Document ID: SEC-2011-0548-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2011-04-14T04:00Z

[Federal Register Volume 76, Number 72 (Thursday, April 14, 2011)]
[Notices]
[Pages 21081-21083]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-9061]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64284; File No. SR-Phlx-2011-48]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Update 
Provisions Regarding the Dress Code and Trade Verification

April 8, 2011.
    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 April 6, 2011, 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 Substance 
of the Proposed Rule Change

    The Exchange is filing with the Commission a proposal to amend Phlx 
Rule 1054 (Verification of Contracts and Reconciliation of Uncompared 
Trades) and Regulation 6 (Dress) of Rule 60 (Order and Decorum Code) 
\3\ to delete obsolete provisions and update and modernize these 
sections.
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    \3\ The Exchange's Order and Decorum regulations are part of the 
Exchange's Options Floor Procedure Advices (``OFPAs'' or Advices''), 
which may correspond to Exchange rules, and contain the Exchange's 
minor rule plan (``MRP'' or ``Minor Rule Plan'') in respect of 
options trading. The Minor Rule Plan consists of Advices with preset 
fines, pursuant to Rule 19d-1(c) under the Act. 17 CFR 240.19d-1(c). 
The Exchange is not, by this filing, amending the fine schedule for 
Regulation 6 in OFPA.
     Similarly to OFPAs, the Exchange also has Equity Floor 
Procedure Advices (``EFPAs'') in respect of equity trading, which 
are not amended by this filing.
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    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

[[Page 21082]]

