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)

Page Range		12769-12770
FR Document		2016-05325
Federal Register, Volume 81 Issue 47 (Thursday, 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
Federal Register / Vol. 81, No. 47 / Thursday, March 10, 2016 / Notices 12769

information that you wish to make II. Self-Regulatory Organization’s 2. Statutory Basis
available publicly. All submissions Statement of the Purpose of, and The Exchange believes that its
should refer to File Number SR–CBOE– Statutory Basis for, the Proposed Rule proposal is consistent with section 6(b)
2016–014, and should be submitted on Change of the Act 5 in general, and furthers the
or before March 31, 2016. objectives of section 6(b)(5) of the Act 6
In its filing with the Commission, the
For the Commission, by the Division of Exchange included statements in particular, in that it is designed to
Trading and Markets, pursuant to delegated concerning the purpose of and basis for promote just and equitable principles of
authority.19 the proposed rule change and discussed trade and to protect investors and the
Brent J. Fields, any comments it received on the public interest, by maintaining a
Secretary. proposed rule change. The text of these framework to handle disputes on the
[FR Doc. 2016–05326 Filed 3–9–16; 8:45 am] statements may be examined at the trading floor, consistent with the current
places specified in Item IV below. The market structure for trading options on
BILLING CODE 8011–01–P
Exchange has prepared summaries, set the Exchange. The proposed change to
forth in sections A, B, and C below, of delete two rules from the list of rules
SECURITIES AND EXCHANGE the most significant aspects of such that, if violated, could result in a trade
COMMISSION statements. nullification should promote just and
equitable principles of trade by
A. Self-Regulatory Organization’s recognizing that due to increased
[Release No. 34–77295; File No. SR–Phlx– Statement of the Purpose of, and automation those disputes are handled
2016–32] Statutory Basis for, the Proposed Rule by a different rule, Rule 1092.
Change
Self-Regulatory Organizations; B. Self-Regulatory Organization’s
NASDAQ PHLX LLC; Notice of Filing 1. Purpose Statement on Burden on Competition
and Immediate Effectiveness of The Exchange does not believe that
Proposed Rule Change To Amend The purpose of the proposal is to
update the rules under which disputes the proposed rule change will impose
Provisions Related to Options any burden on competition not
Disputes can be addressed, as described below.
Rule 124 pertains to disputes on the necessary or appropriate in furtherance
March 4, 2016. options trading floor. Disputes occurring of the purposes of the Act. In terms of
on and relating to the trading floor, if intra-market competition, the proposal
Pursuant to section 19(b)(1) of the applies to all trading floor participants
not settled by agreement between the
Securities Exchange Act of 1934 and does not affect competition among
members interested, shall be settled, if
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 such participants. The proposal does
practicable, by vote of the members
notice is hereby given that on February not burden competition among options
knowing of the transaction in question;
25, 2016, NASDAQ PHLX LLC markets, which is fierce, because it
if not so settled, they shall be settled by
(‘‘Exchange’’) filed with the Securities merely updates an internal dispute
an Options Exchange Official.
and Exchange Commission (‘‘SEC’’ or process on the Phlx options trading
‘‘Commission’’) the proposed rule In issuing decisions for the resolution
of trading disputes, an Options floor.
change as described in Items I, II, and
III, below, which Items have been Exchange Official shall institute the C. Self-Regulatory Organization’s
prepared by the Exchange. The course of action deemed to be most fair Statement on Comments on the
Commission is publishing this notice to to all parties under the circumstances at Proposed Rule Change Received From
solicit comments on the proposed rule the time. An Options Exchange Official Members, Participants, or Others
change from interested persons. may direct the execution of an order on
No written comments were either
the floor, or adjust the transaction terms
I. Self-Regulatory Organization’s solicited or received.
or participants to an executed order on
Statement of the Terms of the Substance the floor. An Options Exchange Official III. Date of Effectiveness of the
of the Proposed Rule Change may nullify a transaction if the Options Proposed Rule Change and Timing for
Exchange Official determines the Commission Action
The Exchange proposes to amend transaction to have been in violation of
Rule 124, Disputes-Options and the Because the foregoing proposed rule
certain rules that are listed in Rule 124. change does not: (i) Significantly affect
corollary Options Floor Procedure
Advice F–27, Options Exchange Official The Exchange proposes to delete from the protection of investors or the public
Rulings,3 in a number of ways described this list the rules that are now entirely interest; (ii) impose any significant
below. automated such that they do not operate burden on competition; and (iii) become
on the trading floor and would not be operative for 30 days from the date on
The text of the proposed rule change subject to the provisions of Rule 124. which it was filed, or such shorter time
is available on the Exchange’s Web site Specifically, Rule 1017, Openings in as the Commission may designate, it has
at http:// Options, and Rule 1080, Phlx XL and become effective pursuant to section
nasdaqomxphlx.cchwallstreet.com/, at Phlx XL II,4 are proposed to be deleted 19(b)(3)(A)(iii) of the Act 7 and
the principal office of the Exchange, and from Rule 124. Both of these rules subparagraph (f)(6) of Rule 19b–4
at the Commission’s Public Reference pertain only to automated activity. thereunder.8
Room. Because errors resulting from automated
mstockstill on DSK4VPTVN1PROD with NOTICES

