Document ID: SEC-2009-0567-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of Filing of Amendment No. 1 to Proposed Rule Change Relating to the Exchange's Enhanced Electronic Trading Platform for Options, Phlx XL II
Posted Date: 2009-04-23T04:00Z

[Federal Register: April 23, 2009 (Volume 74, Number 77)]
[Notices]               
[Page 18600-18602]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23ap09-71]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59779; File No. SR-Phlx-2009-32]

 
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of 
Filing of Amendment No. 1 to Proposed Rule Change Relating to the 
Exchange's Enhanced Electronic Trading Platform for Options, Phlx XL II

April 16, 2009.
    On April 3, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
implement several enhancements to its electronic options trading 
system, Phlx XL. The proposed rule change was published for comment in 
the Federal Register on April 14, 2009.\3\ Pursuant to Section 19(b)(1) 
of the Act,\4\ and Rule 19b-4 thereunder,\5\ notice is hereby given 
that on April 15, 2009, Phlx filed with the Commission Amendment No. 1 
to the proposed rule change as described in Item I below. The 
Commission is publishing this notice of Amendment No. 1 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.
    \3\ See Securities Exchange Act Release No. 59721 (April 7, 
2009), 74 FR 17245 (April 14, 2009).
    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of Amendment No. 1 to the Proposed Rule Change

    The Exchange is filing Amendment No. 1 to clarify and correct 
discrete portions of File No. SR-Phlx-2009-32, which proposes to 
implement several enhancements to its electronic options trading 
system, Phlx XL, with the enhanced system to be named Phlx XL II. The 
text of the proposed rule change is available on the Exchange's Web 
site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/Filings/, 
at the principal office of the Exchange, and at the Commission's Public 
Reference Room.

Changes to the ``Purpose'' Section of the Previously Submitted Form 
19b-4

    References to ``page numbers'' mean the page numbers in the 
previously submitted Form 19b-4 for SR-Phlx-2009-32. In addition to the 
proposed changes below, the Exchange proposes conforming changes to the 
previously submitted Exhibit 1 to SR-Phlx-2009-32.
    1. Delete from footnote 3 the Federal Register citation to 
``44612'' and replace it with ``46612.''
    2. Add a closing parenthesis to footnote 6 after the phrase, ``the 
``Linkage Plan,''.''
    3. Delete the following phrase from the third sentence of the first 
full paragraph on page 12:
    ``a number of contracts with a size equal to the size of the 
interest at other markets at prices better than interest on the 
Exchange,''
    Replace the deleted phrase with the following:
    ``all marketable contracts on the Exchange to such better priced 
away markets,''
    4. Delete the following phrase from the first sentence of the first 
full paragraph on page 15:
    ``conduct a Provisional Opening''
    Replace the deleted phrase with the following:
    ``open as many contracts as possible''
    5. Delete the final sentence of the first full paragraph on page 15 
which states:
    ``The Exchange opening price will always be equal to or better than 
the OQR.''
    6. Delete the following sentence from footnote 39:
    ``The duration of the brief period will be published in an Options 
Trader Alert, which will be available on the Exchange's web site.''
    This is consistent with footnote 65. The brief period is not on a 
timer.
    7. Add the following at the end of footnote 44 on page 20:
    ``All references to a ``Quote Exhaust Timer'' in the Phlx XL II 
system and in the proposed rules mean a system pause for a brief 
period. Phlx XL II participants will not receive any notification that 
a Quote Exhaust Timer has been initiated.''
    8. In the seventh line of the second paragraph on page 24, delete 
``B'' in parentheses and replace it with ``E'' in parentheses and 
delete the ``C'' in parentheses and replace it with ``F'' in 
parentheses.
    9. Delete the following sentences from Page 30 under Example II 
``After the Quote Exhaust Timer'':
    ``The initiating order buys 20 contracts from Market Maker 1 at 
2.70 and the Phlx XL II system will contemporaneously route the 
unexecuted balance of the initiating order to the away market, 10 to 
buy at 2.70. This should result in a buy of 10 contracts at 2.65 on the 
away market.
    The disseminated PBBO is 2.20 bid, 2.70 offer, with a size of 
20x5''
    Replace the deleted sentences with the following:
    ``The initiating order has 30 unexecuted contracts to buy. The Phlx 
XL II system will route 10 contracts to buy at 2.65 to the ABBO market, 
which is the best available price and size. The remaining balance is 
posted in the PBBO at the ABBO price.
    The disseminated PBBO is 2.65 bid, 2.70 offer, with a size of 
20x25.''
    10. Delete the following phrase from the second sentence of the 
last paragraph on page 34 (and continuing to page 35):
    ``a number of contracts that will satisfy interest at''
    Replace the deleted phrase with the following:
    ``all marketable contracts on the Exchange to''
    11. Delete the following phrase from the second sentence of the 
first full paragraph on page 35:
    ``a number of contracts that will satisfy interest at other markets 
at prices better than''
    Replace the deleted phrase with the following:
    ``any remaining contracts to away markets at''
    12. Delete the word ``or'' from the third line of the first full 
paragraph on page 38, and replace it with the phrase ``if the Exchange 
Auction Price is no more than''

