80 FR 72773 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 1014, “Obligations and Restrictions Applicable to Specialists and Registered Options Traders”
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 224 (November 20, 2015)
Federal Register Volume 80, Issue 224 (November 20, 2015)
| Page Range | 72773-72775 | |
| FR Document | 2015-29597 |
[Federal Register Volume 80, Number 224 (Friday, November 20, 2015)] [Notices] [Pages 72773-72775] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-29597] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76441; File No. SR-Phlx-2015-91] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 1014, ``Obligations and Restrictions Applicable to Specialists and Registered Options Traders'' November 16, 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 November 2, 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, 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to amend Phlx Rule 1014 entitled ``Obligations and Restrictions Applicable to Specialists and Registered Options Traders'' to remove the maximum option price change from the Rule. 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 proposes to amend Phlx Rule 1014, entitled ``Obligations and Restrictions Applicable to Specialists and Registered Options Traders,'' to eliminate the provision providing for bids (offers) to be no more than $1 lower (higher) than the last preceding transaction price for the particular option. Today, Phlx Rule 1014 specifies, ``Bidding no more than $1 lower and/or offering no more than $1 higher than the last preceding transaction price for the particular option contract. However, [[Page 72774]] this standard shall not ordinarily apply if the price per share of the underlying stock or Exchange-Traded Fund Share has changed by more than $1 since the last preceding transaction for the particular option contract. Further, this standard shall not apply to U.S. dollar-settled foreign currency options. Phlx Rule 1014 is applicable to specialists \3\ and Registered Options Traders \4\ (collectively ``Market Makers''). Pursuant to Phlx Rule 1014(c)(i)(B), Market Makers are required not to bid more than $1 lower or offer more than $1 higher than the last preceding transaction price for the particular option contract (the ``one point rule''). --------------------------------------------------------------------------- \3\ A specialist is an Exchange member who is registered as an options specialist pursuant to Rule 1020(a). \4\ A Registered Options Trader (``ROT'') includes a Streaming Quote Trader (``SQT''), a Remote Streaming Quote Trader (``RSQT'') and a Non-Streaming Quote Trader, which by definition is neither a SQT nor a RSQT. A Registered Option Trader is defined in Exchange Rule 1014(b) as a regular member of the Exchange located on the trading floor who has received permission from the Exchange to trade in options for his own account. See Exchange Rule 1014 (b)(i) and (ii). --------------------------------------------------------------------------- The Exchange proposes to eliminate the one point rule which sets maximum bid and/or ask differentials that may be quoted by Market Makers because market changes have rendered the rule obsolete and unnecessary. The one point rule applies to options on equities (including Exchange-Traded Fund Shares), Index options and U.S. dollar- settled Foreign Currency Options, to the extent applicable within the rule.\5\ The Exchange initially adopted this standard as a guideline for Market Makers; however, today, this restriction is no longer necessary. For example, today Market-Makers may stream electronic quotes and are subject to various electronic quotation requirements, including bid/ask quote width requirements contained elsewhere in Rule 1014.\6\ In addition, the Exchange has rules in place regarding trade- through and locked/crossed market requirements.\7\ The Exchange also has an obvious error rule that contains provisions on erroneous pricing errors and has in place certain price check parameters that will not permit the automatic execution of certain orders if the execution would take place outside an acceptable price range.\8\ --------------------------------------------------------------------------- \5\ The one point rule does not ordinarily apply if the price per share of the underlying stock or Exchange-Traded Fund Share has changed by more than $1 since the last preceding transaction for the particular option contract. Further, this standard does not apply to U.S. dollar-settled foreign currency options. See Phlx Rule 1014(c)(i)(B). \6\ See Phlx Rule 1014(c)(A)(1). \7\ See Phlx Rules 1083 and 1086. \8\ See Phlx Rule 1092. --------------------------------------------------------------------------- At this time, the Exchange believes that the one point rule is not necessary and should be eliminated so as not to unreasonably constrain Market Makers when submitting quotes to the Exchange. 2. Statutory Basis The Exchange believes that its proposal is consistent with section 6(b) of the Act \9\ in general, and furthers the objectives of section 6(b)(5) of the Act \10\ 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 eliminating this outdated rule which unnecessarily restricts bids and offers that may be entered by Market Makers. The Exchange has other price protections in place today, such as bid/ask quote requirements, locked and crossed market rules and obvious error rules which protect against certain price movements and constrain quoting.\11\ Also, the Chicago Board Options Exchange Incorporated (``CBOE'') had a similar rule in place, which was eliminated in 2009.