Federal Register / Vol. 80, No. 7 / Monday, January 12, 2015 / Notices 1541 

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

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 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

confusion on the part of members that 

expect both types of corporate events to 

receive consistent treatment. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

BX does not believe that the proposed 

rule change will result in any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act, as amended. 

Specifically, by offering market 

participants additional options with 

regard to management of open orders, 

the change has the potential to enhance 

BX’s competitiveness with respect to 

other trading venues, thereby promoting 

greater competition. Moreover, the 

change does not burden competition in 

that it does not restrict the ability of 

members to enter and update trading 

interest in BX. 

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)(ii) of the Act 12 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.13

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– 

BX–2014–061 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–BX–2014–061. 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 

office 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–BX– 

2014–061, and should be submitted on 

or before February 2, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–00219 Filed 1–9–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73991; File No. SR– 

NYSEMKT–2014–108] 

Self-Regulatory Organizations; NYSE 

MKT LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending Its Price List 

To Eliminate Transaction Fees for 

Midpoint Passive Liquidity Orders That 

Remove Liquidity From the Exchange 

and That are Designated With a 

‘‘Retail’’ Modifier as Defined in Rule 

13—Equities 

January 6, 2015. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on December 

22, 2014, NYSE MKT LLC (the 

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

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

Price List to eliminate transaction fees 

for Midpoint Passive Liquidity (‘‘MPL’’) 

Orders that remove liquidity from the 

Exchange and that are designated with 

a ‘‘retail’’ modifier as defined in Rule 

13—Equities. The Exchange proposes to 

implement the fee change effective 

January 2, 2015. The text of the 

proposed rule change is available on the 

Exchange’s Web site at www.nyse.com, 

at the principal office of the Exchange, 

and at the Commission’s Public 

Reference Room. 


tkelley on DSK3SPTVN1PROD with NOTICES
1542 Federal Register / Vol. 80, No. 7 / Monday, January 12, 2015 / Notices 

4MPL Order is defined in Rule 13 as an 

undisplayed limit order that automatically executes 

at the mid-point of the protected best bid or offer 

(‘‘PBBO’’). 

5An order designated as ‘‘retail’’ under Rule 13 

is separate and distinct from a ‘‘Retail Order’’ 

within the Retail Liquidity Program under Rule 

107C. The proposed rule change solely concerns 

orders designated as ‘‘retail’’ pursuant to Rule 13. 

6Such written policies and procedures require 

the member organization to (1) exercise due 

diligence before entering a ‘‘retail’’ order to assure 

that entry as a ‘‘retail’’ order is in compliance with 

the applicable requirements, and (2) monitor 

whether orders entered as ‘‘retail’’ orders meet the 

applicable requirements. If a member organization 

represents ‘‘retail’’ orders from another brokerdealer customer, the member organization’s 

supervisory procedures must be reasonably 

designed to assure that the orders it receives from 

such broker-dealer customer that it designates as 

‘‘retail’’ orders meet the definition of a ‘‘retail’’ 

order. The member organization must (i) obtain an 

annual written representation, in a form acceptable 

to the Exchange, from each broker-dealer customer 

that sends it orders to be designated as ‘‘retail’’ 

orders that entry of such orders as ‘‘retail’’ orders 

will be in compliance with the applicable 

requirements; and (ii) monitor whether its brokerdealer customer’s ‘‘retail’’ order flow meets the 

applicable requirements. 

7Currently, a member organization may designate 

an order as ‘‘retail’’ either by means of a specific 

tag in the order entry message, as with other order 

modifiers, or by designating a particular member or 

member organization mnemonic used at the 

Exchange as a ‘‘retail mnemonic.’’ 

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

9 15 U.S.C. 78f(b)(4) and (5). 

10Securities Exchange Act Release Nos. 72252 

(May 27, 2014), 79 FR 31368 (June 2, 2014) (SR– 

NYSEMKT–2014–46) (introduction of ‘‘retail’’ 

modifier under Rule 13). 

11Securities Exchange Act Release Nos. 71878 

(April 4, 2014), 79 FR 19936 (April 10, 2014) (SR– 

NYSEMKT–2014–25); see also Securities Exchange 

Act Release No. 34–73702 (Nov. 28, 2014), 79 FR 

72049, 72051 (Dec. 4, 2014) (order approving 

NASDAQ OMX BX Retail Price Improvement 

Program and noting that most marketable retail 

order flow is executed in the over-the-counter 

markets, pursuant to bilateral agreements, without 

ever reaching a public exchange) (‘‘BX Retail 

Approval Order’’). 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

Price List to eliminate transaction fees 

for MPL Orders that remove liquidity 

from the Exchange and that are 

designated with a ‘‘retail’’ modifier as 

defined in Rule 13—Equities (‘‘Rule 

13’’). The Exchange proposes to 

implement the fee change effective 

January 2, 2015. 

