Document ID: SEC-2015-0589-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, LLC
Posted Date: 2015-04-07T04:00Z

[Federal Register Volume 80, Number 66 (Tuesday, April 7, 2015)]
[Notices]
[Pages 18662-18664]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-07851]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74628; File No. SR-Phlx-2015-32]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rule 3301(h)

April 1, 2015.
    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 March 24, 2015, 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.
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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 3301(h) to introduce the Market 
Hours Immediate or Cancel Time in Force for use on the NASDAQ OMX PSX 
System and to modify the processing of Good-til-market close-designated 
orders.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxphlx.cchwallstreet.com/, 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 Exchange is proposing to expand the number of Time in Force 
designations currently available for use in the PHLX NASDAQ OMX PSX 
System (``PSX System'' or ``PSX'') by adopting a Market Hours Immediate 
or Cancel (``Market Hours IOC'' or ``MIOC'') Time in Force. Time in 
Force is a characteristic of an order that limits the period of time 
that PSX System will hold an order for potential execution. Currently 
the Exchange offers the following six Times in Force for use in PSX: 
(1) System Hours Immediate or Cancel; (2) System Hours Day; (3) System 
Hours Good-till-Cancelled; (4) System Hours Expire Time; (5) Market 
Hours GTC; and (6) Good-til-market close.\3\ The Exchange is proposing 
to add the Market Hours IOC Time in Force, which will cause an order 
designated as such (or unexecuted portion thereof) to be canceled if, 
after entry into the PSX System, the order (or unexecuted portion 
thereof) becomes non-marketable during the period from 9:30 a.m. 
Eastern Time until 4:00 p.m. Eastern Time (``Regular Market Hours''). 
The new Time in Force is similar to the System Hours Immediate or 
Cancel (``SIOC'') Time in Force, which, as noted above, is currently 
available on the Exchange. Like the proposed MIOC Time in Force, an 
order with a Time in Force of SIOC will cause such an order (or a 
portion thereof) to be canceled and returned to the entering market 
participant if, after entry into the PSX System, the order (or 
unexecuted portion thereof) is not marketable. Unlike the System Hours 
Immediate or Cancel Time in Force, which is available for entry and 
potential execution from 8:00 a.m. until 5:00 p.m. Eastern Time 
(``System Hours''), the proposed MIOC Time in Force is only available 
for entry and potential execution during Regular Market Hours. As such, 
MIOC-designated orders will operate in the same manner as SIOC-
designated orders, but are limited to entry and potential execution 
only during Regular Market Hours. The Exchange notes that, because it 
is an immediate or cancel time in force,\4\ the Exchange believes that 
it is appropriate to limit MIOC order entry to Regular Market Hours. An 
order designated with a Time in Force of MIOC that is entered outside 
of Regular Market Hours will be returned to the entering member firm 
without attempting to execute.
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    \3\ See Rules 3301(h)(1)-(8). The Exchange notes that Rules 
3301(h)(5) and (6) are currently held in reserve.
    \4\ An order designated as ``immediate or cancel'' represents 
the entering member firm's desire for the order to either execute 
immediately after the System determines whether the order is 
marketable or be canceled.
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    The Exchange notes that the NASDAQ Stock Market LLC (``NASDAQ'') 
currently has a MIOC Time in Force, which was adopted in 2006.\5\ The 
Exchange's proposed MIOC Time in Force will operate identically, but 
will be available during a slightly different time period, which is 
attributable to NASDAQ's Opening Cross process.\6\

[[Page 18663]]

