Document ID: SEC-2010-0159-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Deleting Obsolete Provisions Relating to the Opening
Posted Date: 2010-01-29T05:00Z

[Federal Register: January 29, 2010 (Volume 75, Number 19)]
[Notices]               
[Page 4893-4894]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29ja10-124]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61397; File No. SR-Phlx-2010-07]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX, Inc. Deleting 
Obsolete Provisions Relating to the Opening

January 22, 2010.
    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 January 14, 2010, NASDAQ OMX PHLX, Inc. (``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. Phlx has 
designated the proposed rule change as constituting a rule change under 
Rule 19b-4(f)(6) under the Act,\3\ which renders the proposal effective 
upon filing with the Commission. 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\ 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 proposes to amend Rule 1017, Openings in Options, to 
delete the portions of the rule that pertain to the Phlx XL trading 
system, which has since been replaced by the Phlx XL II trading system. 
Accordingly, all of the commentary (.01 through .03) as well as 
paragraphs (a)-(g) will be deleted, with the exception of the last 
sentence of paragraph (a) defining a Phlx XL II participant and sub-
paragraph (iii) of paragraph (c), which will continue to state that to 
be considered in the determination of the opening price and to 
participate in the opening trade, orders represented by Floor Brokers 
must be entered onto the book electronically. Paragraphs (h) and (i) 
are proposed to be amended by deleting references to the old trading 
system, Phlx XL.
    The Exchange also proposes to delete Options Floor Procedure Advice 
(``Advice'') A-12, Opening Rotations, and Advice A-14, Equity Option 
And Index Option Opening Parameters, which are also outdated.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings, 
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 update various rules 
pertaining to the opening by deleting outdated language. In July 2009, 
the Exchange fully rolled out its new options trading system, Phlx XL 
II.\4\ Accordingly, many portions of Rule 1017, which pertained to the 
old trading system, Phlx XL, no longer apply. A few of the provisions 
applied to both Phlx XL and Phlx XL II; those are being amended to 
delete reference to Phlx XL, such that they remain applicable to Phlx 
XL II.
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    \4\ Securities Exchange Act Release No. 59995 (May 28, 2009), 74 
FR 26750 (June 3, 2009) (SR-Phlx-2009-32).
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    Similarly, the Exchange is proposing to delete two Options Floor 
Procedure Advices (``Advices''). Historically, Advices replicated the 
provisions of the Exchange's rules that were most pertinent for the 
trading floor community to keep handy, in lieu of the large, unwieldy 
rulebook; the Exchange adopted, for many years, both rules and advices 
that contained nearly identical language where the rule/advice was the 
subject of a fine schedule under the Exchange's minor rule plan in 
order for the trading floor to have easy access to these provisions 
(which the Exchange printed and distributed) and in order for those 
persons who administered fines to have easy access to consult the 
applicable fine schedules.\5\
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    \5\ At the time, such fines were administered by ``Floor 
Officials,'' who have since been replaced by ``Options Exchange 
Officials.''
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    The first Advice proposed to be deleted is Advice A-12, which 
pertains principally to Phlx XL and is therefore obsolete; the portions 
that refer to Phlx XL II merely cross-reference Rule 1017 and state 
that the opening is conducted automatically. Accordingly, Advice A-12, 
which is merely descriptive, is no longer needed because there is no 
behavior to which to apply the fine schedule.\6\ Similarly, Advice A-14 
is also proposed to be deleted, because it is merely explanatory and 
cannot be violated; it was updated to reflect Phlx XL II processes, but 
should instead have been deleted. Specifically, it describes

[[Page 4894]]

how the system establishes opening parameters. By proposing to delete 
these advices, the Exchange is also proposes to amend its minor rule 
plan to delete these advices from it, because no fine schedule will 
apply. The content of both Advices remains covered by Rule 1017.
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    \6\ Advices are administered as part of the Exchange's minor 
rule plan; the Exchange proposes to remove Advices A-12 and A-14 
from the minor rule plan.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \8\ 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, 
by removing obsolete language such that the rules are more clear.
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    \7\ 15 U.S.C. 78f(b).
    \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 
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 \9\ and Rule 19b-
4(f)(6) 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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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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.

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-2010-07 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-2010-07. 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, on official 
business days between the hours of 10 a.m. and 3 p.m. 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-2010-07 and should be submitted on or before 
February 19, 2010.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
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pursuant to delegated authority.\11\

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-1845 Filed 1-28-10; 8:45 am]
BILLING CODE 8011-01-P