For securities priced $1.00 or greater, 

the Exchange currently charges a fee of 

$0.0028 per share for all MPL Orders 4

that remove liquidity from the NYSE 

MKT. For non-ETP securities traded 

pursuant to unlisted trading privileges 

(‘‘UTP’’) priced at $1.00 or greater, the 

Exchange currently charges a fee of 

$0.0030 for all MPL Orders that remove 

liquidity from the Exchange. For ETPs 

traded pursuant to UTP, the Exchange 

currently charges a fee of $0.0029 for all 

MPL Orders that remove liquidity from 

the Exchange. The Exchange proposes to 

eliminate the fee for MPL Orders that 

remove liquidity from the Exchange that 

are designated with a ‘‘retail’’ modifier 

as defined in Rule 13. 

To be eligible for the proposed pricing 

for MPL Orders, an MPL Order would 

need to meet the requirements to be 

designated as ‘‘retail’’ pursuant to Rule 

13. An order designated as ‘‘retail’’ 

under Rule 13 is an agency or riskless 

principal order that meets the criteria of 

Financial Industry Regulatory 

Authority, Inc. Rule 5320.03 and that (1) 

originates from a natural person and (2) 

is submitted to the Exchange by a 

member organization, provided that no 

change is made to the terms of the order 

with respect to price or side of market 

and the order does not originate from a 

trading algorithm or any other 

computerized methodology.5

To submit an order with a ‘‘retail’’ 

modifier, a member or member 

organization must submit an attestation, 

in a form prescribed by the Exchange, 

that substantially all orders submitted as 

‘‘retail’’ will qualify as such. Further, 

Rule 13 requires a member organization 

to have written policies and procedures 

reasonably designed to assure that it 

will only designate orders as ‘‘retail’’ if 

all requirements are met.6 In addition, a 

member organization would be required 

to designate such MPL Order as ‘‘retail’’ 

pursuant to Rule 13.7

The Exchange proposes to retain the 

fee for MPL Orders that remove 

liquidity from the Exchange but that are 

not designated with a ‘‘retail’’ modifier 

at the current rates. The proposed 

amended Price List would distinguish 

MPL Orders that remove liquidity and 

that are designated as ‘‘retail’’ under 

Rule 13, which would not be charged a 

fee, from MPL Orders that remove 

liquidity and that are not designated as 

‘‘retail’’ under Rule 13, and which 

would continue to be charged the 

existing fee for MPL Orders that take 

liquidity. The Exchange proposes to 

make comparable amendments to the 

Price List relating to pricing applicable 

to Floor broker executions of MPL 

Orders. 

The proposed change is not otherwise 

intended to address any other issues, 

and the Exchange is not aware of any 

problems that members and member 

organizations would have in complying 

with the proposed change. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,8 in general, and 

furthers the objectives of Sections 

6(b)(4) and 6(b)(5) of the Act,9 in 

particular, because it provides for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

members, issuers and other persons 

using its facilities and does not unfairly 

discriminate between customers, 

issuers, brokers or dealers. 

The Exchange believes that removing 

a fee for MPL Orders that remove 

liquidity from the Exchange and that are 

designated as ‘‘retail’’ is reasonable 

because it will encourage the 

submission of orders that meet the 

requirements to be designated as 

‘‘retail’’ to the Exchange, thus enhancing 

order execution opportunities for all 

participants, but specifically retail 

investors. The ‘‘retail’’ modifier under 

Rule 13 along with its pricing is 

designed to incentivize the submission 

of additional retail order flow to a 

public market like the Exchange.10

Moreover, the Exchange believes that 

markets and price discovery optimally 

function through the interactions of 

diverse flow types, and also believes 

that growth in internalization has 

required differentiation of retail order 

flow from other order flow types. As the 

Exchange has previously noted, a 

significant percentage of the orders of 

individual investors are executed overthe-counter.11 The Exchange 

accordingly further believes that the 

proposed change is reasonable because 

it would contribute to maintaining or 

increasing the proportion of retail flow 

in Exchange-listed securities that are 

executed on a registered national 

securities exchange, rather than 

executing in off-exchange venues. 