order handling and execution are 5 15 U.S.C. 78f(b).
19 17 CFR 200.30–3(a)(12). handled pursuant to Rule 1092, there is 6 15 U.S.C. 78f(b)(5).
1 15 U.S.C. 78s(b)(1). 7 15 U.S.C. 78s(b)(3)(a)(iii).
2 17 CFR 240.19b–4.
no need for the Rule 124 process to
8 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
3 Options floor procedures advices generally
apply.
4(f)(6) requires a self-regulatory organization to give
correspond to Exchange rules and comprise the the Commission written notice of its intent to file
Exchange’s minor rule violation plan establishing 4 The Exchange intends to separately update Rule the proposed rule change at least five business days
preset fines for certain violations pursuant to Rule 1080 in a variety of ways to make clear that it only prior to the date of filing of the proposed rule
19d–1(c) under the Act. 17 CFR 240.19d–1(c). applies to automated trading system activity. Continued

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12770 Federal Register / Vol. 81, No. 47 / Thursday, March 10, 2016 / Notices

At any time within 60 days of the office of the Exchange. All comments II. Self-Regulatory Organization’s
filing of the proposed rule change, the received will be posted without change; Statement of the Purpose of, and
Commission summarily may the Commission does not edit personal Statutory Basis for, the Proposed Rule
temporarily suspend such rule change if identifying information from Change
it appears to the Commission that such submissions. You should submit only
action is: (i) Necessary or appropriate in information that you wish to make In its filing with the Commission, the
the public interest; (ii) for the protection available publicly. All submissions Exchange included statements
of investors; or (iii) otherwise in should refer to File Number SR–Phlx– concerning the purpose of, and basis for,
furtherance of the purposes of the Act. 2016–32, and should be submitted on or the proposed rule change and discussed
If the Commission takes such action, the before March 31, 2016. any comments it received on the
Commission shall institute proceedings proposed rule change. The text of these
to determine whether the proposed rule For the Commission, by the Division of
statements may be examined at the
should be approved or disapproved. Trading and Markets, pursuant to delegated
places specified in Item IV below. The
authority.9
IV. Solicitation of Comments self-regulatory organization has
Brent J. Fields,
prepared summaries, set forth in
Interested persons are invited to Secretary. Sections A, B and C below, of the most
submit written data, views, and [FR Doc. 2016–05325 Filed 3–9–16; 8:45 am] significant aspects of such statements.
arguments concerning the foregoing, BILLING CODE 8011–01–P
including whether the proposed rule A. Self-Regulatory Organization’s
change is consistent with the Act. Statement of the Purpose of, and
Comments may be submitted by any of SECURITIES AND EXCHANGE Statutory Basis for, the Proposed Rule
the following methods: COMMISSION Change
Electronic Comments 1. Purpose
• Use the Commission’s Internet [Release No. 34–77292; File No. SR–
comment form (http://www.sec.gov/ ISEMercury–2016–02] The purpose of the proposed rule
rules/sro.shtml); or filing is to establish a Schedule of Fees
• Send an email to rule-comments@ Self-Regulatory Organizations; ISE by adopting fees and rebates for Regular
sec.gov. Please include File Number SR– Mercury, LLC; Notice of Filing and Orders 3 in standard options traded on
Phlx–2016–32 on the subject line. Immediate Effectiveness of Proposed ISE Mercury, and adopting route-out
Rule Change To Establish the fees and marketing fees.
Paper Comments Schedule of Fees
• Send paper comments in triplicate Regular Order Fees and Rebates
March 4, 2016.
to Secretary, Securities and Exchange The Exchange proposes to assess per