\12\ --------------------------------------------------------------------------- \9\ 15 U.S.C. 78f(b). \10\ 15 U.S.C. 78f(b)(5). \11\ See Rule 1014 and supra notes 6 and 7. \12\ See Securities Exchange Act Release No. 60295 (July 13, 2009), 74 FR 35215 (July 20, 2009) (SR-CBOE-2009-049). --------------------------------------------------------------------------- The Exchange believes that this constraint on Market Makers may in fact prove harmful. In a volatile market, Market Makers may find it necessary to move their quotes beyond the one point rule restriction of $1 and would be unnecessarily constrained from moving quotes, while market makers on other options exchanges would not be subject to the same restriction on quoting. The Exchange believes that the one point rule does not serve a reasonable purpose in today's market and should therefore be eliminated in order to remove impediments to and perfect the mechanism of a free and open market and a national market system. 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 believes that eliminating the one point rule does not impose an undue burden on inter-market competition because this constraint on quoting does not exist on other options exchanges,\13\ where market participants may quote without such restriction. Further, the Exchange believes that this constraint on Market Makers may in fact prove harmful. In a volatile market, Market Makers may find it necessary to move their quotes beyond the one point rule restriction of $1 and would be unnecessarily constrained from moving quotes while market makers on other options exchanges would not be subject to the same restriction on quoting. The Exchange does not believe that this rule change imposes an undue burden on intra-market competition because there are other price protections in place today, such as bid/ask quote requirements, locked and crossed market rules and obvious error rules which protect against certain price movements and constrain quoting.\14\ --------------------------------------------------------------------------- \13\ For example, CBOE, The NASDAQ Stock Market LLC, and NASDAQ OMX BX, Inc. do not have such constraints. \14\ See Rule 1014 and supra notes 6 and 7. --------------------------------------------------------------------------- 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)(iii) of the Act \15\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\16\ --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(3)(A)(iii). \16\ 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. --------------------------------------------------------------------------- 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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) 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. [[Page 72775]] 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 CommentsUse 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-2015-91 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-2015-91. 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-2015-91, and should be submitted on or before December 11, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\17\ --------------------------------------------------------------------------- \17\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-29597 Filed 11-19-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 224 / Friday, November 20, 2015 / Notices 72773
increased liquidity to 50the Exchange Commission, 100 F Street NE., (‘‘Act’’),1 and Rule 19b–4 thereunder,2
for the benefit of all Exchange Washington, DC 20549–1090. notice is hereby given that on November
participants. To the extent the purpose All submissions should refer to File 2, 2015, NASDAQ OMX PHLX LLC
of the proposed MARS is achieved, all Number SR–Phlx–2015–89. This file (‘‘Phlx’’ or ‘‘Exchange’’) filed with the
the Exchange’s market participants, number should be included on the Securities and Exchange Commission
including Professionals and Broker- subject line if email is used. To help the (‘‘SEC’’ or ‘‘Commission’’) the proposed
Dealers, should benefit from the Commission process and review your rule change as described in Items I, II,
improved market liquidity. comments more efficiently, please use and III, below, which Items have been
The Exchange believes that only one method. The Commission will prepared by the Exchange. The
preventing members from receiving any post all comments on the Commission’s Commission is publishing this notice to
other revenue for the use of its routing Internet Web site (http://www.sec.gov/ solicit comments on the proposed rule
system, specifically with respect to rules/sro.shtml). Copies of the change from interested persons.
orders routed to Phlx, with the submission, all subsequent I. Self-Regulatory Organization’s
exception of PFOF, does not create amendments, all written statements Statement of the Terms of the Substance
undue burden on intra-market with respect to the proposed rule of the Proposed Rule Change
competition because the Exchange change that are filed with the
would continue to uniformly apply its The Exchange proposes to amend
Commission, and all written
MARS requirements to all Phlx Phlx Rule 1014 entitled ‘‘Obligations
communications relating to the
members. and Restrictions Applicable to
proposed rule change between the
Specialists and Registered Options
C. Self-Regulatory Organization’s Commission and any person, other than
Traders’’ to remove the maximum
Statement on Comments on the those that may be withheld from the
option price change from the Rule.
Proposed Rule Change Received From public in accordance with the The text of the proposed rule change
Members, Participants, or Others provisions of 5 U.S.C. 552, will be is available on the Exchange’s Web site
available for Web site viewing and at http://
No written comments were either printing in the Commission’s Public
solicited or received. nasdaqomxphlx.cchwallstreet.com/, at
Reference Room, 100 F Street NE., the principal office of the Exchange, and
III. Date of Effectiveness of the Washington, DC 20549 on official at the Commission’s Public Reference
Proposed Rule Change and Timing for business days between the hours of Room.
