71484 Federal Register / Vol. 79, No. 231 / Tuesday, December 2, 2014 / Notices 

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

2 17 CFR 240.19b–4. 

3The Penny Pilot was established in January 2007 

and was last extended in 2014. See Securities 

Exchange Act Release Nos. 55153 (January 23, 

2007), 72 FR 4553 (January 31, 2007) (SR–Phlx– 

2006–74) (notice of filing and approval order 

establishing Penny Pilot); and 72245 (May 23, 

2014), 79 FR 33164 (May 30, 2014) (SR–Phlx–2014– 

37) (notice of filing and immediate effectiveness 

extending the Penny Pilot through December 31, 

2014). 

4The replacement issues will be announced to 

the Exchange’s membership via an Options Trader 

Alert (OTA) posted on the Exchange’s Web site. The 

Exchange proposes in its Penny Pilot rule that 

replacement issues will be selected based on 

trading activity in the previous six months. The 

replacement issues would be identified based on 

The Option Clearing Corporation’s trading volume 

data from June 1, 2014 through November 30, 2014. 

The month immediately preceding the replacement 

issues’ addition to the Pilot Program (i.e. December) 

would not be used for purposes of the six-month 

analysis. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73688; File No. SR–Phlx– 

2014–77] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change Relating to 

Extension of the Exchange’s Penny 

Pilot Program and Replacement of 

Penny Pilot Issues That Have Been 

Delisted 

November 25, 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 November 

21, 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 is filing with the 

Commission a proposal to amend Phlx 

Rule 1034 (Minimum Increments) to 

extend through June 30, 2015, the Penny 

Pilot Program in options classes in 

certain issues (‘‘Penny Pilot’’ or ‘‘Pilot’’), 

and to change the date when delisted 

classes may be replaced in the Penny 

Pilot.3

The Exchange requests that the 

Commission waive the 30-day operative 

delay period to the extent needed for 

timely industry-wide implementation of 

the proposal. 

The text of the amended Exchange 

rule is set forth immediately below. 

Proposed new language is in italics 

and proposed deleted language is 

[bracketed]. 

NASDAQ OMX PHLX Rules 

Options Rules 

* * * * * 

Rule 1034. Minimum Increments 

(a) Except as provided in subparagraphs (i)(B) and (iii) below, all 

options on stocks, index options, and 

Exchange Traded Fund Shares quoting 

in decimals at $3.00 or higher shall have 

a minimum increment of $.10, and all 

options on stocks and index options 

quoting in decimals under $3.00 shall 

have a minimum increment of $.05. 

(i)(A) No Change. 

(B) For a pilot period scheduled to 

expire [December 31, 2014]June 30, 

2015 (the ‘‘pilot’’), certain options shall 

be quoted and traded on the Exchange 

in minimum increments of $0.01 for all 

series in such options with a price of 

less than $3.00, and in minimum 

increments of $0.05 for all series in such 

options with a price of $3.00 or higher, 

except that options overlying the 

PowerShares QQQ Trust (‘‘QQQQ’’)®, 

SPDR S&P 500 Exchange Traded Funds 

(‘‘SPY’’), and iShares Russell 2000 Index 

Funds (‘‘IWM’’) shall be quoted and 

traded in minimum increments of $0.01 

for all series regardless of the price. A 

list of such options shall be 

communicated to membership via an 

Options Trader Alert (‘‘OTA’’) posted on 

the Exchange’s Web site. 

The Exchange may replace any pilot 

issues that have been delisted with the 

next most actively traded multiply 

listed options classes that are not yet 

included in the pilot, based on trading 

activity in the previous six months. The 

replacement issues may be added to the 

pilot on the second trading day 

following [July 1, 2014]January 1, 2015. 

* * * * * 

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 

The purpose of this filing is to amend 

Phlx Rule 1034 to extend the Penny 

Pilot through June 30, 2015, and to 

change the date when delisted classes 

may be replaced in the Penny Pilot. The 

Exchange believes that extending the 

Penny Pilot will allow for further 

analysis of the Penny Pilot and a 

determination of how the program 

should be structured in the future. 

Under the Penny Pilot, the minimum 

price variation for all participating 

options classes, except for the Nasdaq100 Index Tracking Stock (‘‘QQQQ’’), 

the SPDR S&P 500 Exchange Traded 

Fund (‘‘SPY’’) and the iShares Russell 

2000 Index Fund (‘‘IWM’’), is $0.01 for 

all quotations in options series that are 

quoted at less than $3 per contract and 

$0.05 for all quotations in options series 

that are quoted at $3 per contract or 

greater. QQQQ, SPY and IWM are 

quoted in $0.01 increments for all 

options series. The Penny Pilot is 

currently scheduled to expire on 

December 31, 2014. 

The Exchange proposes to extend the 

time period of the Penny Pilot through 

June 30, 2015, and to provide revised 

dates for adding replacement issues to 

the Penny Pilot. The Exchange proposes 

that any Penny Pilot Program issues that 

have been delisted may be replaced on 

the second trading day following 

January 1, 2015. The replacement issues 

will be selected based on trading 

activity in the previous six months.4

This filing does not propose any 

substantive changes to the Penny Pilot 

Program; all classes currently 

participating in the Penny Pilot will 

remain the same and all minimum 

increments will remain unchanged. The 

Exchange believes the benefits to public 

customers and other market participants 

who will be able to express their true 

prices to buy and sell options have been 

demonstrated to outweigh the potential 

increase in quote traffic. 


rljohnson on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 231 / Tuesday, December 2, 2014 / Notices 71485 

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

6 15 U.S.C. 78f(b)(5). 

7 15 U.S.C. 78s(b)(3)(A). 

8 17 CFR 240.19b–4(f)(6). 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 5 in general, and furthers the 

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

in particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, and to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system. 

In particular, the proposed rule 

change, which extends the Penny Pilot 

for an additional six months through 

June 30, 2015, and changes the date for 

replacing Penny Pilot issues that were 

delisted to the second trading day 

following January 1, 2015, will enable 

public customers and other market 

participants to express their true prices 

to buy and sell options for the benefit 

of all market participants. This is 

consistent with the Act. 

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. To the 

contrary, this proposal is procompetitive because it allows Penny 

Pilot issues to continue trading on the 

Exchange. Moreover, the Exchange 

believes that the proposed rule change 

will allow for further analysis of the 

Pilot and a determination of how the 

Pilot should be structured in the future; 

and will serve to promote regulatory 

clarity and consistency, thereby 

reducing burdens on the marketplace 

and facilitating investor protection. The 

Pilot is an industry wide initiative 

supported by all other option 

exchanges. The Exchange believes that 

extending the Pilot will allow for 

continued competition between market 

participants on the Exchange trading 

similar products as their counterparts 

on other exchanges, while at the same 

time allowing the Exchange to continue 

to compete for order flow with other 

exchanges in option issues trading as 

part of the Pilot. 

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) 7 of the Act and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.8

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. 

If the Commission takes such action, the 

Commission shall institute proceedings 

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 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–2014–77 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, Station 

Place, 100 F Street NE., Washington, DC 

20549–9303. 

All submissions should refer to File 

Number SR-Phlx-2014–77. 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 the 

filing also will be available for 

inspection and copying at the principal 

office of Phlx. 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–2014–77 and should 

be submitted on or before December 23, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28320 Filed 12–1–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73687; File No. SR–Phlx– 

2014–73] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to the 

Active SQF Port Fees 

November 25, 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 November 

12, 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. 


rljohnson on DSK3VPTVN1PROD with NOTICES