Document ID: SEC-2010-1538-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, Inc.
Posted Date: 2010-10-12T04:00Z

[Federal Register: October 12, 2010 (Volume 75, Number 196)]
[Notices]               
[Page 62621-62623]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12oc10-144]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63036; File No. SR-Phlx-2010-131]

 
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Update 
Rule 1014

October 4, 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 September 27, 2010, 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, 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 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 revise Rule 1014, Obligations and 
Restrictions Applicable to Specialists and Registered Options Traders, 
to delete provisions related to: (i) The obsolete terms AUTOM, 
Streaming Quote Option, electronic interface, AUTO-X, Book Sweep and 
Book Match; (ii) ``trading on Phlx XL''; (iii) the use of trading floor 
tickets; and (iii) [sic] subparagraphs (g)(iii) and (iv), the New Unit/
New Option Enhanced Specialist Participation and New Product Enhanced 
Specialist Participation, respectively. The Exchange also proposes to 
make corollary changes to Floor Procedure Advice B-6, Priority of 
Options Orders for Equity Options, Index Options and U.S. Dollar-
Settled Foreign Currency Options by Account Type, as explained further 
below.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXfilings, at 
the principal office of the Exchange, at the Commission's Public 
Reference Room, and on the Commission's Web site at http://www.sec.gov.

[[Page 62622]]

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 clarify various 
provisions in Rule 1014. Specifically, certain terms are obsolete, 
given the Exchange's current use of the Phlx XL II System; these 
include: Streaming Quote Options, electronic interface, AUTO-X, Book 
Sweep and Book Match. Once the Exchange began enhancing its electronic 
trading systems, these provisions became outdated. For the same reason, 
references to ``trading on Phlx XL'' are both incorrect and 
unnecessary; all trading occurs through Phlx XL II.\3\ The same changes 
are proposed to Advice B-6 as well, which is part of the Exchange's 
minor rule plan.\4\
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    \3\ The Exchange intends to separately update the use of the 
terms ``Phlx XL'' and ``Phlx XL II'' in various other rules in a 
separate proposed rule change.
    \4\ The Exchange's minor rule plan consists of options floor 
procedure advices (``OFPAs'' or ``Advices'') with preset fines, 
pursuant to Rule 19d-1(c) under the Act. 17 CFR 240.19d-1(c). Most 
OFPAs have corresponding options rules.
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    The reference to trading floor tickets in Rule 1014(g)(i)(A)(1) and 
Advice B-6, Section B is being deleted, because Floor Brokers have long 
been required to record certain information into the Floor Broker 
Management System (``FBMS''), pursuant to Rule 1063.
    In addition, the Exchange proposes to delete subparagraphs 
(g)(iii), New Unit/New Option Enhanced Specialist Participation, and 
(g)(iv), New Product Enhanced Specialist Participation, because these 
are no longer applied. All options are subject to the Specialist 
Enhanced Participation in Rule 1014(g)(ii), which then applies to 
manual trades on the trading floor by virtue of Rule 1014(g)(v) and to 
automatically executed trades through Phlx XL II by virtue of Rule 
1014(g)(v)(ii). Accordingly, references to these now-deleted sub-
paragraphs (g)(iii) and (g)(iv) are also being deleted in several 
places in Rule 1014. In addition, in Rule 1014(g)(ii), subparagraph (A) 
is proposed to be deleted, because it covers how it is determined what 
options are subject to the enhanced specialist participation, which is 
no longer relevant. The same changes are proposed to Advice B-6, 
Sections (C), (D) and (E).
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \5\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \6\ 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 updating an Exchange rule.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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: (1) 
Significantly affect the protection of investors or the public 
interest; (2) impose any significant burden on competition; and (3) 
become operative for 30 days after the date of the filing, 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 
\7\ and Rule 19b-4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the self-regulatory organization to give the Commission 
written 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. 
Phlx 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2010-131 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-2010-131. 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

[[Page 62623]]

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 No. SR-Phlx-2010-131 and should be submitted on or 
before November 2, 2010.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-25495 Filed 10-8-10; 8:45 am]
BILLING CODE 8011-01-P