Finally, the Exchange notes that while 

the proposed price change would treat 

retail order flow differently from order 

flow submitted by other market 

participants, such segmentation would 

not be inconsistent with Section 6(b)(5) 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 7 / Monday, January 12, 2015 / Notices 1543 

12 15 U.S.C. 78f(b)(5). 

13See BX Retail Approval Order at 72051. 

14 Id. 

15See, e.g., Securities Exchange Act Release No. 

67347 (July 3, 2012), 77 FR 40673, 40680 (July 10, 

2012) (SR–NYSEAmex–2011–84) (order approving 

adoption of Retail Liquidity Program on a pilot 

basis). The Exchange notes that other markets offer 

separate non-tier and tiered pricing for retail orders, 

see NASDAQ Price List, available at http://

nasdaqtrader.com/

Trader.aspx?id=PriceListTrading2, and EDGX 

Exchange Fee Schedule, available at http://

www.directedge.com/trading/

EDGXFeeSchedule.aspx, as well as retail price 

improvement pricing for ‘‘Retail Orders’’ that 

remove displayed liquidity or mid-point peg 

liquidity. See BATS BYX Exchange Fee Schedule, 

available at http://cdn.batstrading.com/resources/

regulation/rule_book/BATS-Exchanges_Fee_

Schedules.pdf [sic]. 

16 15 U.S.C. 78f(b)(8). 

17See Securities Exchange Act Release Nos. 

70860 (November 13, 2013), 78 FR 69512 

(November 19, 2013) (SR–NASDAQ–2013–138). 

18 15 U.S.C. 78s(b)(3)(A). 19 17 CFR 240.19b–4(f)(2). 20 15 U.S.C. 78s(b)(2)(B). 

of the Act,12 which requires that the 

rules of an exchange are not designed to 

permit unfair discrimination. The 

Commission has previously recognized 

that the markets generally distinguish 

between retail investors, whose orders 

are considered desirable by liquidity 

providers because such retail investors 

are presumed on average to be less 

informed about short-term price 

movements, and professional traders, 

whose orders are presumed on average 

to be more informed.13 The Commission 

has further recognized that, because of 

this distinction, liquidity providers are 

generally inclined to offer price 

improvement to less informed retail 

orders than to more informed 

professional orders.14 The Exchange 

believes that the differentiation 

proposed herein is not designed to 

permit unfair discrimination, but 

instead is reasonably designed to attract 

retail flow to the Exchange, while 

helping to ensure that retail investors 

benefit from the better price that 

liquidity providers are willing to give 

their orders. The Exchange believes that 

the proposed increase of retail order 

flow to the Exchange might also create 

a desirable opportunity for institutional 

investors to interact with retail order 

flow that they are not able to reach 

currently. The Exchange therefore 

believes that the proposed change 

would further promote a competitive 

process around retail executions such 

that retail investors would receive better 

prices than they currently do through 

bilateral internalization arrangements. 

The Exchange believes that the 

transparency and competitiveness of the 

proposed rule change on an exchange 

market would result in better prices for 

retail investors.15 The proposed change 

is also equitable and not unfairly 

discriminatory because it would 

contribute to investors’ confidence in 

the fairness of their transactions and 

because it would benefit all investors by 

increasing the liquidity pool and 

potential for price-improving executions 

at the Exchange. 

The proposed change is also equitable 

and not unfairly discriminatory because 

the ability to designate MPL Orders as 

‘‘retail’’ is available equally to all 

similarly situated members and member 

organizations that submit qualifying 

orders and satisfy the other related, 

existing requirements. 

The Exchange believes that it is 

subject to significant competitive forces, 

as described below in the Exchange’s 

statement regarding the burden on 

competition. 

For the foregoing reasons, the 

Exchange believes that the proposal is 

consistent with the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

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

the Act,16 the Exchange believes that the 

proposed rule change would not impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Instead, the 

Exchange believes that the proposed 

change would increase competition 

among execution venues and encourage 

additional execution opportunities on 

the Exchange. For the same reasons, the 

proposed change also would not impose 

any burden on competition among 

market participants. The Exchange 

believes that while it is the first to offer 

orders with a ‘‘retail’’ modifier the 

ability to take at the mid-point for free 

through MPL Orders, providing 

significant price improvement, the 

proposed change also permits the 

Exchange to compete with other 

markets, including NASDAQ, which 

does not charge but provides a credit for 

designated Retail Orders that take 

liquidity in Retail Liquidity Provider 

programs,17 as well as over-the-counter 

trading that offers mid-point executions 

at low fees. 

