Document ID: SEC-2009-1537-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of Filing
Posted Date: 2009-10-30T04:00Z

[Federal Register: October 30, 2009 (Volume 74, Number 209)]
[Notices]               
[Page 56252-56253]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30oc09-105]                         

[[Page 56252]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60879; File No. SR-Phlx-2009-90]

 
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Permit 
Listing Option Series That Are Restricted to Closing Transactions if 
Such Series Are Listed and Restricted to Closing Transactions on 
Another National Securities Exchange

October 26, 2009.
    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 October 16, 2009, NASDAQ OMX PHLX, Inc. (``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. 
Phlx filed the proposal as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 1010 (Withdrawal of Approval of Underlying Securities or Options) 
to permit the Exchange to list option series that are restricted to 
closing transactions if such series are listed and restricted to 
closing transactions on another exchange; and to add an exception 
regarding opening transactions to accommodate or facilitate certain 
closing transactions. The Exchange requests that the Commission waive 
the 30-day operative delay period contained in Exchange Act Rule 19b-
4(f)(6)(iii).\5\
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    \5\ 17 CFR 240.19b-4(f)(6)(iii).
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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 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 Phlx Rule 1010 
to permit the Exchange to list option series that are restricted to 
closing transactions if such series are listed and restricted to 
closing transactions on another exchange; and to add an exception 
regarding opening transactions to accommodate or facilitate certain 
closing transactions.
    This filing is based on a similar immediately effective filing 
recently filed by another options exchange, Chicago Board Options 
Exchange (``CBOE'').\6\ In that filing, it was noted that the impetus 
for the filing was a customer request for it to list a series of 
options that was previously delisted by the filing exchange but was 
listed on another exchange and restricted to closing transactions, a 
situation that may equally occur on Phlx as well as other options 
exchanges.
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    \6\ See Securities Exchange Act Release No. 60625 (September 4, 
2009), 74 FR 46825 (September 11, 2009) (SR-CBOE-2009-066) (notice 
of filing and immediate effectiveness).
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    Rule 1009 (Criteria for Underlying Securities) sets forth the 
requirements or criteria that underlying securities must meet before 
the Exchange may initially list options on such securities. Rule 1010 
sets forth listing maintenance and delisting criteria in respect of 
securities underlying options listed on the Exchange that are used by 
the Exchange to determine whether such listing status should be 
continued. These rules do not have provisions for listing option series 
that are restricted to closing transactions where such series are 
listed on another exchange.
    Phlx proposes to add new Commentary .05 to Rule 1010 to provide 
that if an option series is listed but restricted to closing 
transactions on another national securities exchange, the Exchange may 
list such series (even if such series would not otherwise be eligible 
for listing under the Exchange's rules), which shall also be restricted 
to closing transactions on the Exchange.\7\
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    \7\ The parenthetical text is being proposed to eliminate 
ambiguity about the Exchange's ability to list a restricted series 
pursuant to proposed Commentary .05 to Rule 1010 in the event other 
Exchange Rules would otherwise prohibit the listing of that series.
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    Similar to series that no longer meet the Exchange's criteria for 
continued listing, (i) Opening transactions by market makers \8\ 
executed to accommodate closing transactions of other market 
participants, and (ii) opening transactions by Phlx member 
organizations to facilitate the closing transactions of public 
customers executed as crosses pursuant to and in accordance with Phlx 
Rule 1064 (b) will be permitted in any restricted series listed 
pursuant to proposed Commentary .05 to Rule 1010. No restrictions will 
be in place with respect to the exercise of any restricted series.
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    \8\ Market makers on the Exchange include specialists, 
Registered Options Traders (``ROTs''), Streaming Quote Traders 
(``SQTs''), and Remote Streaming Quote Traders (``RSQTs''). See Rule 
1014(b).
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    Additionally, the Exchange is making changes in Rule 1010 to codify 
exceptions for these opening transactions by market makers to 
accommodate closing transactions of other market participants or by 
member organizations to facilitate the closing transactions of public 
customers executed as crosses. This is done to conform Rule 1010 to 
similar provisions in listing rules of other options exchanges.\9\
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    \9\ See, for example, CBOE Rule 5.4 and Securities Exchange Act 
Release No. 48142 (July 9, 2003), 68 FR 42150 (July 16, 2003) (SR-
CBOE-2002-36) (order approving, among other things, exceptions for 
certain opening transactions by market makers).
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    The Exchange believes that the proposed rule change should 
encourage competition and be beneficial to traders and market 
participants by providing them with a means to trade on the Exchange 
securities that are listed and traded on other exchanges.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \10\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \11\ 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

[[Page 56253]]

investors and the public interest. Permitting the Exchange to 
accommodate possible customer requests and allow execution of trades on 
the Exchange will encourage competition and not harm investors or the 
public interest.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6) \13\ thereunder 
because the proposal does not: (i) Significantly affect the protection 
of investors or the public interest; (ii) impose any significant burden 
on competition; and (iii) by its terms, become operative for 30 days 
from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, provided that the Exchange has given the 
Commission 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.\14\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ Phlx has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \15\ 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 period. The Commission 
believes that waiver of the 30-day operative delay is consistent with 
the protection of investors and the public interest. In particular, the 
Exchange would be permitted to list the restricted series solely for 
the purpose of closing transactions as long as the restricted series is 
listed on another national securities exchange. In addition, the 
proposed rule change is substantially similar to the rules of CBOE.\16\ 
The Commission therefore designates the proposal operative upon 
filing.\17\
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    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See CBOE Rules 5.4 and 5.4.12(b).
    \17\ For purposes only of waiving the operative delay for this 
proposal, the Commission 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 may summarily abrogate such proposed 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.\18\
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    \18\ 15 U.S.C. 78s(b)(3)(C).
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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-2009-90 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-2009-90. 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 inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 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 available publicly. All 
submissions should refer to File Number SR-Phlx-2009-90 and should be 
submitted on or before November 20, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-26173 Filed 10-29-09; 8:45 am]

BILLING CODE 8011-01-P