[[Page 18601]]

    13. Add the letter ``i'' to the second line of the third full 
paragraph on page 41 immediately before the last letter of the line, to 
spell the word ``is.''
    14. Add the word ``be'' at the end of the third line from the 
bottom of page 45, after the word ``not'' and before the word 
``eligible.''
    15. Add the following at the beginning of the second full paragraph 
on page 45:
    ``In the circumstances described in the preceding paragraph,''
    Delete the capital ``W'' from the word ``What'' and replace it with 
a lower case ``w.''
    16. Add the following at the beginning of the second full paragraph 
on page 46:
    ``In the circumstances described in the preceding paragraph,''
    Delete the capital ``W'' from the word ``What'' and replace it with 
a lower case ``w.''
    17. Add the following at the beginning of the second full paragraph 
on page 48:
    ``In the circumstances described in the preceding paragraph,''
    Delete the capital ``W'' from the word ``What'' and replace it with 
a lower case ``w.''
    18. Add the following at the beginning of the second full paragraph 
on page 49:
    ``In the circumstances described in the preceding paragraph,''
    Delete the capital ``W'' from the word ``What'' and replace it with 
a lower case ``w.''
    19. Add the following at the beginning of the second full paragraph 
on page 50:
    ``In the circumstances described in the preceding paragraph,''
    Delete the capital ``W'' from the word ``What'' and replace it with 
a lower case ``w.''
    20. In the last line on page 54, delete the lower case ``m'' and 
add a capital ``M'' to form the word ``Management.''

Changes to Previously Submitted Proposed Rule Text

    1. Delete currently proposed Rule 1017(l)(ii)(E) and replace it 
with:
    ``A different opening price will not require the Phlx XL II system 
to repeat the entire opening process.``
    2. Amend the first sentence of proposed Rule 1017(l)(iii)(B) to 
state:
    ``If there is sufficient size on the Exchange and on away markets 
on the opposite side of the market from the imbalance to execute all 
opening marketable interest at a price that is at or within the 
established OQR and the Away Best Bid or Offer (``ABBO'') without 
leaving an imbalance, the Phlx XL II system will open the affected 
series for trading at that price by executing opening marketable 
interest on the Phlx XL II system, as long as the system does not trade 
through the ABBO.''
    3. Amend proposed Rule 1017(l)(iv)(B) to state:
    ``If opening quotes, Opening Sweeps and orders submitted during the 
Imbalance Timer, or other changes to the ABBO, would allow the entire 
imbalance amount to trade at the Exchange at or within the OQR without 
trading through the ABBO, the Imbalance Timer will end and the Phlx XL 
II system will execute at the appropriate opening price.''
    4. Delete from proposed Rule 1017(l)(iv)(C)(3) the phrase:
    ``a number of contracts with a size equal to the size of the 
interest at other markets at prices better than interest on the 
Exchange,''
    Replace that deleted phrase with the following:
    ``all marketable contracts on the Exchange to such better priced 
away markets,''
    5. Delete the first two sentences from Rule 1017(l)(iv)(C)(7) and 
replace with the following:
    ``If after that number of times, the Phlx XL II system still cannot 
route and/or trade the entire imbalance amount, the Phlx XL II system 
will open as many contracts as possible by routing to other markets at 
prices better than the Exchange opening price for their disseminated 
size, trading available contracts on the Exchange at the Exchange 
opening price, and routing contracts to other markets at prices equal 
to the Phlx opening price at their disseminated size.''
    6. Make a marking correction to Proposed Rule 1080(c)(iv)(E) by 
underlining the new capital ``R'' in the proposed rule text.
    7. Delete from the first line of proposed Rule 1080(h), the capital 
``A'' and replace it with a lower case ``a.''
    8. Make a marking correction to the first three lines of Proposed 
Rule 1080(m) by underlining the following proposed rule text:
    ``only customer FIND and SRCH Orders (as defined below) with no 
other contingencies. IOC Orders will be cancelled immediately if not 
executed, and will not be routed.''
    9. Add the word ``be'' to the last sentence of the third paragraph 
of proposed Rule 1080(m)(iv)(B) between the words ``not'' and 
``eligible.''
    10. Add the following to the beginning of the fifth paragraph of 
proposed Rule 1080(m)(iv)(B):
    ``In the circumstances described in the preceding paragraph,''
    Delete the capital ``W'' from the word ``What'' and replace it with 
a lower case ``w.''
    11. Add the following to the beginning of the seventh paragraph of 
proposed Rule 1080(m)(iv)(B):
    ``In the circumstances described in the preceding paragraph,''
    Delete the capital ``W'' from the word ``What'' and replace it with 
a lower case ``w.''
    12. Add the word ``be'' to the last sentence of the seventh 
paragraph of proposed Rule 1080(m)(iv)(B) between the words ``not'' and 
``eligible.''
    13. Amend the final paragraph of proposed Rule 1080(m)(iv)(B) by 
adding a space between ``Phlx XL'' and ``II'' in the seventh line. Also 
delete the lower case ``b'' in parentheses at the end of the seventh 
line and replace it with a capital ``B.''
    14. Add the following to the beginning of the fifth paragraph of 
proposed Rule 1080(m)(iv)(C):
    ``In the circumstances described in the preceding paragraph,''
    Delete the capital ``W'' from the word ``What'' and replace it with 
a lower case ``w.''
    15. Add the following to the beginning of the seventh paragraph of 
proposed Rule 1080(m)(iv)(C):
    ``In the circumstances described in the preceding paragraph,''
    Delete the capital ``W'' from the word ``What'' and replace it with 
a lower case ``w.''
    16. Correct a typographical error in the sixth paragraph of 
proposed Rule 1080(m)(iv)(C) by adding an ``i'' to the word ``Timer'' 
in the last sentence.
    17. Add the following to the beginning of the ninth paragraph of 
proposed Rule 1080(m)(iv)(C):
    ``In the circumstances described in the preceding paragraph,''
    Delete the capital ``W'' from the word ``What'' and replace it with 
a lower case ``w.''
    18. Delete the capital ``I'' from the first line of proposed Rule 
1082(a)(ii)(B)(3)(g)(iii)(B)(3) and replace it with a lower case ``i.''
    19. Add the word ``to'' to the first line of proposed Rule 
1082(a)(ii)(B)(3)(g)(iv)(A)(4) between the words ``equal'' and 
``both.''
    20. Delete the capital ``I'' from the first line of proposed Rule 
1082(a)(ii)(B)(3)(g)(iv)(B)(3) and replace it with a lower case ``i.''
    21. Delete the words ``quote or'' from the first line of proposed 
Rule 1082(a)(ii)(B)(3)(g)(v).
    22. Delete from proposed Rule 1082(a)(ii)(B)(4)(d)(iv)(A) the 
following phrase:

