81 FR 12769 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Provisions Related to Options Disputes

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 47 (March 10, 2016)

[Federal Register Volume 81, Number 47 (Thursday, March 10, 2016)]
[Notices]
[Pages 12769-12770]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-05325]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77295; File No. SR-Phlx-2016-32]


Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Provisions 
Related to Options Disputes

March 4, 2016.
    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 February 25, 2016, NASDAQ PHLX LLC (``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.
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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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend Rule 124, Disputes-Options and the 
corollary Options Floor Procedure Advice F-27, Options Exchange 
Official Rulings,\3\ in a number of ways described below.
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    \3\ Options floor procedures advices generally correspond to 
Exchange rules and comprise the Exchange's minor rule violation plan 
establishing preset fines for certain violations pursuant to Rule 
19d-1(c) under the Act. 17 CFR 240.19d-1(c).
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    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 purpose of the proposal is to update the rules under which 
disputes can be addressed, as described below. Rule 124 pertains to 
disputes on the options trading floor. Disputes occurring on and 
relating to the trading floor, if not settled by agreement between the 
members interested, shall be settled, if practicable, by vote of the 
members knowing of the transaction in question; if not so settled, they 
shall be settled by an Options Exchange Official.
    In issuing decisions for the resolution of trading disputes, an 
Options Exchange Official shall institute the course of action deemed 
to be most fair to all parties under the circumstances at the time. An 
Options Exchange Official may direct the execution of an order on the 
floor, or adjust the transaction terms or participants to an executed 
order on the floor. An Options Exchange Official may nullify a 
transaction if the Options Exchange Official determines the transaction 
to have been in violation of certain rules that are listed in Rule 124.
    The Exchange proposes to delete from this list the rules that are 
now entirely automated such that they do not operate on the trading 
floor and would not be subject to the provisions of Rule 124. 
Specifically, Rule 1017, Openings in Options, and Rule 1080, Phlx XL 
and Phlx XL II,\4\ are proposed to be deleted from Rule 124. Both of 
these rules pertain only to automated activity. Because errors 
resulting from automated order handling and execution are handled 
pursuant to Rule 1092, there is no need for the Rule 124 process to 
apply.
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    \4\ The Exchange intends to separately update Rule 1080 in a 
variety of ways to make clear that it only applies to automated 
trading system activity.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with section 
6(b) of the Act \5\ in general, and furthers the objectives of section 
6(b)(5) of the Act \6\ in particular, in that it is designed to promote 
just and equitable principles of trade and to protect investors and the 
public interest, by maintaining a framework to handle disputes on the 
trading floor, consistent with the current market structure for trading 
options on the Exchange. The proposed change to delete two rules from 
the list of rules that, if violated, could result in a trade 
nullification should promote just and equitable principles of trade by 
recognizing that due to increased automation those disputes are handled 
by a different rule, Rule 1092.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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. In terms of intra-market 
competition, the proposal applies to all trading floor participants and 
does not affect competition among such participants. The proposal does 
not burden competition among options markets, which is fierce, because 
it merely updates an internal dispute process on the Phlx options 
trading floor.

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 \7\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(a)(iii).
    \8\ 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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[[Page 12770]]

    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.

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-2016-32 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-2016-32. 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-2016-32, and should be 
submitted on or before March 31, 2016.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Brent J. Fields,
Secretary.
[FR Doc. 2016-05325 Filed 3-9-16; 8:45 am]
 BILLING CODE 8011-01-P