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 purpose of the proposed rule change is to amend Rule 1054 and 
Regulation 6 to delete obsolete provisions and update and modernize 
these sections.
    The Exchange's Order and Decorum regulations pursuant to Rule 60 of 
the Option Floor Procedure Advices,\4\ with corresponding fine 
schedules, were originally codified in 1989.\5\ The dress code in 
Regulation 6 of Rule 60 in OFPA, which indicates dress norms for 
individuals on the options floor (the ``Dress Code'') was omitted 
inadvertently in the 1989 filing and was added the year thereafter.\6\ 
The last proposal in 2007 to amend the Dress Code adopted a business 
casual code and indicated what business attire was deemed acceptable on 
the trading floor.\7\
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    \4\ Order and Decorum regulations relate to administration of 
health, safety, welfare and general order and decorum on the 
Exchange.
    \5\ See Securities Exchange Act Release No. 27072 (August 8, 
1989), 54 FR 32550 (SR-Phlx-89-41) (notice of filing and immediate 
effectiveness).
    \6\ See Securities Exchange Act Release No. 28499 (October 10, 
1990), 55 FR 41290 (SR-Phlx-90-29) (approval order).
    \7\ See Securities Exchange Act Release No. 55492 (March 20, 
2007), 72 FR 14321 (March 27, 2007) (SR-Phlx-2006-61) (notice of 
filing).
    Regulation 6 currently states:
    Acceptable Business Casual Dress (Men):  Casual slacks 
(i.e. khakis, dockers, corduroy fabric).  Ties are optional, 
but must be neat, clean, and properly tied. If a tie is torn or 
frayed, you will be asked to remove it.
     Traditional collared shirts, polo shirts, golf shirts 
(shirts may be long or short sleeved). Shirts must be neat and 
clean. All shirts must be tucked in. Shirts must be buttoned at 
least to the second button from the top.  Dress shoes, 
casual shoes, loafers, athletic shoes and boots (note: pant legs may 
not be tucked into boots). All shoes must be neat and clean. 
 Traditional business attire is always acceptable. Blazers 
may be worn in lieu of trading jackets.  Trading jackets or 
blazers must be worn at all times on the trading floor. 
Identification badges must be properly displayed at chest level. 
 Sweaters worn over a collared shirt, turtlenecks worn under 
a collared shirt. Acceptable Business Casual Dress (Women):  
Dresses or casual slacks (i.e. khakis, dockers, corduroy fabric). 
 Shirts, sweaters, shells, turtlenecks, blouses, polo 
shirts, golf shirts (long or short sleeved).  Dress shoes, 
casual shoes, loafers, athletic shoes and boots (note: pant legs may 
not be tucked into boots). All shoes must be neat and clean. 
Inappropriate Casual Dress (Men & Women):  Denim clothing of 
any kind (i.e. pants, skirts, dresses, shirts, vests, blouses). 
 Sweat shirts, sweat pants, other sweat apparel of any kind 
and sport jerseys.  Shorts, gym shorts, skorts, culottes, 
beach wear, workout attire or miniskirts.  T-shirts of any 
kind.  Stirrup pants or other excessively tight or revealing 
clothing (i.e. bike shorts, leggings, sheer blouses, stretch pants). 
 Tank tops, halter tops, tube tops, tops with spaghetti 
straps, backless tops, crop tops (note: no bare midriffs).  
Clothing with any inappropriate, or oversized logos (cartoon logos, 
oversized sports logos or inappropriately suggestive logos). 
 Slippers, sandals of any kind or open toed shoes.  
Military fatigues, cargo pants, surgical scrubs, bib overalls. 
 Clothing which is torn, soiled or in need of repair. 
 Clothing and/or accessories which disrupt business 
operations or which draw excessive attention to an employee  
Hats or headgear unless worn for religious purposes.
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    The Exchange does not propose by this filing to eliminate its 
Regulation 6. Rather, in light of the Exchange options market combining 
on-floor auction trading with an extensive electronic market, the 
Exchange proposes to eliminate the specifics of the Dress Code from 
Regulation 6 and set forth a procedure whereby the Exchange will 
communicate the specifics of the Dress Code to members \8\ and post 
them on the options floor. The Exchange believes that in this way it 
would be able to address obsolete or unused Dress Code requirements \9\ 
and most efficiently address any needed changes and updates, subject to 
notification of Exchange members regarding such requirements.
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    \8\ This includes, per current use, members, member 
organizations, participants, and participant organizations. As such, 
the Exchange is deleting obsolete or unused references to Floor 
Manager, Post Supervisor, and Firm Representative from Regulation 6.
    \9\ As an example, the current Dress Code discusses items that 
are essentially out of use such as skorts and culottes.
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    Specifically, the Exchange proposes to amend Regulation 6 to 
indicate that the Dress Code outlining acceptable and unacceptable 
dress for members and their staff, as well as any changes to the Dress 
Code, will be communicated to members by the Exchange in writing.\10\ 
In addition, to further provide notification to on-floor traders, the 
Dress Code will be posted on the options trading floor of the Exchange. 
Moreover, to make sure that members have proper notification regarding 
changes, the Exchange proposes that changes to the Dress Code will only 
be effective three business days after such changes are communicated to 
Exchange members. By communicating guidelines as needed regarding 
acceptable apparel while on the trading floor, the Exchange intends to 
encourage the membership (and their associated persons) to comply with 
the Dress Code requirements.
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    \10\ The Exchange intends to communicate the Dress Code to 
members within one week of the date of effectiveness of this 
proposal.
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    Rule 1054 regarding the procedure for verification and 
reconciliation of options trades has been in existence for more than 
thirty years.\11\ During that time the rule has seen little substantive 
(material) modification.\12\ As such, the rule still has obsolete 
legacy language discussing the printing and distribution of carbon copy 
trade contracts. The Exchange therefore proposes to eliminate reference 
to obsolete or unused language in Rule 1054, particularly in light of 
having both on-floor and electronic markets, while preserving most of 
the rule.
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    \11\ Rule 1054 was formerly known as Rule 1074. See Securities 
Exchange Act Release No. 13591 (June 2, 1977) (SR-PBW-76-10) 
(approval order regarding, among things, renumbering Rule 1074 as 
1054).
    Rule 1054 states: At the time of execution, a carbon copy trade 
contract will be printed and distributed by the Exchange to the 
respective purchasing and selling members. Promptly upon receipt of 
such contract, a member organization which is a clearing member of 
the Options Clearing Corporation shall be obligated to verify the 
information shown on the contract, to reconcile all uncompared 
trades and advisory trades shown on the uncompared trade contract 
and to report all reconciliations, corrections and adjustments to 
the Exchange in accordance with such procedures as may be 
established by the Exchange from time to time. Such reconciliation 
report shall be filed with the Exchange prior to such cut-off hour 
as the Exchange may prescribe and shall be binding on the clearing 
member on whose behalf it is filed. The Exchange will consider all 
trades as executed and compared as of such cut-off hour.
    \12\ The last modification of the rule, as an example, was for 
the purpose of deleting Commentary .01 to Rule 1054 relating to use 
of certain technology for the trading of Dell options. See 
Securities Exchange Act Release No. 42143 (November 16, 1999), 64 FR 
66224 (SR-Phlx-99-22) (November 24, 1999) (notice of filing and 
immediate effectiveness).
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    Specifically, after eliminating reference to carbon copy trade 
contracts, the Exchange proposes to state that a member organization 
which is a clearing member of the Options Clearing Corporation shall be 
obligated to compare all trades made through or on behalf of such 
member as soon as possible after such trades are made or after 
receiving notification thereof. In addition, as currently required by 
the rule, such member would have to reconcile all uncompared trades and 
advisory trades and report all reconciliations, corrections and 
adjustments to the Exchange in accordance with such procedures as

[[Page 21083]]

may be established by the Exchange from time to time. The current rule 
requirement that such reconciliation report shall be filed with the 
Exchange prior to such cut-off hour as the Exchange may prescribe and 
shall be binding on the clearing member on whose behalf it is filed is 
not changed.
    The Exchange believes that the proposed Rule 1054 changes not only 
deletes obsolete provisions and updates the rule but also brings the 
rule into conformity with current options trading practices.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \13\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \14\ in particular, in that it 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 facilitating transactions in 
securities, and to remove impediments to and perfect the mechanisms of 
a free and open market and a national market system, by deleting 
obsolete provisions and updating and modernizing its Regulation 6 
regarding the Exchange's Dress Code and Rule 1054 regarding 
verification and reconciliation of options trades.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 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

    The Exchange believes that the foregoing proposed rule change may 
take effect upon filing with the Commission pursuant to Section 
19(b)(3)(A) \15\ of the Act and Rule 19b-4(f)(6)(iii) thereunder \16\ 
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.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6)(iii). 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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    At any time within 60 days of the filing of such 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2011-48 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-2011-48. 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 Web site viewing and 
printing in the Commission's Public Reference Room. 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-2011-48 and should be submitted on or before May 5, 
2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Cathy Ahn,
Deputy Secretary.
[FR Doc. 2011-9061 Filed 4-13-11; 8:45 am]
BILLING CODE 8011-01-P