Specifically, the Exchange's MIOC Time in Force will be available for 
entry and potential execution from 9:30 a.m. through 4:00 p.m. Eastern 
Time, whereas NASDAQ's MIOC Time in Force is available for entry and 
potential execution beginning after the completion of the NASDAQ 
Opening Cross \7\ through 4:00 p.m. Eastern Time.\8\ Unlike NASDAQ, PSX 
does not have an opening cross process, but rather opens for Regular 
Market Hours trading at 9:30 a.m. Eastern Time.\9\ Otherwise, the 
Exchange's proposed MIOC Time in Force will operate identically to 
NASDAQ's.
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    \5\ See Securities Exchange Act Release No. 54155 (July 16 
[sic], 2006), 71 FR 41291 (July 20, 2006)(SR-NASDAQ-2006-001); see 
also NASDAQ Rule 4751(h)(5).
    \6\ See NASDAQ Rule 4752.
    \7\ NASDAQ's Opening Cross begins at 9:30 a.m. Eastern Time and 
market hours trading commences when the Opening Cross concludes. See 
NASDAQ Rule 4752(d).
    \8\ The Exchange notes that NASDAQ recently provided the 
Commission notice of a proposed immediately effective filing to 
simplify handling of NASDAQ MIOC-designated orders by no longer 
accepting such orders prior to the completion of the NASDAQ Opening 
Cross. See SR-NASDAQ-2015-11P.
    \9\ The System is opened for order entry at 8:00 a.m. Eastern 
Time and begins to process each order in accordance with its 
characteristics immediately. All trades executed prior to 9:30 a.m. 
shall be automatically appended with the ``.T'' modifier. See Rule 
3302.
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    The Exchange is also proposing to modify the processing of orders 
designated as Good-til-market close (``GTMC'').\10\ As noted above, the 
Exchange currently has a GTMC Time in Force, which allows an order 
designated as such to be executed from 8:00 a.m. to 4:00 p.m. Eastern 
Time. GTMC-designated orders entered after 4:00 p.m. Eastern Time, 
however, are converted to a Time in Force of SIOC. In lieu of 
converting such orders, the Exchange is proposing to no longer accept 
GTMC orders for execution after 4:00 p.m. Eastern Time. As a 
consequence, the Exchange is adding rule text to the rule noting the 
GTMC orders entered after 4:00 p.m. Eastern Time will not be accepted 
and is deleting text concerning conversion of the order. The Exchange 
notes that NASDAQ recently made similar changes to its GTMC Time in 
Force, whereby it will no longer accept GTMC-designated orders after 
initiation of its Lockdown Period, the time at which no further orders 
for participation in the NASDAQ Closing Cross or the continuous market 
will be accepted, which begins at 4:00 p.m. Eastern Time.\11\
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    \10\ See Rule 4751(h)(8).
    \11\ See Securities Exchange Act Release No. 73943 (December 24, 
2014), 80 FR 69 (January 2, 2015) (SR-NASDAQ-2014-123); see also 
Securities Exchange Act Release No. 74342 (February 20, 2015), 80 FR 
10562 (February 26, 2015) (SR-NASDAQ-2015-014) (delaying 
implementation of the changes made by SR-NASDAQ-2014-123 until April 
13, 2015).
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2. Statutory Basis
    PHLX believes that the proposed rule changes are consistent with 
the provisions of Section 6 of the Act,\12\ in general, and with 
Section 6(b)(5) of the Act,\13\ 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; and also in 
that it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers. The Exchange believes that 
offering market participants with an additional Time in Force, which 
NASDAQ has had since 2006, is indicative of the Exchange's maturation 
as an equities market. Allowing Exchange participants the ability to 
more precisely select when their order may be executed removes 
impediments and perfects the mechanism of the market because it 
benefits all market participants and ensures that PHLX is able to 
compete with other market venues by providing similar tools and 
functionality. This functionality is nearly identical to the MIOC Time 
in Force that has been available on NASDAQ since 2006 and is well known 
to its market participants. Lastly, offering MIOC to PSX market 
participants raises no issues concerning unfair discrimination as the 
new Time in Force is available to all PSX market participants.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4) [sic] and (5).
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    The proposed changes to the processing of GTMC-designated orders 
further these objectives because the changes simplify processing of 
such orders when entered after the close of Regular Market Hours. 
Rather than converting GTMC-designated orders to an order with a 
different time-in-force if entered after the market close, the Exchange 
will no longer accept them after 4:00 p.m. Eastern Time, which is 
consistent with a market participant's intent to execute during the 
period from 8:00 a.m. and 4:00 p.m. To the extent a member firm would 
like to participate in post-market hours trading, it may enter a new 
order eligible to participate in post-market trading. Moreover, 
simplifying the processing of GTMC-designated orders will remove 
complication in the handling of such orders, thereby further improving 
the operation of the market.

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. Specifically, 
the Exchange believes that the proposal will enhance PHLX's 
competitiveness by providing its market participants with an additional 
option to limit when their orders may be executed. As discussed above, 
the MIOC Time in Force is available on NASDAQ, and providing it on PSX 
will allow PHLX to compete with NASDAQ and any other market venue that 
provides similar Time in Force functionality. This may, in turn, 
increase the extent of liquidity available on PSX and increase its 
ability to compete with other execution venues to attract orders that 
are seeking immediate execution during Regular Market Hours. The 
Exchange further believes that the introduction of the MIOC Time in 
Force will not impair in any manner the ability of market participants 
or other execution venues to compete. The proposed changes to GTMC Time 
in Force are designed to promote consistency and stability in the 
closing process and in the handling of orders after Regular Market 
Hours has [sic] ended. Such changes do not place a burden on 
competition between market participants as the changes are applied 
consistently to all PSX market participants. Moreover, the proposed 
changes may foster competition among exchanges and other markets, to 
the extent they make PSX a more attractive venue to market 
participants.

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 \14\ and Rule 19b-4(f)(6) thereunder.\15\ 
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

[[Page 18664]]

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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6)(iii) thereunder.\17\ The Exchange represents that this proposed 
rule change will be implemented during the Second Quarter of 2015 
subject to the issuance of an Equity Trader Alert that will provide at 
least 30 days of notice prior to the operative date for the respective 
amendments to Rule 4751(h).
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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). 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.
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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 Number SR-Phlx-2015-32 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-2015-32. 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 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-2015-32, 
and should be submitted on or before May 7, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-07851 Filed 4-6-15; 8:45 am]
BILLING CODE 8011-01-P