Document ID: SEC-2015-1305-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2015-08-05T04:00Z

[Federal Register Volume 80, Number 150 (Wednesday, August 5, 2015)]
[Notices]
[Pages 46610-46612]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19128]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75558; File No. SR-Phlx-2015-67]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
a Delay of Implementation Related to the Volume-Based and Multi-Trigger 
Thresholds

July 30, 2015.
    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 July 21, 2015, 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 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 timeframe for 
adopting two new Phlx Market Maker \3\ risk

[[Page 46611]]

protections, a volume-based threshold and a multi-trigger threshold.
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    \3\ A ``Market Maker'' includes Registered Options Traders 
(``ROTs'') (Rule 1014(b)(i) and (ii)), which includes Streaming 
Quote Traders (``SQTs'') (See Rule 1014(b)(ii)(A)) and Remote 
Streaming Quote Traders (``RSQTs'') (See Rule 1014(b)(ii)(B)). An 
SQT is defined in Exchange Rule 1014(b)(ii)(A) as an ROT who has 
received permission from the Exchange to generate and submit option 
quotations electronically in options to which such SQT is assigned. 
An RSQT is defined in Exchange Rule 1014(b)(ii)(B) as an ROT that is 
a member or member organization with no physical trading floor 
presence who has received permission from the Exchange to generate 
and submit option quotations electronically in options to which such 
RSQT has been assigned. An RSQT may only submit such quotations 
electronically from off the floor of the Exchange. A Market Maker 
also includes a specialist, an Exchange member who is registered as 
an options specialist pursuant to Rule 1020(a).
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    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 the proposal is to extend the implementation of the 
Exchange's amendments to Phlx Exchange Rule 1095 entitled ``Automated 
Removal of Market Maker Quotes.'' \4\ In its rule change regarding the 
two new risk protections, the Exchange stated that it proposes to ``. . 
. implement this rule within thirty (30) days of the operative date. 
The Exchange will issue an Options Trader Alert in advance to inform 
market participants of such date.'' \5\ At this time, the Exchange 
desires to extend the implementation of this rule change and request 
that it implement the rule within (60) days of the operative date. The 
Exchange will announce the date of implementation by issuing an Options 
Trader Alert.
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    \4\ This rule became immediately effective on June 22, 2015. 
Securities Exchange Act Release No. 75372 (July 7, 2015), 80 FR 
40107 (July 13, 2015) (SR-Phlx-2015-52).
    \5\ See note 4.
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    By way of background, these risk protections are intended to assist 
Market Makers to control their trading risks.\6\ Specifically, the risk 
protections establish: (1) A threshold used to calculate each Market 
Maker's total volume executed in all series of an underlying security 
within a specified time period and to compare that to a pre-determined 
threshold (``Volume-Based Threshold''), and (2) a threshold used to 
measure the number of times the Phlx XL system (``System'') has 
triggered \7\ based on the Risk Monitor Mechanism (``Percentage-Based 
Threshold'') pursuant to Rule 1093 and Volume-Based Thresholds within a 
specified time period and to compare that total to a pre-determined 
threshold (``Multi-Trigger Threshold'').\8\
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    \6\ See Rule 1014 entitled ``Obligations and Restrictions 
Applicable to Specialists and Registered Options Traders.''
    \7\ A trigger is defined as the event which causes the System to 
automatically remove all quotes in all options series in an 
underlying issue.
    \8\ The details of the two risk protections are described in the 
initial filing. See Securities Exchange Act Release No. 75372 (July 
7, 2015), 80 FR 40107 (July 13, 2015) (SR-Phlx-2015-52).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \9\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \10\ 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 the risk protections available to Exchange 
members. The proposal promotes policy goals of the Commission, which 
has encouraged execution venues, exchange and non-exchange alike, to 
enhance risk protection tools and other mechanisms to decrease risk and 
increase stability.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    The delay of the implementation of Phlx Rule 1095 will permit the 
Exchange an additional thirty days within which to implement these risk 
protections that will be utilized by Phlx Market Makers.

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. With respect to the risk 
protections, the proposal will not impose a burden on intra-market or 
inter-market competition; rather it provides Market Makers with the 
opportunity to avail themselves of similar risk tools that are 
currently available on other exchanges.\11\ The proposal does not 
impose a burden on inter-market competition, because members may choose 
to become market makers on a number of other options exchanges, which 
may have similar but not identical features.\12\ The proposed rule 
change is meant to protect Market Makers from inadvertent exposure to 
excessive risk. Accordingly, the proposed rule change will have no 
impact on competition.
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    \11\ See Section 8 of Form 19b-4 with respect to this proposed 
rule change.
    \12\ See BATS Rule 21.16, BOX Rules 8100 and 8110, C2 Rule 8.12, 
CBOE Rule 8.18, ISE Rule 804(g), MIAX Rule 612, NYSE MKT Rule 928NY 
and NYSE Arca Rule 6.40.
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    The delay of the implementation of Phlx Rule 1095 will permit the 
Exchange additional time to implement these risk protections that will 
be utilized by Phlx Market Makers.

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 \13\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\14\ The Exchange has 
requested that the Commission waive the thirty-day operative delay so 
that the proposal may become operative immediately. The Exchange states 
that waiving the thirty-day operative delay will enable it to implement 
these risk protections within the new timeframe. The Commission 
believes that waiving the thirty day delay is consistent with the 
protection of investors and the public interest. Therefore, the 
Commission hereby waives the thirty-

[[Page 46612]]

day operative delay and designates the proposal effective upon 
filing.\15\
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    \13\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \14\ 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.
    \15\ For purposes 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: (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-2015-67 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-2015-67. 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 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-2015-67 and 
should be submitted on or before August 26, 2015.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-19128 Filed 8-4-15; 8:45 am]
 BILLING CODE 8011-01-P