[[Page 18602]]

    ``a number of contracts that will satisfy interest at''
    Replace the deleted phrase with the following:
    ``all marketable contracts on the Exchange to''.
    23. Delete from proposed Rule 1082(a)(ii)(B)(4)(d)(iv)(B) the 
following phrase:
    ``a number of contracts that will satisfy interest at other markets 
at prices better than''
    Replace the deleted phrase with the following:
    ``any remaining contracts to away markets at''
    24. Underline the new text ``OQR'' in proposed OFPA A-14.
    The following proposed rules have been changed from the previously 
submitted Exhibit 5: 1017(l)(ii)(E); 1017(l)(iii)(B); 1017(l)(iv)(B); 
1017(l)(iv)(C)(3); 1017(l)(iv)(C)(7); 1080(c)(iv)(E); 1080(h); 1080(m); 
1080(m)(iv)(B); 1080(m)(iv)(C); 1082(a)(ii)(B)(3)(g)(iii)(B)(3); 
1082(a)(ii)(B)(3)(g)(iv)(A)(4); 1082(a)(ii)(B)(3)(g)(v); 
1082(a)(ii)(B)(4)(d)(iv)(A); 1082(a)(ii)(B)(4)(d)(iv)(B); and OFPA A-
14.
    The Exhibit 5 included in Amendment No. 1 replaces the previously 
submitted Exhibit 5 to SR-Phlx-2009-32 in its entirety.\6\
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    \6\ The text of Exhibit 5 to Amendment No. 1 is also available 
on the Commission's Web site.
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III. Date of Effectiveness of Amendment No. 1 to the Proposed Rule 
Change and Timing for Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) by order approve 
such proposed rule change, or (b) institute proceedings to determine 
whether the proposed rule change should be disapproved.
    The Exchange has requested accelerated approval of this Amendment 
No. 1 to the proposed rule change prior to the 30th day after the date 
of publication of the notice in the Federal Register. The Commission is 
considering granting accelerated approval of the proposed rule change 
at the end of a 21-day comment period.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning this Amendment No. 1, including whether this 
Amendment No. 1 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2009-32 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2009-32. This file 
number should be included on the subject line if e-mail 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 inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 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-2009-32 and should be 
submitted on or before May 14, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-9241 Filed 4-22-09; 8:45 am]

BILLING CODE 8010-01-P