80 FR 46625 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 3301B(a)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 150 (August 5, 2015)

[Federal Register Volume 80, Number 150 (Wednesday, August 5, 2015)]
[Notices]
[Pages 46625-46627]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-19131]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75561; File No. SR-Phlx-2015-66]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rule 3301B(a)

July 30, 2015.
    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 July 20, 2015, 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 Rule 3301B(a) to remove the Market 
Hours Immediate or Cancel Time in Force and to delay implementation of 
changes to the Good-til-market close Time in Force, which were recently 
adopted by Phlx but are not yet implemented.
    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.

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 amend Rule 3301B(a) to remove the 
Market Hours Immediate or Cancel (``Market Hours IOC'' or ``MIOC'') 
Time-in-Force and to delay implementation of changes to the Good-til-
market close (``GTMC'') Time-in-Force, which were recently adopted by 
Phlx but are not yet implemented in the NASDAQ OMX PSX System 
(``System'' or ``PSX'').\3\ Time-in-Force (``TIF'') is a characteristic 
of an order that limits the period of time that the System will hold an 
order for potential execution. An Order that is designated to 
deactivate immediately after determining whether the Order is 
marketable may be referred to as having a TIF of ``Immediate or 
Cancel'' or ``IOC''.\4\ Any Order with a TIF of IOC entered between 
9:30 a.m. ET and 4:00 p.m. ET is considered as having a TIF of MIOC.\5\ 
The MIOC TIF is very similar to the SIOC \6\ TIF, but MIOC designated 
orders are limited to entry and potential execution only during Regular 
Market Hours. An order designated with a TIF of MIOC that is entered 
outside of Regular Market Hours would be returned to the entering 
member firm without attempting to execute. The Exchange has determined 
that, based on a lack of market participant desire for a MIOC TIF and 
the cost that would be incurred in developing and implementing it on 
the Exchange, it will not implement the MIOC TIF at this juncture. 
Accordingly, the Exchange is proposing to delete text under Rule 
3301B(a)(1) concerning the MIOC TIF, which is effective but not yet 
operative.
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    \3\ The Exchange notes that the text at issue in this filing 
concerning the MIOC TIF under Rule 3301B(a)(1) is not yet 
implemented, but was recently inadvertently incorporated into the 
PSX rulebook when the Commission approved certain rules governing 
the PSX equities market in order to provide additional detail and 
clarity regarding its order type functionality. See Securities 
Exchange Act Release No. 75293 (June 24, 2015), 80 FR 37327 (June 
30, 2015) (SR-Phlx-2015-29). Notwithstanding its inadvertent 
inclusion in the rulebook, the rule text concerning the MIOC TIF is 
not yet effective. The Exchange had anticipated implementing the 
MIOC and GTMC changes in the second quarter of 2015. See Securities 
Exchange Act Release No. 74628 (April 1, 2015), 80 FR 18662 (April 
7, 2015) (SR-Phlx-2015-32).
    \4\ See Rule 3301B(a)(1).
    \5\ Id.
    \6\ An Order with a Time-in-Force of IOC that is entered at any 
time between 8:00 a.m. ET and 5:00 p.m. ET may be referred to as 
having a Time-in-Force of ``System Hours Immediate or Cancel'' or 
``SIOC''. Id.
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    The Exchange is also proposing to amend Rule 3301B(a)(6) to make it 
clear that the Exchange will no longer accept GTMC orders for execution 
after 4:00 p.m. Eastern Time, which are currently accepted and 
converted to SIOC orders if received after 4:00 p.m. Eastern Time. In 
April 2015, the Exchange proposed this change to the predecessor rule 
concerning GTMC orders in a prior filing with the Commission,\7\ and 
had anticipated implementing the change at some point in the second 
quarter of 2015. During that time, the Commission approved a rule 
change that renumbered and clarified the rule.\8\ Accordingly, the 
Exchange is now amending the renumbered rule to reflect the changes 
made in the prior filing. The Exchange

