[Federal Register Volume 79, Number 94 (Thursday, May 15, 2014)]
[Notices]
[Pages 27966-27968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-11153]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72135; File No. SR-Phlx-2014-33]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
the Implementation Rollout of the New Options Floor Broker Management
System Until September 1, 2014
May 9, 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 May 7, 2014, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``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 extend the implementation rollout of its
new Options Floor Broker Management System.
The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
[[Page 27967]]
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 proposal is to extend the rollout of the
Exchange's enhancements to the Options Floor Broker Management System
(``FBMS''). Today, FBMS enables Floor Brokers and/or their employees to
enter, route, and report transactions stemming from options orders
received on the Exchange. FBMS also establishes an electronic audit
trail for options orders represented by Floor Brokers on the Exchange.
Floor Brokers can use FBMS to submit orders to Phlx XL, rather than
executing the orders in the trading crowd.
With the new FBMS, all options transactions on the Exchange
involving at least one Floor Broker would be required to be executed
through FBMS. In connection with order execution, the Exchange will
allow FBMS to execute two-sided orders entered by Floor Brokers,
including multi-leg orders up to 15 legs, after the Floor Broker has
represented the orders in the trading crowd. FBMS will also provide
Floor Brokers with an enhanced functionality called the complex
calculator that will calculate and display a suggested price of each
individual component of a multi-leg order, up to 15 legs, submitted on
a net debit or credit basis.
The Exchange received approval to implement the FBMS enhancements
as of June 1, 2013,\3\ and delayed implementation until July 2013,\4\
until September 2013,\5\ until December 2013,\6\ and again until March
2014.\7\ The Exchange made a number of improvements intended to improve
the performance of the new system.
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\3\ Securities Exchange Act Release No. 69471 (April 29, 2013),
78 FR 26096 (May 3, 2013) (SR-Phlx-2013-09).
\4\ Securities Exchange Act Release No. 69811 (June 20, 2013),
78 FR 38422 (June 26, 2013) (SR-Phlx-2013-67).
\5\ Securities Exchange Act Release No. 70141 (August 8, 2013),
78 FR 49565 (August 14, 2013) (SR-Phlx-2013-83).
\6\ Securities Exchange Act Release No. 70629 (October 8, 2013),
78 FR 62852 (October 22, 2013) (SR-Phlx-2013-100).
\7\ Securities Exchange Act Release No. 71212 (December 31,
2013), 79 FR 888 (January 7, 2014) (SR-Phlx-2013-129).
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Implementation began on March 7, 2014. In its most recent filing
delaying implementation,\8\ the Exchange stated that the implementation
period would be up to eight weeks, which would be May 2, 2014, during
which the new FBMS enhancements and related rules would operate along
with the existing FBMS and rules.\9\ At this time, the Exchange needs
additional time to complete the implementation because of technology
issues with the new system. The new FBMS is available to all users
(Floor Brokers) and in all options. Nevertheless, the Exchange believes
that the Floor Brokers need additional time to familiarize themselves
with the new features of FBMS, based on that ongoing experience, offer
input regarding system performance, and provide the Exchange with the
opportunity to address performance improvements. Given some technology
issues that the Exchange has encountered during the implementation
period, the delay is needed to allow Floor Brokers additional time to
adapt to the new system as the Exchange works to improve the
performance of the new system. As the performance issues are resolved,
the delay will allow the Floor Brokers to migrate their business in a
prudent manner. The delay is not as a result of major technology
changes from the original proposal and no rule changes are being made;
rather, the Exchange continues to work to, generally, make the system
more user-friendly and provide more useful interfaces for the ultimate
user, the Floor Broker.
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\8\ Id.
\9\ In the original filing, the Exchange stated its intent to
implement these enhancements with a trial period of two to four
weeks. Id.
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Accordingly, the Exchange seeks an additional four month period
(until September 1, 2014) to be able to continue the implementation
rollout; the Exchange will announce the specific date on which the
trial period will end and the old FBMS will no longer be available in
advance through an Options Trader Alert. During the additional time
period, the Exchange will continue to encourage Floor Brokers to use
the new FBMS in order to help them become more familiar with the new
features of FBMS.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \10\ in general, and furthers the objectives of Section
6(b)(5) of the Act \11\ 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 enhancing FBMS to make the Exchange's markets more
efficient, to the benefit of the investing public. Although the
Exchange needs additional time to finalize the implementation rollout,
this time period is expected to be limited, depending on user input,
and will involve advance notice to the Exchange membership.
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\10\ 15 U.S.C. 78f(b).
\11\ 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. The Exchange continues to
believe, as it stated when proposing these enhancements, that these
enhancements to FBMS should result in the Exchange's trading floor
operating in a more efficient way, which should help it compete with
other floor-based exchanges and help the Exchange's Floor Brokers
compete with floor brokers on other options exchanges.
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 \12\ and
[[Page 27968]]
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing.\14\ However,
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter
time if such action is consistent with the protection of investors and
the public interest.\15\ The Exchange has requested that the Commission
waive the 30-day operative delay so that the Exchange can implement the
enhancements once they are ready from a technology perspective. The
Commission believes that the waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest
because the proposal only extends the implementation date of the FBMS
and does not make any additional changes to the FBMS itself. Therefore,
the Commission designates the proposal operative upon filing.\16\
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\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ Id.
\16\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.\17\
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\17\ 15 U.S.C. 78s(b)(3)(C).
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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 [email protected]. Please include
File Number SR-Phlx-2014-33 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-2014-33. 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 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 available publicly. All
submissions should refer to File Number SR-Phlx-2014-33 and should be
submitted on or before June 5, 2014.
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\18\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-11153 Filed 5-14-14; 8:45 am]
BILLING CODE 8011-01-P