Document ID: SEC-2014-0808-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2014-05-15T04:00Z

[Federal Register Volume 79, Number 94 (Thursday, May 15, 2014)]
[Notices]
[Pages 27966-27968]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-11153]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72135; File No. SR-Phlx-2014-33]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend 
the Implementation Rollout of the New Options Floor Broker Management 
System Until September 1, 2014

May 9, 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 May 7, 2014, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 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.

[[Page 27967]]

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 the proposal is to extend the rollout of the 
Exchange's enhancements to the Options Floor Broker Management System 
(``FBMS''). Today, FBMS enables Floor Brokers and/or their employees to 
enter, route, and report transactions stemming from options orders 
received on the Exchange. FBMS also establishes an electronic audit 
trail for options orders represented by Floor Brokers on the Exchange. 
Floor Brokers can use FBMS to submit orders to Phlx XL, rather than 
executing the orders in the trading crowd.
    With the new FBMS, all options transactions on the Exchange 
involving at least one Floor Broker would be required to be executed 
through FBMS. In connection with order execution, the Exchange will 
allow 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. FBMS will also provide 
Floor Brokers with an enhanced functionality called the complex 
calculator that will calculate and display 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 FBMS enhancements 
as of June 1, 2013,\3\ and delayed implementation until July 2013,\4\ 
until September 2013,\5\ until December 2013,\6\ and again until March 
2014.\7\ The Exchange made a number of improvements intended to improve 
the performance of the new system.
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    \3\ Securities Exchange Act Release No. 69471 (April 29, 2013), 
78 FR 26096 (May 3, 2013) (SR-Phlx-2013-09).
    \4\ Securities Exchange Act Release No. 69811 (June 20, 2013), 
78 FR 38422 (June 26, 2013) (SR-Phlx-2013-67).
    \5\ Securities Exchange Act Release No. 70141 (August 8, 2013), 
78 FR 49565 (August 14, 2013) (SR-Phlx-2013-83).
    \6\ Securities Exchange Act Release No. 70629 (October 8, 2013), 
78 FR 62852 (October 22, 2013) (SR-Phlx-2013-100).
    \7\ Securities Exchange Act Release No. 71212 (December 31, 
2013), 79 FR 888 (January 7, 2014) (SR-Phlx-2013-129).
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    Implementation began on March 7, 2014. In its most recent filing 
delaying implementation,\8\ the Exchange stated that the implementation 
period would be up to eight weeks, which would be May 2, 2014, during 
which the new FBMS enhancements and related rules would operate along 
with the existing FBMS and rules.\9\ At this time, the Exchange needs 
additional time to complete the implementation because of technology 
issues with the new system. The new FBMS is available to all users 
(Floor Brokers) and in all options. Nevertheless, the Exchange believes 
that the Floor Brokers need additional time to familiarize themselves 
with the new features of FBMS, based on that ongoing experience, offer 
input regarding system performance, and provide the Exchange with the 
opportunity to address performance improvements. Given some technology 
issues that the Exchange has encountered during the implementation 
period, the delay is needed to allow Floor Brokers additional time to 
adapt to the new system as the Exchange works to improve the 
performance of the new system. As the performance issues are resolved, 
the delay will allow the Floor Brokers to migrate their business in a 
prudent manner. The delay is not as a result of major technology 
changes from the original proposal and no rule changes are being made; 
rather, the Exchange continues to work to, generally, make the system 
more user-friendly and provide more useful interfaces for the ultimate 
user, the Floor Broker.
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    \8\ Id.
    \9\ In the original filing, the Exchange stated its intent to 
implement these enhancements with a trial period of two to four 
weeks. Id.
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    Accordingly, the Exchange seeks an additional four month period 
(until September 1, 2014) to be able to continue the implementation 
rollout; the Exchange will announce the specific date on which the 
trial period will end and the old FBMS will no longer be available in 
advance through an Options Trader Alert. During the additional time 
period, the Exchange will continue to encourage Floor Brokers to use 
the new FBMS in order to help them become more familiar with the new 
features of 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\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest, by enhancing FBMS to make the Exchange's markets more 
efficient, to the benefit of the investing public. Although the 
Exchange needs additional time to finalize the implementation rollout, 
this time period is expected to be limited, depending on user input, 
and will involve advance notice to the Exchange membership.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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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 continues to 
believe, as it stated when proposing these enhancements, that these 
enhancements to FBMS should result in the Exchange's trading floor 
operating in a more efficient way, which should help it 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

[[Page 27968]]

subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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    \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.
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    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 so that the Exchange can implement the 
enhancements once they are ready from a technology perspective. The 
Commission believes that the waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the proposal only extends the implementation date of the FBMS 
and does not make any additional changes to the FBMS itself. Therefore, 
the Commission designates the proposal operative upon filing.\16\
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    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ Id.
    \16\ For 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).
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    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 necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.\17\
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    \17\ 15 U.S.C. 78s(b)(3)(C).
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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-2014-33 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2014-33. 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-Phlx-2014-33 and should be 
submitted on or before June 5, 2014.
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    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-11153 Filed 5-14-14; 8:45 am]
BILLING CODE 8011-01-P