Document ID: SEC-2014-0618-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2014-04-14T04:00Z

[Federal Register Volume 79, Number 71 (Monday, April 14, 2014)]
[Notices]
[Pages 20949-20951]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-08299]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71906; File No. SR-Phlx-2014-20]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Emergency and Extraordinary Market Conditions

April 8, 2014.
    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 27, 2014, 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 the manner in which it authorizes 
action in emergency and extraordinary market conditions.
    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 Exchange is proposing to eliminate Rule 98, entitled 
``Emergency Committee,'' in order to conform its process for 
authorizing action to make decisions in emergency and extraordinary 
market conditions. The Exchange proposes to utilize a By-Law to govern 
the process of authoring such action similar to By-Laws relied upon by 
The NASDAQ Stock Market LLC (``Nasdaq'') and NASDAQ OMX BX, Inc. 
(``BX'').\3\
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    \3\ See Nasdaq By-Law Article IX, Section 5 entitled ``Authority 
to Take Action Under Emergency or Extraordinary Market Conditions.'' 
See also BX By-Law Article XII, Section 12.5 entitled ``Authority to 
Take Action Under Emergency or Extraordinary Market Conditions.''
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    Exchange Rule 98 provides that the Phlx Board of Directors is 
authorized to establish an emergency committee to determine the 
existence of extraordinary market conditions or other emergencies.\4\ 
Further, upon a determination that such an emergency condition exists, 
the Committee may take any action regarding the following: (1) 
Operation of Phlx XL II, or any other Exchange quotation, transaction 
reporting, execution, order routing or other systems or facility; (2) 
operation of, and trading on, any Exchange floor; (3) trading in any 
securities traded on the Exchange; and (4) the operation of members' or 
member organizations' offices or systems. Any member of the Committee 
may request the Committee to determine whether an emergency condition 
exists. If the Committee determines that such an emergency exists and 
takes action, the Committee shall prepare a report of this matter and 
submit it promptly to the Securities and Exchange Commission and submit 
it to the Board of Directors at the Board's next regular meeting.
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    \4\ See Rule 98.
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    Nasdaq and BX rely on Article IX, Section 5 of the exchanges' 
respective By-Laws [sic] to authorize the Board of Directors or its 
designee with authority to take action under emergency or extraordinary 
market conditions. Phlx would similarly rely on By-Law language which 
was adopted in 2011 \5\ at By-Law Article VII, Section 7-5. 
Specifically, the Phlx By-Law states, that the Board of Directors, or 
such person or persons or committee as may be designated by the Board, 
in the event of an emergency or extraordinary market conditions, shall 
have the authority to take any action regarding: (a) The trading in or 
operation of the national securities exchange operated by the Company 
or any other organized securities markets that may be operated by the 
Company, the operation of any automated system owned or operated by the 
Company, and the participation in any such system or any or all persons 
or the trading therein of any or all securities; and (b) the operation 
of any or all offices or systems of members, if, in the opinion of the 
Board or the person or persons hereby designated, such action is 
necessary or appropriate for the protection of investors or the public 
interest or for the orderly operation of the marketplace or the system.
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    \5\ See Securities Exchange Act Release No. 63981 (February 25, 
2011), 76 FR 12180 (March 4, 2011) (SR-Phlx-2011-13) (a rule 
proposal to, among other things, amend the Limited Liability Company 
Agreement and By-Laws to substantially conform to NASDAQ Stock 
Market's Second Amended Limited Liability Company Agreement and By-
Laws).
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    The Exchange is proposing to eliminate Phlx Rule 98, which provides 
for an Emergency Committee, and instead rely on the authority in 
existing By-Law Article VII, Section 7-5 to empower the Phlx Board of 
Directors or such person or persons or committee as designated by the 
Phlx Board of Directors to take action in the event of an emergency or 
extraordinary market condition. Specifically, regarding the trading in 
or operation of the national securities exchange operated by the 
Exchange or any other organized securities markets that may be operated 
by the Exchange, the operation of any automated system owned or 
operated by the Exchange, and the participation in any such system or 
any or all persons or the trading therein of any or all securities; and 
the operation of any or all offices or systems of members, if, in the 
opinion of the Board or the person or persons hereby designated, such 
action is necessary or appropriate for the protection of investors or 
the public

[[Page 20950]]

interest or for the orderly operation of the marketplace or the system, 
similar to Nasdaq and BX. The Exchange's revised procedures would 
continue to report emergency matters to the Commission and Phlx Board 
of Directors of uses of such authority to the extent that the Board of 
Directors has delegated such authority to certain person(s) or 
committee. The Exchange believes that eliminating Rule 98 and utilizing 
existing By-Law Article VII, Section 7-5 to take action under emergency 
or extraordinary market conditions would conform the processes for 
handling such circumstances across the various NASDAQ OMX markets. This 
proposal does not impact the types of events that would be deemed 
``emergency'' or ``extraordinary market'' conditions. The Exchange 
anticipates utilizing By-Law Article VII, Section 7-5 in the same 
manner and for the same types of emergency and extraordinary market 
events as Rule 98 is utilized for today.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \7\ 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 conforming the authority to take action under emergency or 
extraordinary market conditions across the NASDAQ OMX markets.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that utilizing By-Law Article VII, Section 7-
5 to designate authority to either the Board of Directors or its 
designee to take action under emergency or extraordinary market 
conditions instead of utilizing Rule 98, which provides for an 
Emergency Committee established by the Board, will conform the 
Exchange's process and authority pursuant to its By-Laws in these types 
of events to those of Nasdaq and BX. The manner in which the Exchange 
handles emergency or extraordinary market conditions will not otherwise 
be impacted, except that the Board may retain such authority or 
delegate the authority to a person, persons or a committee to take 
action in these events. The Exchange would continue to report such uses 
of this authority to the Commission and the Phlx Board of Directors. 
The Exchange believes that eliminating Rule 98 in favor of relying on 
Article VII, Section 7-5 will continue to ensure that the Exchange has 
authority to operate in times of emergency and extraordinary 
conditions, which will foster investor and public interest, and promote 
just and equitable principles of trade. Also, this proposal continues 
to remove possible impediments to the Exchange's market that may arise 
due to emergency or extraordinary market conditions, thereby perfecting 
the mechanism of a free and open market and a national market system.

(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. The Exchange believes this 
proposed rule change will continue to benefit investors by providing 
the Exchange the ability to authorize action in the event of an 
emergency or extraordinary market conditions.

 (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) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\ 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 prior to 
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 \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
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 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.

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-2014-20 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-2014-20. 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 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-2014-20 and should be 
submitted on or before May 5, 2014.

[[Page 20951]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-08299 Filed 4-11-14; 8:45 am]
BILLING CODE 8011-01-P