Commission Action 10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for II. Self-Regulatory Organization’s
The foregoing rule change has become inspection and copying at the principal Statement of the Purpose of, and
effective pursuant to Section office of the Exchange. All comments Statutory Basis for, the Proposed Rule
19(b)(3)(A)(ii) of the Act.42 received will be posted without change; Change
At any time within 60 days of the
the Commission does not edit personal In its filing with the Commission, the
filing of the proposed rule change, the
identifying information from Exchange included statements
Commission summarily may
submissions. You should submit only concerning the purpose of and basis for
temporarily suspend such rule change if
information that you wish to make the proposed rule change and discussed
it appears to the Commission that such
available publicly. All submissions any comments it received on the
action is: (i) Necessary or appropriate in
should refer to File Number SR–Phlx– proposed rule change. The text of these
the public interest; (ii) for the protection
2015–89, and should be submitted on or statements may be examined at the
of investors; or (iii) otherwise in
before December 11, 2015. places specified in Item IV below. The
furtherance of the purposes of the Act.
For the Commission, by the Division of Exchange has prepared summaries, set
If the Commission takes such action, the
Trading and Markets, pursuant to delegated forth in sections A, B, and C below, of
Commission shall institute proceedings
authority.43 the most significant aspects of such
to determine whether the proposed rule
Robert W. Errett, statements.
should be approved or disapproved.
Deputy Secretary. A. Self-Regulatory Organization’s
IV. Solicitation of Comments [FR Doc. 2015–29602 Filed 11–19–15; 8:45 am] Statement of the Purpose of, and
Interested persons are invited to BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule
submit written data, views, and Change
arguments concerning the foregoing,
including whether the proposed rule SECURITIES AND EXCHANGE 1. Purpose
change is consistent with the Act. COMMISSION The Exchange proposes to amend
Comments may be submitted by any of Phlx Rule 1014, entitled ‘‘Obligations
[Release No. 34–76441; File No. SR–Phlx–
the following methods: 2015–91] and Restrictions Applicable to
Specialists and Registered Options
Electronic Comments Traders,’’ to eliminate the provision
Self-Regulatory Organizations;
• Use the Commission’s Internet NASDAQ OMX PHLX LLC; Notice of providing for bids (offers) to be no more
comment form (http://www.sec.gov/ Filing and Immediate Effectiveness of than $1 lower (higher) than the last
rules/sro.shtml); or Proposed Rule Change To Amend Rule preceding transaction price for the
• Send an email to rule-comments@ 1014, ‘‘Obligations and Restrictions particular option.
sec.gov. Please include File Number SR– Applicable to Specialists and Today, Phlx Rule 1014 specifies,
tkelley on DSK3SPTVN1PROD with NOTICES
Phlx–2015–89 on the subject line. Registered Options Traders’’ ‘‘Bidding no more than $1 lower and/or
offering no more than $1 higher than the
Paper Comments November 16, 2015. last preceding transaction price for the
• Send paper comments in triplicate Pursuant to section 19(b)(1) of the particular option contract. However,
to Secretary, Securities and Exchange Securities Exchange Act of 1934
1 15 U.S.C. 78s(b)(1).
42 15 U.S.C. 78s(b)(3)(A)(ii). 43 17 CFR 200.30–3(a)(31). 2 17 CFR 240.19b–4.
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![Federal Register / Vol. 80, No. 224 / Friday, November 20, 2015 / Notices 72775
IV. Solicitation of Comments For the Commission, by the Division of proposed rule change, disapprove the
Trading and Markets, pursuant to delegated proposed rule change, or institute
Interested persons are invited to authority.17 proceedings to determine whether the
submit written data, views, and Robert W. Errett, proposed rule change should be
arguments concerning the foregoing, Deputy Secretary. disapproved. The 45th day for this filing
including whether the proposed rule [FR Doc. 2015–29597 Filed 11–19–15; 8:45 am] is November 27, 2015. The Commission
change is consistent with the Act. BILLING CODE 8011–01–P is extending this 45-day time period.
Comments may be submitted by any of The Commission finds it appropriate to
the following methods: designate a longer period within which
SECURITIES AND EXCHANGE to take action on the proposed rule
Electronic Comments COMMISSION change so that it has sufficient time to
• Use the Commission’s Internet [Release No. 34–76444; File No. SR–FINRA– consider the proposed rule change and
comment form (http://www.sec.gov/ 2015–034] the comments received.
rules/sro.shtml); or Accordingly, the Commission,
Self-Regulatory Organizations; pursuant to Section 19(b)(2) of the Act,6
• Send an email to rule-comments@ Financial Industry Regulatory designates January 11, 2016, as the date
sec.gov. Please include File Number SR– Authority, Inc.; Notice of Designation by which the Commission should either
Phlx–2015–91 on the subject line. of a Longer Period for Commission approve or disapprove, or institute
Paper Comments Action on a Proposed Rule Change To proceedings to determine whether to
Merge FINRA Dispute Resolution, Inc. disapprove, the proposed rule
• Send paper comments in triplicate Into and With FINRA Regulation, Inc. change(File No. SR–FINRA–2015–034).
to Secretary, Securities and Exchange For the Commission, by the Division of
November 16, 2015.
