[Federal Register Volume 80, Number 125 (Tuesday, June 30, 2015)]
[Notices]
[Pages 37327-37329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15974]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75293; File No. SR-Phlx-2015-29]
Self-Regulatory Organizations; NASDAQ OMX Phlx LLC; Notice of
Filing of Amendment No. 1 and Order Granting Accelerated Approval of
Proposed Rule Change, as Modified by Amendment No. 1, To Amend and
Restate Certain Rules That Govern the NASDAQ OMX PSX
June 24, 2015.
I. Introduction
On March 20, 2015, NASDAQ OMX PHLX LLC (``Phlx'' or the
``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 amend and restate certain Phlx rules that
govern NASDAQ OMX PSX (``PSX'') in order to provide a clearer and more
detailed description of certain aspects of its functionality. The
proposed rule change was published for comment in the Federal Register
on April 6, 2015.\3\ The Commission received no comment letters
regarding the proposed rule change. On May 13, 2015, the Commission
extended to July 5, 2015, the time period in which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether the proposed rule change should be
disapproved.\4\ On June 22, 2015, the Exchange filed Amendment No. 1 to
the proposed rule change.\5\ This order approves the proposed rule
change, as amended, on an accelerated basis.
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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. 74618 (March 31,
2015), 80 FR 18452 (``Notice'').
\4\ See Securities Exchange Act Release No. 74954, 80 FR 28739
(May 19, 2015).
\5\ In Amendment No. 1, the Exchange proposed to correct
typographical errors in the original filing, further improve the
clarity of certain rule language, and include additional explanation
with regard to the purpose of the proposed rule change.
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II. Description of the Amended Proposal
The Exchange proposes to amend and restate certain Phlx rules that
govern PSX in order to provide additional detail and clarity regarding
its order type functionality.\6\ This proposed rule change is a
response to Chair White's request that each equities exchange conduct a
comprehensive review of the operation of each of the order types that
it offers to members.\7\
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\6\ See Notice, 80 FR at 18452-53.
\7\ See id. at 18453; see also Mary Jo White, Chair, Commission,
Speech at the Sandler O'Neill & Partners, L.P. Global Exchange and
Brokerage Conference (June 5, 2014), available at http://www.sec.gov/News/Speech/Detail/Speech/1370542004312.
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While the Exchange believes that its current rules and other public
disclosures provide a comprehensive description of the operation of PSX
and are sufficient for members and the investing public to have an
accurate understanding of its market structure, it also acknowledges
that a restatement of certain rules will further clarify the operation
of its system.\8\ For instance, Phlx believes that adding examples of
order type operation to its rules will promote greater understanding of
the Exchange's market structure.\9\ In addition, Phlx asserts that
certain functionality previously described as an ``order type'' is more
precisely characterized as an attribute that may be added to a
particular order.\10\ Accordingly, this proposed rule change
distinguishes between ``Order Types'' and ``Order Attributes,'' and
provides descriptions of the Order Attributes that may be attached to
particular Order Types.\11\
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\8\ See Notice, 80 FR at 18453.
\9\ Id.
\10\ Id.
\11\ Id.
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Currently, Phlx Rule 3301 (Definitions) sets forth most of the
rules governing Order Types and Order Attributes, as well as other
defined terms that pertain to trading securities on PSX.\12\ Phlx
proposes to amend Rule 3301. Phlx also proposes to amend the
definitions pertaining to Order Types and Order Attributes and to
relocate them from Rule 3301 to new Rules 3301A (Order Types) and 3301B
(Order Attributes), respectively.\13\ In addition, Phlx proposes to
delete Rule 3305 as the information contained therein is superseded by
proposed Rules 3301A and 3301B.\14\ Lastly, Phlx proposes certain
conforming and technical changes to Rule 3306.\15\
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\12\ See Rule 3301.
\13\ See proposed Rules 3301A and 3301B.
\14\ See Rule 3305.
\15\ Phlx states that, in subsequent proposed rule changes, it
plans to restate the remainder of its Rules numbered 3302 through
3316 so that they appear sequentially following Rule 3301B.
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Phlx represents that, except where specifically stated otherwise,
all proposed rules are restatements of existing rules and are not
intended to reflect substantive changes to rule text or the operation
of PSX.\16\ Proposed Rule 3301A related to Order Types
[[Page 37328]]
contains definitions and descriptions of Price to Comply Orders, Price
to Display Orders (referred to as ``Price to Comply Post Orders'' in
current Rule 3301),\17\ Non-Displayed Orders, Post-Only Orders, and
Market Maker Peg Orders. Proposed Rule 3301B related to Order
Attributes contains definitions and descriptions of time-in-force
(``TIF'') modifiers, order size, order price, pegging, minimum
quantity, routing, discretion, reserve size, attribution, intermarket
sweep order designation, and display.\18\
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\16\ See Notice, 80 FR at 18453.
