[Federal Register Volume 76, Number 189 (Thursday, September 29, 2011)]
[Notices]
[Pages 60566-60567]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-25071]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65389; File No. SR-Phlx-2011-101]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order
Approving Proposed Rule Change Regarding Streaming Quote Traders and
Remote Streaming Quote Traders Entering Certain Option Day Limit Orders
September 23, 2011.
I. Introduction
On July 17, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
allow Streaming Quote Traders (``SQTs'') and Remote Streaming Quote
Traders (``RSQTs'') to enter day limit orders. The proposed rule change
was published for comment in the Federal Register on August 11,
2011.\3\ The Commission received no comments on the proposal. This
order approves the proposal.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 65050 (August 5,
2011), 76 FR 49816.
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II. Description of the Proposal
The purpose of the proposal is to amend two subsections of Exchange
Rule 1080 to allow entry of day limit orders for the proprietary
accounts of SQTs and RSQTs.
Current Rule 1080 (Phlx XL and XL II) discusses the Exchange's
enhanced electronic order, trading, and execution system (the
``electronic interface''). The current iteration of the Exchange's
electronic interface is known as Phlx XL II.\4\ Rule 1080 states that
it governs the orders, execution reports and administrative order
messages transmitted between the offices of member organizations and
the trading floors of the Exchange. Rule 1080 also discusses what
agency and proprietary orders are eligible for entry into the
Exchange's electronic interface.
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\4\ See Securities Exchange Act Release No. 59995 (May 28,
2009), 74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32) (order approving
Phlx XL II). Phlx XL II is the Exchange's electronic order delivery
and reporting system, which provides for the automatic entry and
routing of Exchange-listed equity options, index options and U.S.
dollar-settled foreign currency options orders to the Exchange
trading floor. Rule 1080(a).
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Subsection (b)(i)(B)(2) states that the following types of orders
for the proprietary account(s) of SQTs and RSQTs are eligible for entry
via electronic interface: limit on opening, IOC, and ISO. Currently,
there is no ability for SQTs and RSQTs to enter day limit orders in
their proprietary accounts. The proposal allows day limit orders for
the proprietary account(s) of SQTs and RSQTs to be entered pursuant to
subsection (b)(i)(B)(2). The proposed change will promote consistency
among ROTs by allowing SQTs and RSQTs to do what Rule 1080 and
Commentary .04 now allow non-SQT ROTs to do: enter certain day limit
orders (10 or more contracts) in their proprietary accounts.\5\
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\5\ For example, subsection (b)(i)(B)(1) allows non-SQTs and
specialists to enter certain day limit orders (10 or more contracts)
in their proprietary accounts.
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Commentary .04 of Rule 1080 states that orders for the proprietary
accounts of SQTs, RSQTs and non-SQT ROTs may be entered for delivery
via electronic interface through the use of Exchange approved
proprietary systems of members that interface with the Exchange's
electronic interface.\6\ Currently, proprietary non-SQT ROT orders with
a size of less than 10 contracts have to be submitted as IOC and larger
orders may be submitted as day limit and other order types; while
proprietary SQT and RSQT orders may only be submitted as IOC.
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\6\ Such orders have to be for a minimum of one (1) contract.
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The Exchange is proposing to put all the ROTs (SQTs, RSQTs and non-
SQT ROTs) on an equal footing. Specifically, the Exchange proposes to
state in Commentary .04 that orders for the proprietary account(s) of
SQTs, RSQTs, and non-SQT ROTs with a size of less than 10 contracts
shall be submitted as IOC only. Thus, where SQT and RSQT orders under
the current rule could only be submitted as IOC, the proposed change to
Commentary .04 would allow these SQTs and RSQTs to enter non IOC orders
(e.g. day orders) in proprietary accounts if they are for 10 or more
contracts.
III. Discussion
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange \7\
and, in particular, the requirements of Section 6 of the Act.\8\
Specifically, the Commission finds that the proposal is consistent with
Section 6(b)(5) of the Act,\9\ in that the proposal has been designed
to promote just and equitable principles of trade, and to protect
investors and the public interest. The Commission believes that it is
consistent with the Act for SQTs and RSQTs to enter non IOC orders
(e.g. day orders) in proprietary accounts if they are for 10 or more
contracts. The Commission believes that allowing these order types
should help to enhance liquidity on the Exchange. The Commission notes
that SQTs and RSQTs would still be required to comply with their
electronic quoting obligations.
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\7\ The Commission has considered the proposed rule change's
impact on efficiency, competition and capital formation. 15 U.S.C.
78c(f).
\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion
It Is Therefore Ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-PHLX-20011-101) is approved.
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\10\ 15 U.S.C. 78s(b)(2).
[[Page 60567]]
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-25071 Filed 9-28-11; 8:45 am]
BILLING CODE 8011-01-P