Commission, 100 F Street NE., Trading and Markets, pursuant to delegated
Washington, DC 20549–1090. On September 29, 2015, the Financial authority.7
Industry Regulatory Authority, Inc. Robert W. Errett,
All submissions should refer to File (‘‘FINRA’’) filed with the Securities and
Deputy Secretary.
Number SR–Phlx–2015–91. This file Exchange Commission (‘‘Commission’’),
[FR Doc. 2015–29600 Filed 11–19–15; 8:45 am]
number should be included on the pursuant to Section 19(b)(1) of the
BILLING CODE 8011–01–P
subject line if email is used. To help the Securities Exchange Act of 1934
Commission process and review your (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
comments more efficiently, please use proposed rule change to merge its
only one method. The Commission will dispute resolution subsidiary, FINRA SOCIAL SECURITY ADMINISTRATION
post all comments on the Commission’s Dispute Resolution, Inc. into and with [Docket No. SSA 2015–0044]
Internet Web site (http://www.sec.gov/ its regulatory subsidiary, FINRA
rules/sro.shtml). Copies of the Regulation, Inc. In addition, the Privacy Act of 1974, as Amended;
submission, all subsequent proposed rule change would amend the Computer Matching Program (SSA/
amendments, all written statements FINRA Regulation By-Laws to increase Department of the Treasury, Internal
with respect to the proposed rule the total number of directors who could Revenue Service (IRS))—Match
serve on the FINRA Regulation board. Number 1016
change that are filed with the
The proposed rule change was
Commission, and all written AGENCY: Social Security Administration
published for comment in the Federal
communications relating to the (SSA).
Register on October 13, 2015.3 The
proposed rule change between the Commission received five comment ACTION: Notice of a renewal of an
Commission and any person, other than letters to the proposed rule change.4 existing computer matching program
those that may be withheld from the Section 19(b)(2) of the Act 5 provides that will expire on December 31, 2015.
public in accordance with the that within 45 days of the publication of
provisions of 5 U.S.C. 552, will be SUMMARY: In accordance with the
notice of the filing of a proposed rule provisions of the Privacy Act, as
available for Web site viewing and change, or within such longer period up amended, this notice announces a
printing in the Commission’s Public to 90 days as the Commission may renewal of an existing computer
Reference Room, 100 F Street NE., designate if it finds such longer period matching program that we are currently
Washington, DC 20549 on official to be appropriate and publishes its conducting with IRS.
business days between the hours of reasons for so finding or as to which the
DATES: We will file a report of the
10:00 a.m. and 3:00 p.m. Copies of such self-regulatory organization consents,
subject matching program with the
filing also will be available for the Commission shall either approve the
Committee on Homeland Security and
inspection and copying at the principal Governmental Affairs of the Senate; the
17 17 CFR 200.30–3(a)(12).
offices of the Exchange. All comments Committee on Oversight and
1 15 U.S.C. 78s(b)(1).
received will be posted without change; 2 17 CFR 240.19b–4. Government Reform of the House of
the Commission does not edit personal 3 See Securities Exchange Act Release No. 76082 Representatives; and the Office of
identifying information from (October 6, 2015), 80 FR 61545. Information and Regulatory Affairs,
submissions. You should submit only 4 See letters from Hugh D. Berkson, President,
Office of Management and Budget
information that you wish to make Public Investors Arbitration Bar Association, dated (OMB). The matching program will be
November 3, 2015; Ron A. Rhoades, dated
tkelley on DSK3SPTVN1PROD with NOTICES
available publicly. All submissions November 3, 2015; Jill Gross, Director, Pace Investor effective as indicated below.
should refer to File Number SR–Phlx– Rights Clinic, Pace Law School, dated November 3, ADDRESSES: Interested parties may
2015–91, and should be submitted on or 2015; Larry A. Tawwater, President, American comment on this notice by either
before December 11, 2015. Association for Justice, dated November 3, 2015;
and William A. Jacobson, Director, Cornell telefaxing to (410) 966–0869 or writing
Securities Law Clinic, Cornell Law School, dated
November 4, 2015. 6 15 U.S.C. 78s(b)(2).
5 15 U.S.C. 78s(b)(2). 7 17 CFR 200.30–3(a)(31).
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Document Created: 2015-12-14 13:58:34
Document Modified: 2015-12-14 13:58:34
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 80 FR 72773 |
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