Document ID: SEC-2012-1687-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2012-10-15T04:00Z

[Federal Register Volume 77, Number 199 (Monday, October 15, 2012)]
[Notices]
[Pages 62556-62558]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-25279]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68012; File No. SR-Phlx-2012-115]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Clarify 
Further That the Provisions of the Rule 800 Series Are Not Effective To 
Permit the Listing of Securities and Include a Reference on the Need To 
Comply With Rule 10C-1 Under the Securities Exchange Act of 1934 Should 
the Exchange List Equity Securities in the Future

October 9, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on September 25, 2012, 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, II, and III 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 the 
Substance of the Proposed Rule Change

    Phlx is proposing to modify certain Exchange Rules to clarify 
further that the provisions of the Rule 800 Series are not effective to 
permit the listing of securities. The text of the proposed rule change 
is available at http://nasdaqomxphlx.cchwallstreet.com/nasdaqomxphlx/phlx/, at Phlx's principal office, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and the 
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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Commission recently adopted rules that require any national 
securities exchange that lists equity securities to have listing 
standards relating to the independence of compensation committees and 
their advisers.\3\
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    \3\ See 17 CFR 240.10C-1 and Securities Exchange Act Release No. 
67220 (June 20, 2012), 77 FR 38422 (June 27, 2012).
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    The Exchange operates NASDAQ OMX PSX (``PSX''), a fully integrated 
order display and execution system for all NMS stocks,\4\ as defined in 
SEC Rule 600(b)(47) under Regulation NMS.\5\ PSX trades stocks listed 
on other exchanges pursuant to unlisted trading privileges (``UTP''). 
As provided by SEC Rule 12f-5, the Exchange may extend UTP to any 
security for which the Exchange has in effect rules providing for 
transactions in such class or type of security.\6\ Accordingly, Phlx's 
rules include the Rule 800 Series to support UTP trading of all NMS 
stocks on PSX. However, the Exchange does not list any securities 
pursuant to the Rule 800 Series, and does not have any present intent 
to list securities under this series in the future.\7\
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    \4\ See Securities Exchange Act Release No. 62877 (September 9, 
2010), 75 FR 56633 (September 16, 2010) (SR-Phlx-2010-079).
    \5\ See 17 CFR 242.600(b)(47).
    \6\ See 17 CFR 240.12f-5.
    \7\ Pursuant to its Rule 1000, 1000A and 1000C Series, the 
Exchange lists only standardized options, as defined in Rule 9b-1 
under the Act, issued by a clearing agency that is registered 
pursuant to Section 17A of the Act. As a result, the Exchange is not 
proposing any clarifying changes to its Rule 1000, 1000A and 1000C 
Series relating to Rule 10C-1 under the Act because Rule 10C-1 
includes an exemption for listing of such standardized options. See 
17 CFR 240.10C-1(b)(5)(iv). The Exchange's Rule 1000B Series is a 
dormant set of rules applicable to trading of cash index 
participations, and the Exchange has no present intent to trade or 
list such securities. Should the Exchange ever propose to trade or 
list any securities pursuant to its Rule 1000, 1000A, 1000B or 1000C 
Series that are not entitled to an exemption under Rule 10C-1 under 
the Act, the Exchange recognizes that it must file a proposed rule 
change under Section 19(b)(2) under the Act to amend its rules to 
make any changes needed to comply with Rule 10C-1 under the Act and 
that such proposed rule change must be approved by the Commission.

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[[Page 62557]]

    The Exchange proposes to modify Rules 800-803 and 867.5 to clarify 
further that the provisions of the Rule 800 Series are not effective to 
permit the listing of securities. Specifically, the Exchange proposes 
to change the title of the Rule 800 Series from ``Listing of 
Securities'' to ``Standards for Trading Securities Pursuant to Unlisted 
Trading Privileges.'' Regarding Rule 801, the Exchange proposes to 
delete references to listing and add clarifying language to state that 
the Exchange lists only standardized options, as defined in Rule 9b-1 
under the Act, issued by a clearing agency that is registered pursuant 
to Section 17A of the Act, pursuant to the Rule 1000, 1000A and 1000C 
Series. In addition, the Exchange will not list securities pursuant to 
any other rule until the Exchange files a proposed rule change under 
Section 19(b)(2) under the Act to amend its rules to make any changes 
needed to comply with Rules 10A-3 and 10C-1 under the Act and to 
incorporate additional qualitative and other listing criteria, and such 
proposed rule change is approved by the Commission. The Exchange also 
proposes to state explicitly in Rule 801, as well as Rule 803, which is 
discussed further below, that the provisions of the Rule 800 Series are 
not effective to permit the listing of securities.
    Regarding Rule 802, the Exchange proposes to move the statement 
that ``[t]he Exchange does not rate or guarantee the quality of any 
security dealt on the Exchange'' to Rule 801. The Exchange also 
proposes to move the definition of the terms ``public shareholder'' and 
``public holder'' to Rule 800, which includes definitions that apply to 
the entire Rule 800 Series. The Exchange proposes to delete the 
remainder of Rule 802, which relates to determinations concerning 
listing or delisting, and is therefore irrelevant since the Exchange 
does not list securities pursuant to the Rule 800 Series.
    The Exchange proposes to change the title of Rule 803 from 
``Criteria for Listing--Tier I'' to ``Listing Standards for Unlisted 
Trading Privileges.'' As discussed above, Rule 803(o) includes a 
statement that the provisions of the Rule 800 Series that permit the 
listing of securities will not be effective until the Exchange files a 
proposed rule change under Section 19(b)(2) under the Act to amend its 
rules to make any changes needed to comply with Rule 10A-3 under the 
Act and to incorporate additional qualitative listing criteria, and 
such proposed rule change is approved by the Commission. The Exchange 
proposes to move this language to Rule 801, so that it is more 
prominent at the beginning of this section of rules, and to revise the 
existing language to state that the Exchange will not list securities 
pursuant to any other rule until it complies with the aforementioned 
conditions. The Exchange also proposes to add a reference to Rule 10C-1 
under the Act, which requires securities exchanges that list equity 
securities to adopt rules relating to the independence of compensation 
committees and their advisers,\8\ and to expand the reference to 
additional qualitative listing criteria to include other listing 
criteria as well. As a result of this new language, the Exchange cannot 
list securities pursuant to the Rule 800 Series until it files proposed 
rules under Rule 10C-1, and such rules are approved by the Commission.
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    \8\ See 17 CFR 240.10C-1.
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    Finally, the Exchange proposes to add similar clarifying language 
to Rule 867.5, which relates to compensation committees.
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, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers. The rule change will promote 
these goals by clarifying further the intent of the Exchange's Rule 800 
Series, which exists to permit the Exchange to extend UTP to NMS stocks 
that are listed on another national securities exchange. The proposed 
amendments to the Rule 800 Series emphasize that the Exchange does not 
list securities pursuant to that series and that it will not list 
securities pursuant to that series until it proposes certain rule 
changes and those changes are approved by the Commission. These 
clarifications will serve to protect investors and the public interest 
by preventing confusion about the intent of the Rule 800 Series.
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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.

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 
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
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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 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

[[Page 62558]]

Number SR-Phlx-2012-115 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-2012-115. 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 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 offices 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-2012-115, and should be submitted on or before 
November 5, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25279 Filed 10-12-12; 8:45 am]
BILLING CODE 8011-01-P