Document ID: SEC-2010-2030-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2010-12-30T05:00Z

[Federal Register Volume 75, Number 250 (Thursday, December 30, 2010)]
[Notices]
[Pages 82419-82420]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-32891]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63603; File No. SR-Phlx-2010-180]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Revising 
Floor Qualification Examination

December 22, 2010
    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 December 10, 2010, NASDAQ OMX PHLX LLC (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change, and an amendment 
thereto on December 15, 2010, 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, as amended, from interested persons.\3\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Amendment No. 1.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to revise its floor qualification 
examination. Specifically, the Exchange proposes to delete obsolete 
questions, revise outdated questions and add several new questions, as 
described further below.

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 improve the 
Exchange's program for qualification of members by updating its floor 
qualification examination. The Exchange has employed a written floor 
qualification examination, which is required for persons seeking to act 
as members on the trading floor,\4\ for many years. The examination, 
which has not been substantively amended for many years,\5\ covers many 
areas of the Exchange's rules.
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    \4\ See Rules 620(a) and 901(c). See also Rule 1061 applicable 
to Floor Brokers.
    \5\ Securities Exchange Act Release No. 33304 (December 9, 
1993), 58 FR 65613 (December 15, 1993)(SR-Phlx-92-34).
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    At this time, the Exchange proposes to update the exam in a variety 
of ways. The exam would continue to be comprised of 100 questions, 
randomly and electronically selected from a question bank of 
approximately 148 questions. The floor qualification examination is 
administered by the Exchange's membership department, and requires a 
passing score of 70 during a 75 minute testing period.
    In terms of outdated questions, the Exchange proposes to delete 
about 31 obsolete questions, mostly pertaining to: (i) The ``Wheel,'' 
an obsolete method of allocating trades among specialist and Registered 
Options Traders (``ROTs''); (ii) ``AUTO-X'' functionality and 
specialists manually conducting an opening and executing trades, which 
have been replaced by the current trading system, Phlx XL II; and (iii) 
the ``ten-up'' guarantees that preceded displayed size for options and 
the application of the Quote Rule to options.\6\
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    \6\ For current requirements, see e.g., Rules 1080 and 1082.
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    The Exchange also proposes to eliminate the foreign currency 
options qualification examination, because there have been no foreign 
currency options participants for many years.\7\ In addition, the 
Exchange no longer offers the foreign currency options products that 
were the subject of this examination, but rather now offers a U.S. 
dollar-settled foreign currency option,\8\ which trades pursuant to the 
Exchange's options trading rules that are covered on the floor 
qualification exam.
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    \7\ The Exchange intends to separately delete ``foreign currency 
options participant'' and related terms from its rules.
    \8\ See Securities Exchange Act Release No. 54989 (December 21, 
2006), 71 FR 78506 (December 29, 2006)(SR-Phlx-2006-34).
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    The Exchange proposes to modify approximately 17 questions 
pertaining to electronic quoting, various changes in priority rules and 
to reflect the existence of Options Exchange Officials (``OEOs''), who 
replaced Floor Officials, as well as make various minor corrections 
reflecting rule changes over time. Similarly, the Exchange proposes to 
add approximately 46 new questions reflecting trade reporting, disputes 
and OEO rulings, priority and trade allocation, spreads, openings, 
halts and reopening, quoting obligations, order types, Floor Broker 
obligations and Rule 703.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \9\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \10\ in particular, in that it is designed to 
prevent fraudulent and manipulative acts and practices, 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. In 
addition, the Exchange believes that the proposed rule change is 
consistent with Section 6(c)(3)(B) of the Act,\11\ which authorizes 
exchanges to prescribe standards of training, experience and competence 
for persons associated with exchange members, and gives exchanges the 
authority to bar a natural person from becoming a member or a person 
associated with a member, if the person does not meet the standards of 
training, experience and competence prescribed in the rules of the 
exchange. The Exchange believes that revising its floor member 
qualification examination should better test the knowledge of its floor 
members, and thereby enhance the Exchange's standards for training, 
experience and competence.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ 15 U.S.C. 78f(c)(3)(B).
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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.

[[Page 82420]]

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

    Pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(1) \13\ thereunder, the Exchange has designated this proposal as 
one that constitutes a stated policy, practice or interpretation with 
respect to the meaning, administration, or enforcement of an existing 
rule of the SRO, and therefore has become effective.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(1).
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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.

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-2010-180 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-2010-180. 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, 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 publicly available. All 
submissions should refer to File Number SR-PHLX-2010-180 and should be 
submitted on or before January 20, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-32891 Filed 12-29-10; 8:45 am]
BILLING CODE 8011-01-P