Document ID: SEC-2019-0472-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq PHLX, LLC
Posted Date: 2019-04-15T04:00Z

[Federal Register Volume 84, Number 72 (Monday, April 15, 2019)]
[Notices]
[Pages 15260-15262]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07363]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85577; File No. SR-Phlx-2019-09]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Delay the 
Implementation of the FBMS FIX Interface To Submit Orders to a 
Particular Floor Broker on the Options Floor

April 9, 2019.
    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 March 29, 2019, Nasdaq 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 delay the implementation of the FBMS FIX 
Interface to submit orders to a particular Floor Broker on the options 
floor.
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaqphlx.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 Exchange filed a rule change to offer a new FBMS FIX interface 
which connects to FBMS (``FBMS FIX Interface'') \3\ to allow members 
and non-members to submit orders directly \4\ to a Floor Broker on the 
Exchange's trading floor.\5\ With this new protocol, a market 
participant desiring to submit an order

[[Page 15261]]

to the trading floor, who would today contact a Floor Broker 
telephonically, would be able to electronically utilize an external 
order management system or via instant message.\6\
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    \3\ This new FBMS FIX Interface is a separate and distinct 
connection from the existing FIX interface, which allows members to 
send orders to the electronic match engine.
    \4\ The FBMS FIX Interface would allow the market participant to 
designate a particular Floor Broker through the use of a FIX tag.
    \5\ See Securities Exchange Act Release No. 84180 (September 18, 
2018), 83 FR 48353 (September 24, 2018) (SR-Phlx-2018-58).
    \6\ An audit trail is maintained today for all orders received 
by a Floor Broker.
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FBMS FIX Interface Background
    An order submitted via the FBMS FIX Interface will be created by 
the sender and routed to a Floor Broker. This order would be 
systematized so that the Floor Broker \7\ automatically receives the 
order and may then represent the order for execution. A member or non-
member would not be able to send the order directly to the System for 
execution. Orders entered via the FBMS FIX Interface will require the 
interaction of a Floor Broker. Orders will continue to be represented 
in the trading crowd, regardless of the method in which the order was 
received. Orders would be executed in the matching engine using FBMS, 
after all requirements for exposure have been met.\8\
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    \7\ A Floor Broker's employee may also send an order into FBMS 
or the System on behalf of the Floor Broker.
    \8\ The FBMS FIX Interface will allow the following types of 
orders to be submitted directly to a Floor Broker: Simple Orders, 
Multi-leg Orders, Cross and Non-Cross Orders, Simple Cancels, Cancel 
and Replacement Orders and Floor Qualified Contingent Cross Orders.
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Proposal
    The Exchange proposed to implement this functionality in Q1 of 2019 
and notify market participants of the deployment date by way of an 
Options Trader Alert, which will be posted on the Exchange's website. 
At this time, the Exchange proposes to delay the implementation until 
Q2 of 2019. The Exchange would still notify market participants via an 
Options Trader Alert.
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 proposing delaying the implementation of the FBMS FIX 
Interface to allow for additional testing. The Exchange believes that 
additional testing will ensure a successful launch of the FBMS FIX 
Interface.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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's proposal to 
delay the adoption of the FBMS FIX Interface does not impose an undue 
burden on competition. Delaying the FBMS FIX Interface will allow the 
Exchange additional time to test the functionality.

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 \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of 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 pursuant to Rule 19b-4(f)(6) under the 
Act \13\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \14\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay so 
that the proposed rule change may become operative upon filing. Waiver 
of the operative delay would allow the Exchange to immediately delay 
the implementation of the FBMS Fix Interface to allow the Exchange 
additional time to successfully implement this functionality. 
Therefore, the Commission believes that waiver of the 30-day operative 
delay is consistent with the protection of investors and the public 
interest. Accordingly, the Commission hereby waives the operative delay 
and designates the proposed rule change operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission also 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. If the Commission 
takes such action, the Commission shall institute proceedings 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 [email protected]. Please include 
File Number SR-Phlx-2019-09 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-2019-09. 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 website (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

[[Page 15262]]

provisions of 5 U.S.C. 552, will be available for website 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. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-Phlx-2019-09 and should be 
submitted on or before May 6, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-07363 Filed 4-12-19; 8:45 am]
 BILLING CODE 8011-01-P