Document ID: SEC-2014-1738-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, LLC
Posted Date: 2014-10-16T04:00Z

[Federal Register Volume 79, Number 200 (Thursday, October 16, 2014)]
[Notices]
[Pages 62239-62241]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24544]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73330; File No. SR-Phlx-2014-64]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Options 
Floor Procedure Advice F-27, Options Exchange Official Rulings

October 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 October 2, 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 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to correct Options Floor Procedure Advice 
(``Advice'') F-27, Options Exchange Official Rulings, by updating an 
obsolete reference.
    The text of the proposed rule change is below; proposed new 
language is in italics; proposed deletions are in brackets.
* * * * *

F-27 Options Exchange Official Rulings

    Options Exchange Officials are empowered to render rulings on the 
trading floor to resolve trading disputes occurring on and respecting 
activities on the trading floor. All rulings rendered by Options 
Exchange Officials are effective immediately and must be complied with 
promptly. Failure to promptly comply with a ruling concerning a trading 
dispute may result in referral to the Business Conduct Committee. 
Failure to promptly comply with other rulings issued pursuant to Order 
and Decorum Regulations or Floor Procedure Advices and not concerning a 
trading dispute may result in an additional violation. Options Exchange 
Officials need not render decisions in any instance where the request 
for a ruling was not made within a reasonable period of time. An 
Options Exchange Official should not render a decision or authorize a 
citation where such Options Exchange Official was involved in or 
affected by the dispute, as well as in any situation where the Options 
Exchange Official is not able to objectively and fairly render a 
decision.
    Options Exchange Officials shall endeavor to be prompt in rendering 
decisions. However, in any instance where an Options Exchange Official 
has determined that the benefits of further discovery as to the facts 
and circumstances of any matter under review outweigh the monetary 
risks of a delayed ruling, the Options Exchange Official may determine 
to delay rendering the ruling until such time as that further discovery 
is completed. In issuing decisions for the resolution of trading 
disputes, Options Exchange Officials shall institute the course of 
action deemed by the ruling Options Exchange Official to be more fair 
to all parties under the circumstances at the time. An Options Exchange 
Official may direct the execution of an order on the floor, or adjust 
the transaction terms or participants to an executed order on the 
floor. However, an Options Exchange Official may nullify a transaction 
if they determine the transaction to have been in violation of Rule 
Rules 1014 (Obligations and Restrictions Applicable to Specialists and 
Registered Options Traders), Rule 1017 (Openings In Options), Rule 1033 
(Bids And Offers-Premium) or Rule 1080 (Phlx XL and Phlx XL II).
    Exchange staff may determine that an Options Exchange Official is 
ineligible to participate in a particular ruling where it appears that 
such Options Exchange Official has a conflict of interest. For purposes 
of this Rule, and without limitation, a conflict of interest exists 
where an Options Exchange Official: (a) Is directly or indirectly 
affiliated with a party seeking an Options Exchange Official ruling; 
(b) is a participant or is directly or indirectly affiliated with a 
participant in a transaction that is the subject of an Options Exchange 
Official ruling; (c) is a debtor or creditor of a party seeking an 
Options Exchange Official ruling; or (d) is an immediate family member 
of a party seeking an Options Exchange Official ruling. Exchange staff 
may consider other circumstances, on a case-by-case basis, in 
determining the eligibility or ineligibility of a particular Options 
Exchange Official to participate in a particular ruling due to a 
conflict of interest.
    All Options Exchange Official rulings concerning the adjustment and 
nullification of transactions are reviewable by the [Referee (as 
defined in Rule 124)] Market Operations Review Committee.
    (i)-(v) No change.
FINE SCHEDULE
$250.00

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

[[Page 62240]]

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 correct an Exchange provision 
respecting how disputes are settled. Advice F-27 generally parallels 
Rule 124 and governs how disputes are settled on the Exchange's options 
trading floor. Specifically, Advice F-27 (as well as Rule 124) provides 
that Options Exchange Officials are empowered to render rulings on the 
trading floor to resolve trading disputes occurring on and respecting 
activities on the trading floor. It also governs the process for 
rendering rulings and situations where the Options Exchange Official 
may have a conflict.
    Some time ago, Options Exchange Official rulings were appealable to 
the Exchange Referee, an Exchange employee who was empowered to review 
Options Exchange Official rulings. In 2009,\3\ the Exchange replaced 
the Referee with a committee, the Market Operations Review 
Committee,\4\ and inadvertently left one reference to the Referee in 
Advice F-27. At this time, the Exchange proposes to delete that 
reference and replace it with reference to the Market Operations Review 
Committee. This change to Advice F-27 ensures that the terms used in 
the Advice and the Rule are consistent and up-to-date.
---------------------------------------------------------------------------

    \3\ Securities Exchange Act Release Nos. 60687 (September 18, 
2009), 74 FR 49060 (September 25, 2009) (SR-Phlx-2009-59) (Replacing 
Referee with Options Trade Review Committee); and 64338 (April 25, 
2011), 76 FR 24069 (April 29, 2011) (SR-Phlx-2011-13) (Renaming the 
Options Trade Review Committee as the Market Operations Review 
Committee).
    \4\ Options Exchange Official rulings (including those 
concerning the nullification or adjustment of transactions) may be 
sustained, overturned or modified by the Market Operations Review 
Committee. See Rule 124(d) and By-Law Article V, Section 5-3(d).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \5\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \6\ in particular, in that it is designed to promote 
just and equitable principles of trade, and, to protect investors and 
the public interest, by providing a clear rule on how rulings can be 
appealed.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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, because it merely corrects a 
reference.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\ 
Because the 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, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) 
thereunder.\9\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to 
give the Commission written notice of the Exchange's 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of the filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\10\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest. Specifically, the 
Commission believes that the proposal would eliminate confusion in the 
Exchange's rules and provide clarification to the public. Therefore, 
the Commission hereby waives the 30-day operative delay and designates 
the proposal operative upon filing.\11\
---------------------------------------------------------------------------

    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ 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).
---------------------------------------------------------------------------

    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 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-2014-64 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-2014-64. 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

[[Page 62241]]

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-2014-64 and should be 
submitted on or before November 6, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24544 Filed 10-15-14; 8:45 am]
BILLING CODE 8011-01-P