Finally, the Exchange notes that it 

operates in a highly competitive market 

in which market participants can 

readily favor competing venues if they 

deem fee levels at a particular venue to 

be excessive or rebate opportunities 

available at other venues to be more 

favorable. In such an environment, the 

Exchange must continually adjust its 

fees and rebates to remain competitive 

with other exchanges and with 

alternative trading systems that have 

been exempted from compliance with 

the statutory standards applicable to 

exchanges. Because competitors are free 

to modify their own fees and credits in 

response, and because market 

participants may readily adjust their 

order routing practices, the Exchange 

believes that the degree to which fee 

changes in this market may impose any 

burden on competition is extremely 

limited. As a result of all of these 

considerations, the Exchange does not 

believe that the proposed changes will 

impair the ability of member 

organizations or competing order 

execution venues to maintain their 

competitive standing in the financial 

markets. 

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) 18 of the Act and 

subparagraph (f)(2) of Rule 19b–4 19

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) 20 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– 


tkelley on DSK3SPTVN1PROD with NOTICES
1544 Federal Register / Vol. 80, No. 7 / Monday, January 12, 2015 / Notices 

21 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Commission notes that the correct rule 

number for this reference is PSX Rule 3311. 

4Securities Exchange Act Release No. 69632 (May 

23, 2013), 78 FR 32501 (May 30, 2013) (SR–Phlx– 

2013–56). 

5Securities Exchange Act Release No. 70110 

(August 5, 2013), 78 FR 48736 (August 9, 2013) 

(SR–Phlx–2013–77). 

NYSEMKT–2014–108 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–NYSEMKT–2014–108. 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 Section, 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 the 

filing will also be available for 

inspection and copying at the NYSE’s 

principal office and on its Internet Web 

site at www.nyse.com. 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–2014–108 and should be 

submitted on or before February 2, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–00210 Filed 1–9–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74003; File No. SR–Phlx– 

2014–79] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Modify the 

Rule Governing Modification of Orders 

on Its NASDAQ OMX PSX Facility 

(‘‘PSX’’) in the Event of an Issuer 

Corporate Action Related to a 

Dividend, Payment or Distribution 

January 6, 2015. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

23, 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 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 

PSX Rule 4761 [sic] 3 addresses the 

treatment of quotes/orders in securities 

that are the subject of issuer corporate 

actions related to a dividend, payment 

or distribution. The rule applies to any 

trading interest that is carried on the 

PSX book overnight. As a general 

matter, PSX cancels open quotes/orders 

in the event of any corporate action 

related to a dividend, payment or 

distribution, on the ex-date of the 

action. The cancellation occurs 

immediately prior to the opening of 

trading at 8 a.m. on the ex-date of the 

corporate action, and the member 

receives a cancellation notice, so that it 

can, if it desires, reenter the order at the 

commencement of trading on the exdate. 

Prior to 2013, PSX had not had a clear 

rule providing for the adjustments of 

quotes and orders carried on the PSX 

book overnight. In April 2013, Phlx 

adopted Rule 3311 to provide that PSX 

would cancel all open quotes/orders in 

the event of any corporate action.4

Subsequently, in response to member 

demand for assistance with order 

management with respect to certain 

common types of corporate action, Phlx 

amended the rule to offer limited, 

optional functionality to allow open 

orders to be adjusted, rather than 

cancelled.5 As written, the rule provides 

for the possibility of order adjustment in 

the case of cash dividends, forward 

stock splits, and combined cash 

dividends/forward stock splits. 

The proposal will expand the rule 

also to provide for adjustment in the 

case of stock dividends and combined 

cash dividends/stock dividends. The 

proposal reflects the conclusion, based 

on member feedback, that actions 

resulting in the distribution of 

additional stock should be treated 

similarly, regardless of whether they are 

denominated as forward stock splits or 

stock dividends. Phlx will make 

members aware of the effective date of 

the proposed change by the issuance of 

a widely disseminated Equity Trader 

Alert. 

Under the current rule, a member may 

designate that all orders with a time-inVerDate Sep<11>2014 17:35 Jan 09, 2015 Jkt 235001 PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 E:\FR\FM\12JAN1.SGM 12JAN1

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