[[Page 46626]]

is also proposing to delay the change to the operation of GTMC orders 
after 4:00 p.m. Eastern Time, so that this change will now be 
implemented the week of August 17, 2015 and will complete the 
implementation the week of August 31, 2015.
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    \7\ See Securities Exchange Act Release No. 74628 (April 1, 
2015), 80 FR 18662 (April 7, 2015) (SR-Phlx-2015-32).
    \8\ The Exchange also made a clarifying change to the rule, 
which was incorporated into the renumbered rule. Supra note 3.
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    The Exchange is also making a minor technical correction to Rule 
3301B(a)(6) by inserting hyphenation in the term ``Time-in-Force'', 
which will make it consistent with its use in other paragraphs of the 
rule.
2. Statutory Basis
    Phlx believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act,\9\ in general, and with Section 
6(b)(5) of the Act,\10\ in particular, in that the proposal is 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 regulating, clearing, settling, 
processing information with respect to, and 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 also in that it is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange believes that, in light of a lack of 
market participant interest and the costs the Exchange would incur in 
developing and implementing a MIOC TIF, it would be in the best 
interest of the market and market participants not to implement the 
change at this juncture. Implementing a change, which will not be used 
significantly yet will represent a cost to the Exchange to implement, 
could ultimately result in increased costs to market participants in 
the form of increased fees. Accordingly, the Exchange is eliminating 
the MIOC TIF until such time that the demand for it justifies the 
expenditure.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).
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    The proposed change to Rule 3301B(a)(6) is designed 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 because it modifies the rule to reflect a change made 
to the predecessor rule, which was filed with the Commission as an 
immediately effective filing to be implemented sometime in the second 
quarter of 2015. The change, which was subject to the notice and 
comment process, had not been implemented prior to the rule's 
renumbering. Accordingly, the proposed change to amend Rule 3301B(a)(6) 
merely modifies the rule text so that it is consistent with the changes 
made to the predecessor rule.
    The proposed delay in implementing the changes to the Good-til-
market close TIF is designed 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 because it 
will provide the Exchange with a brief extension to adequately program 
and test the proposed changes to the TIF. Moreover, the Exchange is 
delaying implementation of the changes until after the reconstitution 
of the Russell indexes, which is a day of significant volume in the 
market and immediately prior to which the Exchange reduces the number 
of changes made to the System. Accordingly, the proposed delay will 
serve to reduce risk in the market during a time of significant volume 
and provide the Exchange adequate time to program and test the proposed 
changes, thereby protecting investors and the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. Specifically, 
the Exchange notes that there is little interest in MIOC among market 
participants on PSX, and accordingly removing MIOC before it is 
implemented will not impact the Exchange's competitiveness among 
exchanges or other execution venues. In addition, the Exchange does not 
believe that briefly delaying the changes to the Good-til-market close 
TIF will place any burden on competition whatsoever because the TIF 
will continue to be available unchanged until the Exchange has 
adequately programmed and tested the proposed changes.

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)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
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 for 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 \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
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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    A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative immediately. The Exchange represents 
that market participants have not expressed interest in the MIOC TIF. 
The Exchange therefore argues that waiver of the operative delay is 
consistent with the protection of investors and the public interest 
because it will allow the Exchange to remove the MIOC TIF prior its 
implementation, thereby serving to avoid investor confusion. The 
Exchange also reasons that waiving the operative delay would allow the 
Exchange to make the required technical and operational changes to the 
GTMC TIF after the reconstitution of the Russell Indexes. Based on the 
foregoing, the Commission finds that waiving the 30-day operative delay 
is consistent with the protection of investors and the public interest 
and hereby designates the proposal operative upon filing.\17\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ 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

[[Page 46627]]

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 change 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 email to [email protected]. Please include 
File Number SR-Phlx-2015-66 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-2015-66. 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 offices 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-2015-66, 
and should be submitted on or before August 26, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12), (59).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-19131 Filed 8-4-15; 8:45 am]
 BILLING CODE 8011-01-P