX Only Price 

Sliding.26 Given that SR–CHX–2014–15, 

in addition to the amendments to LULD 

Price Sliding, expanded the 

applicability of CHX Only Price Sliding 

to orders that could post at its limit 

price without violating Regulation NMS 

(e.g., limit orders marked Do Not 

Display),27 the Exchange proposes to 

replace the phrase ‘‘would be displayed 

at a price in violation of Rule 610(d) of 

Regulation NMS, Rule 201 of Regulation 

SHO’’ with the more inclusive ‘‘that 


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28 Id. 

29The version of CHX Article 20, Rule 8(b)(7) that 

was not amended under SR–CHX–2014–15, is 

currently operative. See supra note 4. 

30See supra note 4. 

31See BYX Rule 11.11(a). 

32See supra note 4. 

33 15 U.S.C. 78f(b). 

34 15 U.S.C. 78f(b)(1). 

35 15 U.S.C. 78f(b)(5). 36See CHX Article 20, Rule 4(b). 

triggers LULD and/or CHX Only Price 

Sliding’’ and include the term ‘‘CHX 

Rules’’ as one of the rules and 

regulations with which price slid orders 

must comply. Moreover, in light of the 

expansion of both LULD and CHX Only 

Price Sliding, the Exchange proposes to 

add the term ‘‘if applicable’’ 

immediately after the term ‘‘displayed 

at’’ in light of the fact that undisplayed 

orders may also be price slid pursuant 

to CHX Only and LULD Price Sliding.28

The Exchange also proposes to amend 

paragraph (b)(3) to delete the last 

sentence, which incorrectly cites to an 

obsolete rule, which was amended 

under SR–CHX–2014–15. The current 

citation should have read ‘‘Article 20, 

Rule 8(b)(7),’’ which currently provides 

that orders price slid pursuant to CHX 

Only and LULD Price Sliding shall 

receive order execution priority based 

first on its working price, then original 

time of receipt by the Matching 

System.29 In light of the fact that the 

term Working Price has been adopted to 

apply to the execution price of all 

resting orders, the Exchange no longer 

believes it necessary to maintain a 

redundant rule that specifically refers to 

the execution priority of price slid 

orders, as CHX Article 20, Rule 8(b)(1)– 

(3), as amended by SR–CHX–2014–15, is 

applicable to all limit orders, including 

those that have been price slid.30

Amended CHX Article 20, Rule 

4(a)(7)(D) (Eligible Orders) 

Current CHX Article 20, Rule 

4(a)(7)(D) provides that orders in 

securities that customarily trade at a per 

share price of $100,000 or greater must 

be submitted in minimum increments of 

$0.10. This rule provides an exception 

from current CHX Article 20, Rule 

4(a)(5), which provides that unless 

otherwise permitted pursuant to 

exemptive relief granted by the 

Commission, orders priced at or above 

$1.00 must not be submitted in 

increments less than $0.01 and orders 

priced less than $1.00 must not be 

submitted in increments less than 

$0.0001. 

The Exchange proposes to eliminate 

the $0.10 minimum price increment 

requirement for orders in securities 

priced at $100,000/share. The Exchange 

does not currently permit the trading of 

any securities with this minimum price 

increment. Moreover, eliminating this 

requirement would make the Exchange’s 

minimum price increment rules 

consistent with the rules of other 

exchanges, such as the BATS YExchange (‘‘BYX’’).31

Amended CHX Article 20, Rule 8(b) 

(Ranking and display of orders) 

Under SR–CHX–2014–15, the 

Exchange amended, inter alia, CHX 

Article 20, Rule 8(b) to clarify how 

orders are ranked in the Matching 

System. In doing so, the Exchange 

adopted language under Rule 8(b)(1)–(3) 

that states that ‘‘at each price point up 

to their limit prices,’’ orders shall be 

ranked ‘‘based on their sequence 

numbers.’’ Given that limit orders could 

be either buy or sell orders, the 

Exchange proposes to insert ‘‘or down’’ 

after the phrase ‘‘at each price up,’’ so 

that the rule also contemplates limit sell 

orders being ranked at each price point 

down to its limit price. 

Operative Date for Proposed Rule 

Change 

The Exchange proposes to make all 

amendments proposed within this 

proposed rule change operative on the 

same date as all changes proposed 

under SR–CHX–2014–15, which will 

become operative upon two weeks’ 

notice by the Exchange to its 

Participants via Information 

Memorandum.32 The Exchange 

anticipates that all changes in this 

proposed rule filing and SR–CHX– 

2014–15 will become operative in the 

first quarter of 2015. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change to amend various 

CHX Rules to clarify the operation of 

certain order types, modifiers and LULD 

price sliding and to substantively 

modify the operation of the cross order 

type and Cross With Size order handling 

functionality is consistent with Section 

6(b) of the Act in general 33 and furthers 

the objectives of Sections 6(b)(1) 34 and 

6(b)(5) in particular.35As discussed 

below, the Exchange believes that the 

proposed rule change would further 

enable the Exchange to be so organized 

as to have the capacity to be able to 

carry out the purposes of the Act and to 

comply, and to enforce compliance by 

its Participants and persons associated 

with its Participants, with the 

provisions of the Act, the rules and 

regulations thereunder, and the rules of 

the Exchange, in furtherance of the 

objectives of Section 6(b)(1). The 

Exchange also believes that the 

proposed rule change 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 

transaction in securities, to remove 

impediments to, and perfect the 

mechanisms of, a free and open market 

and, in general, by protecting investors 

and the public interest, in furtherance of 

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

Specifically, with respect to the nonsubstantive clarifying amendments, the 

Exchange believes that clarification of 

the CHX Rules is consistent with 

Section 6(b)(1) and Section 6(b)(5) 

because it improves the transparency 

and consistency of the CHX Rules, 

which is in the public interest. 

Similarly, with respect to the proposed 

deletion of Cross With Satisfy and Cross 

With Yield, the Exchange submits that 

the deletion of the related rules are 

consistent with Section 6(b)(1) and 

Section 6(b)(5) because, as a result of 

such deletion, the CHX Rules, and 

specifically CHX Article 1, Rule 2, will 

only list order types and modifiers that 

are either currently available or only 

temporary unavailable, pursuant to 

notice,36 which would promote clarity 

as to the Exchange’s order types and 

modifiers, which is also in the public 

interest. 

With respect to the substantive 

amendments to the cross order type and 

Cross With Size order handling 

functionality, the Exchange believes that 

prohibiting cross orders and Cross With 

Size orders from trading through betterpriced precedent orders resting on the 

CHX Book is consistent with Section 

6(b)(5), because such consistency 

promotes just and equitable principles 

of trade by honoring the executable 

price of every resting order on the CHX 

Book. 

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. Given that 

the proposed changes promote clarity as 

to existing rules and substantively 

amends other functionality to be 

consistent with analog functionality of 

other national securities exchanges or to 

be more restrictive than they are 

currently, the Exchange believes that 

any burden on competition is necessary 

as clarity and consistency of rules across 


tkelley on DSK3SPTVN1PROD with NOTICES
68740 Federal Register / Vol. 79, No. 222 / Tuesday, November 18, 2014 / Notices 

37 15 U.S.C. 78s(b)(3)(A). 

38 17 CFR 240.19b–4(f)(6). 

39 17 CFR 240.19b–4(f)(6)(iii). 

40 15 U.S.C. 78s(b)(1). 

41 15 U.S.C. 78s(b)(2)(B). 

42 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3SPY options are based on the SPDR exchangetraded fund (‘‘ETF’’), which is designed to track the 

performance of the S&P (Standard and Poors) 500 

Index. 

4PIXL is the Exchange’s price improvement 

mechanism known as Price Improvement XL or 

(PIXLSM). See Rule 1080(n). 

5The term ‘‘Customer’’ applies to any transaction 

that is identified by a member or member 

organization for clearing in the Customer range at 

The Options Clearing Corporation (‘‘OCC’’) which 

is not for the account of broker or dealer or for the 

account of a ‘‘Professional’’ (as that term is defined 

in Rule 1000(b)(14)). 

national securities exchanges further 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 

Pursuant to Section 19(b)(3)(A) of the 

Act 37 and Rule 19b–4(f) thereunder,38

CHX has designated this proposal as one 

that effects a change that (A) does not 

significantly affect the protection of 

investors or the public interest; (B) does 

not impose any significant burden on 

competition; and (C) by its terms, does 

not become operative for 30 days after 

the date of the filing, or such shorter 

time as the Commission may designate 

if consistent with the protection of 

investors and the public interest. The 

Exchange has also provided the 

Commission written notice of its intent 

to file the 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.39 Given that the proposed 

rule change clarifies existing rules, 

deletes obsolete rules and amends the 

functionality of the cross order type and 

Cross With Size order handling to be 

more restrictive than it is currently, the 

Exchange believes that this proposed 

rule filing qualifies for summary 

effectiveness. 

At any time within the 60-day period 

beginning on the date of filing this 

proposed rule change in accordance 

with the provisions of Section 19(b)(1) 

of the Act,40 the Commission summarily 

may temporarily suspend the change in 

the rules of the self-regulatory 

organization made thereby, 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 the furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings under Section 

19(b)(2)(B) of the Act 41 to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposal 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 No. SR– 

CHX–2014–18 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. 

All submissions should refer to File 

No. SR–CHX–2014–18. 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 changes 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 the 

filing also will be available for 

inspection and copying at the principal 

office of the CHX. 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 No. SR–CHX–2014– 

18 and should be submitted on or before 

December 9, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.42

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–27185 Filed 11–17–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73580; File No. SR–Phlx– 

2014–72] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

PIXL Executions in SPY and PIXL 

Pricing 

November 12, 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 

31, 2014, 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 proposes to modify 

Section I entitled ‘‘Rebates and Fees for 

Adding and Removing Liquidity in 

SPY 3’’ and Section IV entitled ‘‘Other 

Transaction Fees’’ of the Phlx Pricing 

Schedule (‘‘Pricing Schedule’’). 

Specifically, the Exchange proposes to 

amend its Initiating Order Fee for PIXL 4

Executions in SPY and PIXL Pricing for 

Initiating Order that is contra to a 

Customer 5 PIXL order, to allow for 

volume discounts. While the changes 

proposed herein are effective upon 

filing, the Exchange has designated that 


tkelley on DSK3SPTVN1PROD with NOTICES