Document ID: SEC-2013-1160-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, LLC
Posted Date: 2013-06-27T04:00Z

[Federal Register Volume 78, Number 124 (Thursday, June 27, 2013)]
[Notices]
[Pages 38777-38779]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-15345]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69817; File No. SR-Phlx-2013-66]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 3100 To Adopt a Modification in the Process for Initiating Trading 
of a Security That Is the Subject of a Trading Halt or Pause on NASDAQ 
OMX PSX

June 21, 2013.
    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 June 14, 2013, NASDAQ OMX PHLX LLC (``Phlx'' or the ``Exchange'') 
filed with the Securities and Exchange Commission (``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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 3100 to adopt a modification in 
the process for initiating trading of a security that is the subject of 
a trading halt or pause on NASDAQ OMX PSX (``PSX''). The text of the 
proposed rule change is available on the Exchange's Web site at http://nasdaqomxphlx.cchwallstreet.com/nasdaqomxphlx/phlx/, 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

[[Page 38778]]

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
    In 2012, The NASDAQ Stock Market (``NASDAQ'') modified its process 
for commencing trading of a security that is the subject of an initial 
public offering (an ``IPO'') on NASDAQ by allowing market participants 
to enter orders to be held in an undisplayed state until the 
commencement of the Display-Only Period that occurs prior to the 
IPO.\3\ NASDAQ recently proposed a similar change with regard to 
entering orders prior to the end of other trading halts or pauses on 
NASDAQ.\4\ The Exchange is proposing to make a similar change with 
regard to entering orders prior to the end of trading halts or pauses 
on PSX. Rule 3100(a) describes the circumstances under which the 
Exchange has the authority to initiate a trading halt. As detailed in 
Rule 3100(a), the specific bases for a halt include the following:
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    \3\ Securities Exchange Act Release No. 66652 (March 23, 2012), 
77 FR 13129 (March 29, 2012) (SR-NASDAQ-2012-038).
    \4\ Securities Exchange Act Release No. 69563 (May 13, 2013), 78 
FR 29187 (May 17, 2013) (SR-NASDAQ-2013-073).
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     A halt to permit the dissemination of material news with 
respect to a security listed on another national securities exchange 
(Rule 3100(a)(1)(A));
     a halt due to an order imbalance or influx (Rule 
3100(a)(1)(B));
     a halt with respect to an index warrant when deemed 
appropriate in the interests of a fair and orderly market and to 
protect investors (Rule 3100(a)(2));
     a halt in a Derivative Securities Product (as defined in 
Rule 3100(b)(4)(A)) for which a net asset value (``NAV'') or a 
Disclosed Portfolio is disseminated if the Exchange becomes aware that 
the NAV or Disclosed Portfolio is not being disseminated to all market 
participants at the same time (Rule 3100(a)(3));
     a trading pause with respect to stocks that are not 
subject to the Limit Up-Limit Down Plan \5\ and for which the primary 
listing market has issued an individual stock trading pause (Rule 
3100(a)(4)); and
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    \5\ Plan to Address Extraordinary Market Volatility Submitted to 
the Commission Pursuant to Rule 608 of Regulation NMS under the Act, 
Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 
33498 (June 6, 2012).
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     a trading halt in a Derivative Security Product traded 
pursuant to unlisted trading privileges for which a ``Required Value,'' 
such as an intraday indicative value or disclosed portfolio, is not 
being disseminated, under the conditions described in Rule 3100(b).
    Under the current process, quotes and orders in a halted security 
may not be entered until the resumption of trading. However, the 
Exchange believes that the quality of its process for commencing 
trading in the halted security would be enhanced by allowing market 
participants to enter orders to be held but not displayed until the 
resumption of trading. Specifically, the Exchange believes that this 
change will provide for a greater number of orders being entered prior 
to commencement of trading, resulting in a higher level of order 
interaction at the resumption of trading.
    Orders entered in this manner will be held in a suspended state 
until the resumption of trading, at which time they will be entered 
into the system. Market participants may cancel orders entered in this 
manner in the same way they would cancel any other order. Orders 
entered prior to the resumption of trading will be rejected unless they 
are designated for holding. Specifically, the orders will be entered 
into the continuous market once trading resumes.\6\
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    \6\ Orders entered and held during the halt period will be 
entered into the continuous market in the order in which they were 
received. However, such orders will be entered contemporaneously 
with any orders received through order entry ports after the halt is 
terminated. Thus, the relative priority of orders received during 
the halt and orders received through order entry ports after the 
halt is terminated will be a function of the duration of system 
processing associated with each particular order. As a result, 
orders received during the halt will not automatically have priority 
over orders received at the conclusion of the halt.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\7\ in general, and with 
Section 6(b)(5) of the Act,\8\ in particular, in that the proposal is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, 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. Specifically, 
the Exchange believes that the change to allow entry of quotes and 
orders for holding during a trading halt will provide for a greater 
number of orders being entered prior to commencement of trading, 
resulting in a higher level of order interaction in the re-opening 
process. Thus, the Exchange believes that the change will remove 
impediments to and perfect the mechanism of a free and open market.
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    \7\ 15 U.S.C. 78f.
    \8\ 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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. 
Specifically, the Exchange believes that this change will provide for a 
greater number of orders being entered prior to commencement of 
trading, resulting in a higher level of order interaction. The Exchange 
believes that this change will promote competition by enhancing the 
attractiveness of PSX as a trading venue through higher order fill 
rates and more complete price discovery. Moreover, because the change 
will not affect the availability or price of goods or services offered 
by PSX or others, it will not impose any burden on competition.

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 \9\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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.

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[[Page 38779]]

    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.

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-2013-66 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-2013-66. 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 such 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 publicly available. All 
submissions should refer to File Number SR-Phlx-2013-66 and should be 
submitted on or before July 18, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority. \11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2013-15345 Filed 6-26-13; 8:45 am]
BILLING CODE 8011-01-P