Commission, 100 F Street NE., Pursuant to Section 19(b)(1) of the contract transaction fees and rebates in
Washington, DC 20549–1090. Securities Exchange Act of 1934 (the all option classes traded on the
All submissions should refer to File ‘‘Act’’ or ‘‘Exchange Act’’),1 and Rule Exchange to market participants that
Number SR–Phlx–2016–32. This file 19b–4 thereunder,2 notice is hereby trade on the Exchange. The fees and
number should be included on the given that on February 18, 2016, ISE rebates depend on the category of
subject line if email is used. To help the Mercury, LLC (the ‘‘Exchange’’ or ‘‘ISE market participant submitting orders to
Commission process and review your Mercury’’) filed with the Securities and
the Exchange and the type of orders
comments more efficiently, please use Exchange Commission (‘‘Commission’’)
submitted to the Exchange.
only one method. The Commission will the proposed rule change, as described
post all comments on the Commission’s in Items I, II, and III below, which Items The proposed Schedule of Fees
Internet Web site (http://www.sec.gov/ have been prepared by the self- identifies the following categories of
rules/sro.shtml). Copies of the regulatory organization. The market participants: (1) Market Maker; 4
submission, all subsequent Commission is publishing this notice to (2) Non-ISE Mercury Market Maker; 5 (3)
amendments, all written statements solicit comments on the proposed rule Firm Proprietary 6/Broker-Dealer; 7 (4)
with respect to the proposed rule change from interested persons. Professional Customer; 8 (5) Priority
change that are filed with the
Commission, and all written I. Self-Regulatory Organization’s 3 A Regular Order is an order that consists of only

communications relating to the Statement of the Terms of Substance of a single option series and is not submitted with a
proposed rule change between the the Proposed Rule Change stock leg.
4 The term Market Makers refers to ‘‘Competitive
Commission and any person, other than ISE Mercury proposes to establish a Market Makers’’ and ‘‘Primary Market Makers’’
those that may be withheld from the
Schedule of Fees by adopting fees and collectively. Market Maker orders sent to the
public in accordance with the Exchange by an Electronic Access Member are
rebates for all Regular Orders in
provisions of 5 U.S.C. 552, will be assessed fees at the same level as Market Maker
standard options traded on ISE Mercury,
available for Web site viewing and orders.
and adopting route-out fees and
printing in the Commission’s Public 5 A Non-ISE Mercury Market Maker, or Far Away
marketing fees. The text of the proposed Market Maker (‘‘FARMM’’), is a market maker as
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official rule change is available on the defined in Section 3(a)(38) of the Securities
mstockstill on DSK4VPTVN1PROD with NOTICES

business days between the hours of Exchange’s Internet Web site at http:// Exchange Act of 1934, as amended (‘‘Exchange
www.ise.com, at the principal office of Act’’), registered in the same options class on
10:00 a.m. and 3:00 p.m. Copies of such another options exchange.
filing also will be available for the Exchange, and at the Commission’s 6 A Firm Proprietary order is an order submitted

inspection and copying at the principal Public Reference Room. by a member for its own proprietary account.
7 A Broker-Dealer order is an order submitted by
9 17 CFR 200.30–3(a)(12). a member for a non-member broker-dealer account.
change, or such shorter time as designated by the
1 15 U.S.C. 78s(b)(1). 8 A Professional Customer is a person who is not
Commission. The Exchange has satisfied this
requirement. 2 17 CFR 240.19b–4. a broker/dealer and is not a Priority Customer.

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Document Created: 2018-02-02 15:12:02
Document Modified: 2018-02-02 15:12:02
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		81 FR 12769