81 FR 46731 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend Pilot Program Through January 18, 2017
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 137 (July 18, 2016)
Federal Register Volume 81, Issue 137 (July 18, 2016)
| Page Range | 46731-46734 | |
| FR Document | 2016-16859 |
[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)] [Notices] [Pages 46731-46734] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-16859] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78301; File No. SR-Phlx-2016-75] Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend Pilot Program Through January 18, 2017 July 12, 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 July 12, 2016, NASDAQ 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Exchange Rule 1080(n), Price Improvement XL (``PIXL\SM\''), to extend, through January 18, 2017, a pilot program (the ``pilot'') concerning (i) the early conclusion of the PIXL Auction (as described below), and (ii) permitting orders of fewer than 50 contracts into the PIXL Auction. The current pilot is scheduled to expire July 18, 2016.\3\ --------------------------------------------------------------------------- \3\ The extension of the pilot relates to several subparagraphs of Rule 1080(n) in respect of PIXL and Complex Order PIXL, as discussed below. --------------------------------------------------------------------------- The text of the proposed rule change is set forth below. Proposed new text is italicized. Deleted text is [bracketed]. * * * * * NASDAQ PHLX LLC Rules Options Rules Rule 1080. Phlx XL and Phlx XL II (a)-(m) No change. (n) Price Improvement XL (``PIXL'') A member may electronically submit for execution an order it represents as agent on behalf of a public customer, broker-dealer, or any other entity (``PIXL Order'') against principal interest or against any other order (except as provided in sub-paragraph (n)(i)(F) below) it represents as agent (an ``Initiating Order'') provided it submits the PIXL Order for electronic execution into the PIXL Auction (``Auction'') pursuant to this Rule. The contract size specified in Rule 1080(n) as applicable to PIXL Orders shall apply to Mini Options. (i) Auction Eligibility Requirements. All options traded on the Exchange are eligible for PIXL. A member (the ``Initiating Member'') may initiate an Auction provided all of the following are met: (A) No change. (B) No change. (C) If the PIXL Order is a Complex Order and of a conforming ratio, as defined in Commentary .08(a)(i) and (a)(ix) to Rule 1080, the Initiating Member must stop the entire PIXL order at a price that is better than the best net price (debit or credit) (i) available on the Complex Order book regardless of the Complex Order book size; and (ii) achievable from the best Phlx bids and offers for the individual options (an ``improved net price''), provided in either case that such price is equal to or better than the PIXL Order's limit price. Complex Orders consisting of a ratio other than a conforming ratio will not be accepted. This sub-paragraph (C) shall apply to all Complex Orders submitted into PIXL. This sub-paragraph (C), where applied to Complex Orders where the smallest leg is less than 50 contracts in size, shall be effective for a pilot period scheduled to expire [July 18, 2016]January 18, 2017. [[Page 46732]] (D)-(G) No change. (ii) Auction Process. Only one Auction may be conducted at a time in any given series or strategy. Once commenced, an Auction may not be cancelled and shall proceed as follows: (A) No change. (B) Conclusion of Auction. The PIXL Auction shall conclude at the earlier to occur of (1) through (4) below, with the PIXL Order executing pursuant to paragraph (C)(1) through (3) below. (1)-(4) No change. (5) Sub-paragraphs (B)(2), (B)(3) and (B)(4) above shall be effective for a pilot period scheduled to expire [July 18, 2016]January 18, 2017. (C) No change. (D) An unrelated market or marketable limit order (against the PBBO) on the opposite side of the market from the PIXL Order received during the Auction will not cause the Auction to end early and will execute against interest outside of the Auction. In the case of a Complex PIXL Auction, an unrelated market or marketable limit Complex Order on the opposite side of the market from the Complex PIXL Order as well as orders for the individual components of the Complex Order received during the Auction will not cause the Auction to end early and will execute against interest outside of the Auction. If contracts remain from such unrelated order at the time the Auction ends, they will be considered for participation in the order allocation process described in sub-paragraph (E) below. This sub-paragraph shall be effective for a pilot period scheduled to expire on [July 18, 2016]January 18, 2017. (E)-(J) No change. (iii)-(vi) No change. (vii) Initially, and for at least a Pilot Period expiring on [July 18, 2016] January 18, 2017, there will be no minimum size requirement for orders to be eligible for the Auction. During this Pilot Period, the Exchange will submit certain data, periodically as required by the Commission, to provide supporting evidence that, among other things, there is meaningful competition for all size orders and that there is an active and liquid market functioning on the Exchange outside of the Auction mechanism. Any raw data which is submitted to the Commission will be provided on a confidential basis. * * * * * 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 proposed rule change is to extend the pilot through January 18, 2017. Background The Exchange adopted PIXL in October 2010 as a price-improvement mechanism on the Exchange.\4\ PIXL is a component of the Exchange's fully automated options trading system, PHLX XL[supreg] that allows an Exchange member (an ``Initiating Member'') to electronically submit for execution an order it represents as agent on behalf of a public customer, broker dealer, or any other entity (``PIXL Order'') against principal interest or against any other order it represents as agent (an ``Initiating Order'') provided it submits the PIXL Order for electronic execution into the PIXL Auction (``Auction'') pursuant to the Rule. --------------------------------------------------------------------------- \4\ See Securities Exchange Act Release Nos. 63027 (October 1, 2010), 75 FR 62160 (October 7, 2010) (SR-Phlx-2010-108) (Order Granting Approval to a Proposed Rule Change Relating to a Proposed Price Improvement System, Price Improvement XL); 65043 (August 5, 2011), 76 FR 49824 (August 11, 2011) (SR-Phlx-2011-104) (Extending Pilot for Price Improvement System, Price Improvement XL); 67399 (July 11, 2012), 77 FR 42048 (July 17, 2012) (SR-Phlx-2012-94) (Extending Pilot for Price Improvement System, Price Improvement XL); 69845 (June 25, 2013), 78 FR 39429 (July 1, 2013) (SR-Phlx- 2013-46) (Order Granting Approval To Proposed Rule Change, as Modified by Amendment No. 1, Regarding Complex Order PIXL); 69989 (July 16, 2013), 78 FR 43950 (July 22, 2013) (SR-Phlx-2013-74) (Extending Pilot for Price Improvement System, Price Improvement XL); 72619 (July 16, 2014), 79 FR 42613 (July 22, 2014) (Extending Pilot for Price Improvement System, Price Improvement XL); and 75470 (July 16, 2015) 80 FR 43509 (July 22, 2015) (Amending Exchange Rule 1080(n), Price Improvement XL (``PIXL\SM\'') to Extend, Until July 18, 2016, a Pilot Program). --------------------------------------------------------------------------- An Initiating Member may initiate a PIXL Auction by submitting a PIXL Order, which is not a Complex Order, in one of three ways:First, the Initiating Member could submit a PIXL Order specifying a single price at which it seeks to execute the PIXL Order (a ``stop price''). Second, an Initiating Member could submit a PIXL Order specifying that it is willing to automatically match as principal or as agent on behalf of an Initiating Order the price and size of all trading interest and responses to the PIXL Auction Notification (``PAN,'' as described below) (``auto-match''), in which case the PIXL Order will be stopped at the better of the National Best Bid/Offer (``NBBO'') or the Reference BBO \5\ on the Initiating Order side. --------------------------------------------------------------------------- \5\ The ``Reference BBO'' is defined as the ``internal market BBO''. --------------------------------------------------------------------------- Third, an Initiating Member could submit a PIXL Order specifying that it is willing to either: (i) Stop the entire order at a single stop price and auto-match PAN responses, as described below, together with trading interest, at a price or prices that improve the stop price to a specified price above or below which the Initiating Member will not trade (a ``Not Worse Than'' or ``NWT'' price); (ii) stop the entire order at a single stop price and auto-match all PAN responses and trading interest at or better than the stop price; or (iii) stop the entire order at the better of the NBBO or Reference BBO on the Initiating Order side, and auto-match PAN responses and trading interest at a price or prices that improve the stop price up to the NWT price. In all cases, if the PHLX Best Bid/Offer (``PBBO'') on the same side of the market as the PIXL Order represents a limit order on the book, the stop price must be at least one minimum price improvement increment better than the booked limit order's limit price. In addition, an Initiating Member may initiate a PIXL Auction by submitting a Complex Order which is of a conforming ratio, as defined in Commentary .08(a)(i) and (a)(ix) to Rule 1080. When submitting a Complex Order, the Initiating Member must stop the PIXL order at a price that is better than the best net price (debit or credit) (i) available on the Complex Order book regardless of the Complex Order book size; and (ii) achievable from the best PHLX bids and offers for the individual options (an ``improved net price''), provided in either case that such price is equal to or better than the PIXL Order's limit price. After the PIXL Order is entered, a PAN is broadcast and a blind Auction ensues for a period of time as determined by the Exchange and announced on the Nasdaq Trader Web site. The Auction period will be no less than one hundred milliseconds and no more than one second. Anyone may respond to the PAN by sending orders or quotes. At the conclusion of the [[Page 46733]] Auction, the PIXL Order will be allocated at the best price(s). Once the Initiating Member has submitted a PIXL Order for processing, such PIXL Order may not be modified or cancelled. Under any of the above circumstances, the Initiating Member's stop price or NWT price may be improved to the benefit of the PIXL Order during the Auction, but may not be cancelled. Under no circumstances will the Initiating Member receive an allocation percentage, at the final price point, of more than 50% with one competing quote, order or PAN response or 40% with multiple competing quotes, orders or PAN responses, when competing quotes, orders or PAN responses have contracts available for execution. After a PIXL Order has been submitted, a member organization submitting the order has no ability to control the timing of the execution. The execution is carried out by the Exchange's PHLX XL automated options trading system and pricing is determined solely by the other orders and quotes that are present in the Auction. The Pilot Three components of the PIXL system were approved by the Commission on a pilot basis: (1) Paragraphs (n)(i)(A), (n)(i)(B), and (n)(i)(C) of Rule 1080, relating to auction eligibility requirements; (2) paragraphs (n)(ii)(B)(5) and (n)(ii)(D) of Rule 1080, relating to the early conclusion of the PIXL Auction; and (3) paragraph (n)(vii) of Rule 1080, stating that there shall be no minimum size requirement of orders entered into PIXL. The pilot was extended until July 18, 2016.\6\ The Exchange notes that during the pilot period it has been required to submit, and has been submitting, certain data periodically as required by the Commission, to provide supporting evidence that, among other things, there is meaningful competition for all size orders and that there is an active and liquid market functioning on the Exchange outside of the Auction mechanism.\7\ Further, the Exchange provided certain additional data requested by the Commission regarding trading in the PIXL Auction for the six (6) month period from January 1, 2015 through June 30, 2015. The Exchange represented that it would make publicly available a summary of the data provided to the Commission. The Exchange continues to believe that there remains meaningful competition for all size orders and that there is an active and liquid market functioning on the Exchange outside of the PIXL Auction and that there is significant price improvement for orders entered into the PIXL Auction. The Exchange believes the additional data will substantiate the Exchange's belief and provide further evidence in support of permanent approval of the PIXL Pilot. --------------------------------------------------------------------------- \6\ See supra note 4. \7\ See Exchange Rule 1080(n)(vii). --------------------------------------------------------------------------- The Exchange proposes to extend the pilot through January 18, 2017. The Exchange believes that the proposed extension should afford the Commission additional time to evaluate the pilot. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,\8\ in general, and with Section 6(b)(5) of the Act,\9\ in that it is designed 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 is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers, or to regulate by virtue of any authority conferred by the Act matters not related to the purposes of the Act or the administration of the Exchange. --------------------------------------------------------------------------- \8\ 15 U.S.C. 78f. \9\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed rule change is also consistent with Section 6(b)(8) of the Act \10\ in that it does not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- Specifically, the Exchange believes that PIXL, including the rules to which the pilot applies, results in increased liquidity available at improved prices, with competitive final pricing out of the Initiating Member's complete control. The Exchange believes that PIXL promotes and fosters competition and affords the opportunity for price improvement to more options contracts. The extension proposal allows additional time for the Commission to evaluate the pilot. 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 proposal extends existing pilots that apply to all Exchange members, and enables the Exchange to be competitive in respect of other option exchanges that have similar programs. 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) of the Act \11\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\12\ --------------------------------------------------------------------------- \11\ 15 U.S.C. 78s(b)(3)(A). \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 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. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requested that the Commission waive the 30-day operative delay. The Exchange noted that the pilot is scheduled to expire July 18, 2016. According to the Exchange, a waiver of the operative delay will allow uninterrupted application of the PIXL pilot and thereby ensure fair competition with other exchanges that have similar programs. --------------------------------------------------------------------------- \13\ 17 CFR 240.19b-4(f)(6). \14\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest, as it will allow the PIXL pilot to continue uninterrupted, thereby avoiding any potential investor confusion that could result from a temporary interruption in the pilot. Therefore, the Commission [[Page 46734]] designates the proposed rule change to be operative on July 18, 2016.\15\ --------------------------------------------------------------------------- \15\ For purposes only of waiving the operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- 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 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 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-2016-75 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Phlx-2016-75. 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-2016-75 and should be submitted on or before August 8, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\16\ --------------------------------------------------------------------------- \16\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-16859 Filed 7-15-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 / Notices 46731
Additionally, the Exchange proposes II. Date of Effectiveness of the Proposed Improvement XL (‘‘PIXLSM’’), to extend,
that, going forward, to the extent that Minor Rule Violation Plan and Timing through January 18, 2017, a pilot
there are any changes to the rules for Commission Action program (the ‘‘pilot’’) concerning (i) the
applicable to the Exchange’s MRVP, the Pursuant to Section 19(d)(1) of the Act early conclusion of the PIXL Auction (as
Exchange hereby requests that the and Rule 19d–1(c)(2) thereunder,8 after described below), and (ii) permitting
Commission deem such changes to be August 2, 2016, the Commission may, orders of fewer than 50 contracts into
modifications to the Exchange’s MRVP. the PIXL Auction. The current pilot is
by order, declare the Exchange proposed
scheduled to expire July 18, 2016.3
I. Solicitation of Comments MRVP effective if the plan is consistent
The text of the proposed rule change
with the public interest, the protection is set forth below. Proposed new text is
Interested persons are invited to
of investors, or otherwise in furtherance italicized. Deleted text is [bracketed].
submit written data, views, and
of the purposes of the Act. The
arguments concerning the Exchange’s * * * * *
Commission in its order may restrict the
proposed MRVP, including whether the
categories of violations to be designated NASDAQ PHLX LLC Rules
proposed MRVP is consistent with the
as minor rule violations and may
Act. Comments may be submitted by Options Rules
impose any other terms or conditions to
any of the following methods: Rule 1080. Phlx XL and Phlx XL II
the proposed MRVP, File No. 4–701,
Electronic Comments and to the period of its effectiveness, (a)–(m) No change.
• Use the Commission’s Internet which the Commission deems necessary (n) Price Improvement XL (‘‘PIXL’’)
comment form (http://www.sec.gov/ or appropriate in the public interest, for A member may electronically submit
rules/sro.shtml); or the protection of investors or otherwise for execution an order it represents as
in furtherance of the purposes of the agent on behalf of a public customer,
• Send an email to rule-comments@
Act. broker-dealer, or any other entity (‘‘PIXL
sec.gov. Please include File Number 4–
For the Commission, by the Division of Order’’) against principal interest or
701 on the subject line.
Trading and Markets, pursuant to delegated against any other order (except as
Paper Comments authority.9 provided in sub-paragraph (n)(i)(F)
• Send paper comments in triplicate Robert W. Errett, below) it represents as agent (an
Deputy Secretary. ‘‘Initiating Order’’) provided it submits
to Brent J. Fields, Secretary, Securities
the PIXL Order for electronic execution
and Exchange Commission, 100 F Street [FR Doc. 2016–16866 Filed 7–15–16; 8:45 am]
into the PIXL Auction (‘‘Auction’’)
NE., Washington, DC 20549–1090. BILLING CODE 8011–01–P
pursuant to this Rule. The contract size
All submissions should refer to File specified in Rule 1080(n) as applicable
Number 4–701. This file number should to PIXL Orders shall apply to Mini
be included on the subject line if email SECURITIES AND EXCHANGE
Options.
is used. To help the Commission COMMISSION
(i) Auction Eligibility Requirements.
process and review your comments [Release No. 34–78301; File No. SR–Phlx– All options traded on the Exchange are
more efficiently, please use only one 2016–75] eligible for PIXL. A member (the
method. The Commission will post all ‘‘Initiating Member’’) may initiate an
comments on the Commission’s Internet Self-Regulatory Organizations; Auction provided all of the following
Web site (http://www.sec.gov/rules/ NASDAQ PHLX LLC; Notice of Filing are met:
sro.shtml). Copies of the submission, all and Immediate Effectiveness of (A) No change.
subsequent amendments, all written Proposed Rule Change To Extend Pilot (B) No change.
statements with respect to the proposed Program Through January 18, 2017 (C) If the PIXL Order is a Complex
MRVP that are filed with the Order and of a conforming ratio, as
July 12, 2016. defined in Commentary .08(a)(i) and
Commission, and all written
communications relating to the Pursuant to Section 19(b)(1) of the (a)(ix) to Rule 1080, the Initiating
proposed MRVP between the Securities Exchange Act of 1934 Member must stop the entire PIXL order
Commission and any person, other than (‘‘Act’’),1 and Rule 19b–4 thereunder,2 at a price that is better than the best net
those that may be withheld from the notice is hereby given that on July 12, price (debit or credit) (i) available on the
public in accordance with the 2016, NASDAQ PHLX LLC (‘‘Phlx’’ or Complex Order book regardless of the
provisions of 5 U.S.C. 552, will be ‘‘Exchange’’) filed with the Securities Complex Order book size; and (ii)
available for Web site viewing and and Exchange Commission (‘‘SEC’’ or achievable from the best Phlx bids and
printing in the Commission’s Public ‘‘Commission’’) the proposed rule offers for the individual options (an
Reference Room, 100 F Street NE., change as described in Items I and II ‘‘improved net price’’), provided in
Washington, DC 20549 on official below, which Items have been prepared either case that such price is equal to or
business days between the hours of by the Exchange. The Commission is better than the PIXL Order’s limit price.
10:00 a.m. and 3:00 p.m. Copies of the publishing this notice to solicit Complex Orders consisting of a ratio
proposed MRVP also will be available comments on the proposed rule change other than a conforming ratio will not be
for inspection and copying at the from interested persons. accepted. This sub-paragraph (C) shall
principal office of the Exchange. All I. Self-Regulatory Organization’s apply to all Complex Orders submitted
comments received will be posted Statement of the Terms of Substance of into PIXL. This sub-paragraph (C),
asabaliauskas on DSK3SPTVN1PROD with NOTICES
without change; the Commission does the Proposed Rule Change where applied to Complex Orders where
not edit personal identifying the smallest leg is less than 50 contracts
information from submissions. You The Exchange proposes to amend in size, shall be effective for a pilot
should submit only information that Exchange Rule 1080(n), Price period scheduled to expire [July 18,
you wish to make available publicly. All 2016]January 18, 2017.
8 15 U.S.C. 78s(d)(1); 17 CFR 240.19d–1(c)(2).
submissions should refer to File 9 17 CFR 200.30–3(a)(44). 3 The extension of the pilot relates to several
Number 4–701, and should be 1 15 U.S.C. 78s(b)(1).
subparagraphs of Rule 1080(n) in respect of PIXL
submitted on or before August 2, 2016. 2 17 CFR 240.19b–4. and Complex Order PIXL, as discussed below.
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(D)–(G) No change. concerning the purpose of and basis for is willing to automatically match as
(ii) Auction Process. Only one the proposed rule change and discussed principal or as agent on behalf of an
Auction may be conducted at a time in any comments it received on the Initiating Order the price and size of all
any given series or strategy. Once proposed rule change. The text of these trading interest and responses to the
commenced, an Auction may not be statements may be examined at the PIXL Auction Notification (‘‘PAN,’’ as
cancelled and shall proceed as follows: places specified in Item IV below. The described below) (‘‘auto-match’’), in
(A) No change. Exchange has prepared summaries, set which case the PIXL Order will be
(B) Conclusion of Auction. The PIXL forth in sections A, B, and C below, of stopped at the better of the National
Auction shall conclude at the earlier to the most significant aspects of such Best Bid/Offer (‘‘NBBO’’) or the
occur of (1) through (4) below, with the statements. Reference BBO 5 on the Initiating Order
PIXL Order executing pursuant to side.
paragraph (C)(1) through (3) below. A. Self-Regulatory Organization’s
Statement of the Purpose of, and • Third, an Initiating Member could
(1)–(4) No change. submit a PIXL Order specifying that it
(5) Sub-paragraphs (B)(2), (B)(3) and Statutory Basis for, the Proposed Rule
Change is willing to either: (i) Stop the entire
(B)(4) above shall be effective for a pilot
order at a single stop price and auto-
period scheduled to expire [July 18, 1. Purpose match PAN responses, as described
2016]January 18, 2017.
(C) No change. The purpose of the proposed rule below, together with trading interest, at
(D) An unrelated market or change is to extend the pilot through a price or prices that improve the stop
marketable limit order (against the January 18, 2017. price to a specified price above or below
PBBO) on the opposite side of the which the Initiating Member will not
Background trade (a ‘‘Not Worse Than’’ or ‘‘NWT’’
market from the PIXL Order received
during the Auction will not cause the The Exchange adopted PIXL in price); (ii) stop the entire order at a
Auction to end early and will execute October 2010 as a price-improvement single stop price and auto-match all
against interest outside of the Auction. mechanism on the Exchange.4 PIXL is a PAN responses and trading interest at or
In the case of a Complex PIXL Auction, component of the Exchange’s fully better than the stop price; or (iii) stop
an unrelated market or marketable limit automated options trading system, the entire order at the better of the
Complex Order on the opposite side of PHLX XL® that allows an Exchange NBBO or Reference BBO on the
the market from the Complex PIXL member (an ‘‘Initiating Member’’) to Initiating Order side, and auto-match
Order as well as orders for the electronically submit for execution an PAN responses and trading interest at a
individual components of the Complex order it represents as agent on behalf of price or prices that improve the stop
Order received during the Auction will a public customer, broker dealer, or any price up to the NWT price. In all cases,
not cause the Auction to end early and other entity (‘‘PIXL Order’’) against if the PHLX Best Bid/Offer (‘‘PBBO’’) on
will execute against interest outside of principal interest or against any other the same side of the market as the PIXL
the Auction. If contracts remain from order it represents as agent (an Order represents a limit order on the
such unrelated order at the time the ‘‘Initiating Order’’) provided it submits book, the stop price must be at least one
Auction ends, they will be considered the PIXL Order for electronic execution minimum price improvement increment
for participation in the order allocation into the PIXL Auction (‘‘Auction’’) better than the booked limit order’s
process described in sub-paragraph (E) pursuant to the Rule. limit price.
below. This sub-paragraph shall be An Initiating Member may initiate a In addition, an Initiating Member may
effective for a pilot period scheduled to PIXL Auction by submitting a PIXL initiate a PIXL Auction by submitting a
expire on [July 18, 2016]January 18, Order, which is not a Complex Order, in Complex Order which is of a
2017. one of three ways: conforming ratio, as defined in
(E)–(J) No change. • First, the Initiating Member could Commentary .08(a)(i) and (a)(ix) to Rule
(iii)–(vi) No change. submit a PIXL Order specifying a single 1080. When submitting a Complex
(vii) Initially, and for at least a Pilot price at which it seeks to execute the Order, the Initiating Member must stop
Period expiring on [July 18, 2016] PIXL Order (a ‘‘stop price’’). the PIXL order at a price that is better
January 18, 2017, there will be no • Second, an Initiating Member could than the best net price (debit or credit)
minimum size requirement for orders to submit a PIXL Order specifying that it (i) available on the Complex Order book
be eligible for the Auction. During this 4 See Securities Exchange Act Release Nos. 63027
regardless of the Complex Order book
Pilot Period, the Exchange will submit (October 1, 2010), 75 FR 62160 (October 7, 2010)
size; and (ii) achievable from the best
certain data, periodically as required by (SR–Phlx–2010–108) (Order Granting Approval to a PHLX bids and offers for the individual
the Commission, to provide supporting Proposed Rule Change Relating to a Proposed Price options (an ‘‘improved net price’’),
evidence that, among other things, there Improvement System, Price Improvement XL); provided in either case that such price
65043 (August 5, 2011), 76 FR 49824 (August 11,
is meaningful competition for all size 2011) (SR–Phlx–2011–104) (Extending Pilot for
is equal to or better than the PIXL
orders and that there is an active and Price Improvement System, Price Improvement XL); Order’s limit price.
liquid market functioning on the 67399 (July 11, 2012), 77 FR 42048 (July 17, 2012) After the PIXL Order is entered, a
Exchange outside of the Auction (SR–Phlx–2012–94) (Extending Pilot for Price PAN is broadcast and a blind Auction
Improvement System, Price Improvement XL);
mechanism. Any raw data which is 69845 (June 25, 2013), 78 FR 39429 (July 1, 2013) ensues for a period of time as
submitted to the Commission will be (SR–Phlx–2013–46) (Order Granting Approval To determined by the Exchange and
provided on a confidential basis.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Proposed Rule Change, as Modified by Amendment announced on the Nasdaq Trader Web
No. 1, Regarding Complex Order PIXL); 69989 (July site. The Auction period will be no less
* * * * * 16, 2013), 78 FR 43950 (July 22, 2013) (SR–Phlx–
2013–74) (Extending Pilot for Price Improvement than one hundred milliseconds and no
II. Self-Regulatory Organization’s more than one second. Anyone may
System, Price Improvement XL); 72619 (July 16,
Statement of the Purpose of, and 2014), 79 FR 42613 (July 22, 2014) (Extending Pilot respond to the PAN by sending orders
Statutory Basis for, the Proposed Rule for Price Improvement System, Price Improvement or quotes. At the conclusion of the
Change XL); and 75470 (July 16, 2015) 80 FR 43509 (July
22, 2015) (Amending Exchange Rule 1080(n), Price
In its filing with the Commission, the Improvement XL (‘‘PIXLSM’’) to Extend, Until July 5 The ‘‘Reference BBO’’ is defined as the ‘‘internal
Exchange included statements 18, 2016, a Pilot Program). market BBO’’.
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![46734 Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 / Notices
designates the proposed rule change to 10:00 a.m. and 3:00 p.m. Copies of the II. Self-Regulatory Organization’s
be operative on July 18, 2016.15 filing also will be available for Statement of the Purpose of, and
At any time within 60 days of the inspection and copying at the principal Statutory Basis for, the Proposed Rule
filing of the proposed rule change, the office of the Exchange. All comments Change
Commission summarily may received will be posted without change; In its filing with the Commission, the
temporarily suspend such rule change if the Commission does not edit personal Exchange included statements
it appears to the Commission that such identifying information from concerning the purpose of and basis for
action is necessary or appropriate in the submissions. You should submit only the proposed rule change and discussed
public interest, for the protection of information that you wish to make any comments it received on the
investors, or otherwise in furtherance of available publicly. All submissions proposed rule change. The text of these
the purposes of the Act. If the should refer to File Number SR–Phlx– statements may be examined at the
Commission takes such action, the 2016–75 and should be submitted on or places specified in Item IV below. The
Commission shall institute proceedings before August 8, 2016. Exchange has prepared summaries, set
to determine whether the proposed rule For the Commission, by the Division of forth in sections A, B, and C below, of
should be approved or disapproved. Trading and Markets, pursuant to delegated the most significant aspects of such
IV. Solicitation of Comments authority.16 statements.
Robert W. Errett, A. Self-Regulatory Organization’s
Interested persons are invited to
submit written data, views, and Deputy Secretary. Statement of the Purpose of, and
arguments concerning the foregoing, [FR Doc. 2016–16859 Filed 7–15–16; 8:45 am] Statutory Basis for, the Proposed Rule
including whether the proposed rule BILLING CODE 8011–01–P Change
change is consistent with the Act. 1. Purpose
Comments may be submitted by any of
the following methods: SECURITIES AND EXCHANGE The Exchange proposes to amend its
COMMISSION Fee Schedule to assess certain existing
Electronic Comments transaction fees, provide certain existing
• Use the Commission’s Internet [Release No. 34–78299; File No. SR–MIAX–
credits, and to afford certain existing
comment form (http://www.sec.gov/ 2016–20] discounts, concerning executions
rules/sro.shtml); or stemming from unrelated MIAX Market
• Send an email to rule-comments@ Self-Regulatory Organizations; Miami Maker quotes and unrelated MIAX
sec.gov. Please include File Number SR– International Securities Exchange LLC; Market Maker orders that participate in
Phlx–2016–75 on the subject line. Notice of Filing and Immediate the MIAX PRIME Auction, as described
Effectiveness of a Proposed Rule more fully below.
Paper Comments Change To Amend Its Fee Schedule The Exchange proposes to amend
• Send paper comments in triplicate section (1)(a)(i) of the Fee Schedule
to Brent J. Fields, Secretary, Securities July 12, 2016. concerning Market Maker 3 Transaction
and Exchange Commission, 100 F Street Pursuant to the provisions of section Fees to exclude volume related to
NE., Washington, DC 20549–1090. 19(b)(1) of the Securities Exchange Act certain transaction fees and rebates for
of 1934 (‘‘Act’’),1 and Rule 19b–4 Members that participate in the price
All submissions should refer to File
thereunder,2 notice is hereby given that improvement auction (‘‘PRIME
Number SR–Phlx–2016–75. This file
on June 30, 2016, Miami International Auction’’ or ‘‘PRIME’’) pursuant to
number should be included on the
Securities Exchange LLC (‘‘MIAX’’ or Exchange Rule 515A,4 and to state
subject line if email is used. To help the
Commission process and review your ