Federal Register / Vol. 79, No. 223 / Wednesday, November 19, 2014 / Notices 68931 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 69471 

(April 29, 2013), 78 FR 26096 (May 3, 2013) (SR– 

Phlx–2013–09). 

4Securities Exchange Act Release No. 69811 

(June 20, 2013), 78 FR 38422 (June 26, 2013) (SR– 

Phlx–2013–67). 

5Securities Exchange Act Release No. 70141 

(August 8, 2013), 78 FR 49565 (August 14, 2013) 

(SR–Phlx–2013–83). 

6Securities Exchange Act Release No. 70629 

(October 8, 2013), 78 FR 62852 (October 22, 2013) 

(SR–Phlx–2013–100). 

7Securities Exchange Act Release No. 71212 

(December 31, 2013), 79 FR 888 (January 7, 2014) 

(SR–Phlx–2013–129). 

8Securities Exchange Act Release No. 72135 (May 

9, 2014), 79 FR 27966 (May 15, 2014) (SR–Phlx– 

2014–33). 

9Securities Exchange Act Release No. 73246 

(September 29, 2014), 79 FR 59874 (October 3, 

2014) (SR–Phlx–2014–59). 

10 15 U.S.C. 78f(b). 

11 15 U.S.C. 78f(b)(5). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73586; File No. SR–Phlx– 

2014–71] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Extend the 

Implementation of the New Options 

Floor Broker Management System 

Until November 3, 2015 

November 13, 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 the Substance 

of the Proposed Rule Change 

The Exchange proposes to extend the 

implementation rollout of its new 

Options Floor Broker Management 

System. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://

nasdaqomxphlx.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, the Proposed Rule 

Change 

1. Purpose 

Currently, the Exchange operates two 

Floor Broker Management Systems 

concurrently on the options trading 

floor: The original Floor Broker 

Management System operating since 

2005 (‘‘old FBMS’’); and the enhanced 

Floor Broker Management System (‘‘new 

FBMS’’). The purpose of the proposal is 

to continue the concurrent operation of 

old FBMS and new FBMS for a 

temporary period ending November 3, 

2015 for the reasons stated below. 

Old FBMS enables Floor Brokers and/ 

or their employees to enter, route, and 

report transactions stemming from 

options orders received on the 

Exchange. Old FBMS also establishes an 

electronic audit trail for options orders 

represented by Floor Brokers on the 

Exchange. Floor Brokers can also use 

old FBMS to submit orders to Phlx XL, 

rather than executing the orders in the 

trading crowd. 

New FBMS was launched in March 

2014. With the new FBMS, all options 

transactions on the Exchange involving 

at least one Floor Broker are required to 

be executed by the new FBMS. In 

connection with order execution, the 

Exchange allows the new FBMS to 

execute two-sided orders entered by 

Floor Brokers, including multi-leg 

orders up to 15 legs, after the Floor 

Broker has represented the orders in the 

trading crowd. New FBMS also provides 

Floor Brokers with an enhanced 

functionality called the complex 

calculator that calculates and displays a 

suggested price of each individual 

component of a multi-leg order, up to 15 

legs, submitted on a net debit or credit 

basis. 

The Exchange received approval to 

implement the new FBMS as of June 1, 

2013,3 and delayed implementation 

until July 2013,4 until September 2013,5

until December 2013,6 and until March 

2014.7 Implementation began on March 

7, 2014, with the new FBMS operating 

concurrently with the old FBMS. The 

Exchange intended to retire the old 

FBMS after a specified implementation 

period. The new FBMS has been fully 

rolled out to all Floor Brokers and in all 

options. Nevertheless, the Exchange 

delayed the retirement of the old FBMS 

until September 1, 2014 8 and, most 

recently, until November 3, 2014,9 for 

reasons of the performance of the new 

FBMS. 

The Exchange has been making 

improvements intended to improve the 

performance of the new system. 

However, the Floor Brokers have 

experienced, among other things, some 

latency in order processing as well as 

some occasional difficulty accessing 

certain order entry screens in a timely 

manner. Accordingly, the Exchange 

does not believe that the old FBMS 

should be retired on November 3, 2014. 

Therefore, the Exchange proposes to 

continue operation of the old FBMS and 

new FBMS concurrently for a one year 

period ending November 3, 2015. 

During this time period, the Exchange 

intends to identify an alternative system 

to the new FBMS to ultimately replace 

both old FBMS and new FBMS. 

If an alternative to the new FBMS 

could be implemented sooner than this 

date, the Exchange will seek to 

implement it sooner. In addition, the 

Exchange will notify the Floor Brokers 

and file a proposed rule change 

addressing any changes to its rules 

before implementing any new system. 

During this additional time period, 

the Exchange will continue to permit 

Floor Brokers to use both the old and 

the new FBMS based on their business 

needs and Floor Brokers can choose 

whether to use one or both. Both old 

FBMS and new FBMS will continue to 

be available in all options and to all 

Floor Brokers. For example, a Floor 

Broker will be able to use the old FBMS 

for one order and the new FBMS for the 

next order. Accordingly, the Exchange 

believes that the performance issues 

with the new FBMS are less likely and 

should decrease because the Floor 

Broker can choose the old FBMS. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 10 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 11

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68932 Federal Register / Vol. 79, No. 223 / Wednesday, November 19, 2014 / Notices 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

14 17 CFR 240.19b–4(f)(6)(iii). 

15 Id. 

16For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

17 15 U.S.C. 78s(b)(3)(C). 

18 Id. 19 17 CFR 200.30–3(a)(12). 

in particular, in that it is designed to 

promote just and equitable principles of 

trade and protect investors and the 

public interest, by providing options 

Floor Brokers with two different FBMS 

offerings for order entry and processing. 

Despite its performance issues, the new 

FBMS offers many beneficial features to 

the Floor Brokers that the old FBMS 

does not, such as the complex calculator 

and increased automation described 

above, such that the Exchange has 

determined not to shut down the new 

FBMS. This should enable Floor Brokers 

to operate their businesses and comply 

with the relevant rules, which is 

consistent with the protection of 

investors and the public interest. 

Continuing to operate both old FBMS 

and new FBMS concurrently for a 

temporary period should also promote 

just and equitable principles of trade by 

providing Floor Brokers with the tools 

to enter and process their orders 

efficiently. The proposal is not unfairly 

discriminatory because all Floor Brokers 

will be able to use both the old and the 

new FBMS. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange believes that permitting Floor 

Brokers to use both the old FBMS and 

new FBMS for an additional period of 

time while the Exchange considers an 

alternative approach to address the 

efficient operation of the Exchange’s 

trading floor should allow it to compete 

with other floor-based exchanges and 

help the Exchange’s Floor Brokers 

compete with floor brokers on other 

options exchanges. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 12 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.13 A proposed rule change 

filed under Rule 19b–4(f)(6) normally 

does not become operative for 30 days 

after the date of filing.14 However, Rule 

19b–4(f)(6)(iii) permits the Commission 

to designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest.15

The Exchange has requested that the 

Commission waive the 30-day operative 

delay. The Commission notes that the 

full implementation of the new FBMS 

was scheduled to occur on November 3, 

2014. The Exchange has indicated that 

it has experienced performance issues 

with the new FBMS and that it needs 

additional time to identify an alternative 

system to the new FBMS. While it seeks 

this alternative, the Exchange represents 

that it will continue to operate the old 

FBMS and new FMBS concurrently and 

that all Floor Brokers may use either the 

old FBMS or the new FBMS. Based on 

the foregoing, the Commission has 

determined to waive the 30-day 

operative date so that the proposal may 

take effect upon filing.16

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act.17

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved.18

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– 

Phlx–2014–71 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–2014–71. 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– 

Phlx 2014–71, and should be submitted 

on or beforeDecember 10, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–27309 Filed 11–18–14; 8:45 am] 

BILLING CODE 8011–01–P 

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