\17\ See Notice, 80 FR at 18456 n.29.
\18\ The Notice contains additional details related to proposed
Rules 3301A and 3301B. See Notice, 80 FR at 18452-70.
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In Amendment No. 1, the Exchange proposes to add language further
explaining the operation of the following order types: Post-Only
Orders, orders with a TIF of IOC, including Routable Orders and Post-
Only Orders; Market Maker Peg Orders; orders with Midpoint Pegging,
Primary Pegging or Market Pegging; and orders designated with both
Pegging and Routing attributes.\19\ For example, the Exchange states
that for Order Types that list both Pegging and Routing as possible
Order Attributes, the two Order Attributes may be combined since
Pegging serves to establish the price of the order, while Routing
establishes the market center(s) to which the system's routing
functionality may direct a routed order if liquidity is available at
that price.\20\ The Exchange also proposes to add further specification
regarding the availability of certain order types only through certain
communication protocols by stating that a Post-Only Order with a TIF of
IOC may not be entered through the RASH or FIX protocols.\21\ In
addition, the Exchange proposes to add language stating that one or
more Order Attributes may be assigned to a single order, but if the use
of multiple Order Attributes would result in contradictory
instructions, the system will reject the order or remove non-conforming
Order Attributes.\22\
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\19\ See Amendment No. 1.
\20\ Id.
\21\ Id.
\22\ Id.
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III. Discussion and Commission Findings
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.\23\ In particular, the Commission finds that the proposed
rule change is consistent with section 6(b)(5) of the Act,\24\ which
requires, among other things, that the rules of a national securities
exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, 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; and are not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\23\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\24\ 15 U.S.C. 78f(b)(5).
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The Commission notes that the Exchange believes that the proposal
is consistent with section 6(b)(5) of the Act because the reorganized
and enhanced descriptions of its Order Types, Order Attributes, and
related System functionality should promote just and equitable
principles of trade and perfect the mechanisms of a free and open
market and the national market system by providing greater clarity
concerning certain aspects of the System's operations.\25\ In addition,
the Commission notes that Phlx believes that the proposed rule change
should contribute to the protection of investors and the public
interest by making Phlx's rules easier to understand.\26\ Further, Phlx
believes that additional specificity in its rules will promote a better
understanding of the Exchange's operation, thereby facilitating fair
competition among brokers and dealers and among markets.\27\
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\25\ See Notice, 80 FR at 18467.
\26\ Id.
\27\ Id.
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The Commission notes that, according to the Exchange, the proposal
does not add any new functionality but instead re-organizes the
Exchange's order type rules and provides additional detail regarding
the order type functionality currently offered by the Exchange. Based
on the Exchange's representation, the Commission believes that the
proposed rule change does not raise any novel regulatory considerations
and should provide greater specificity, clarity and transparency with
respect to the order type functionality available on the Exchange. In
addition, the Commission notes that the Exchange's proposed rule
changes provide additional detail related to functionality for certain
order types and the handling of orders during initial entry and after
posting to the PSX Book. Accordingly, the Commission believes that this
proposed rule change should provide greater transparency with respect
to the Exchange's order type functionality. For these reasons, the
Commission believes that the proposal should help to prevent fraudulent
and manipulative acts and practices, promote just and equitable
principles of trade, remove impediments to and perfect the mechanism of
a free and open market and a national market system, and, in general,
protect investors and the public interest.
The Commission finds good cause to approve the filing, as amended
by Amendment No. 1 to the proposed rule change, prior to the thirtieth
day after the date of publication of notice of filing thereof in the
Federal Register. The proposed amendments should further increase the
Exchange's transparency with respect to the operation of various order
types and modifiers, and serve to enhance investors' understanding of
the tools available with respect to the handling of their orders.
Accelerated approval would allow the Exchange to update its rule text
immediately, thus providing users with greater clarity with respect to
the use and potential use of functionality offered by the Exchange. In
addition, the initial proposal was open for comment for twenty-one days
after publication and generated no comment. Accordingly, the Commission
believes that good cause exists, consistent with sections 6(b)(5) and
19(b) of the Act,\28\ to approve the filing, as amended by Amendment
No. 1 to the proposed rule change, on an accelerated basis.
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\28\ 15 U.S.C. 78f(b)(5); 15 U.S.C. 78s(b).
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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, as amended, 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-2015-029 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.
[[Page 37329]]
All submissions should refer to File Number SR-Phlx-2015-029. 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-2015-029 and should be
submitted on or before July 21, 2015.
V. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\29\ that the proposed rule change (SR-Phlx-2015-29) be, and it
hereby is, approved on an accelerated basis, as amended.
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\29\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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\30\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-15974 Filed 6-29-15; 8:45 am]
BILLING CODE 8011-01-P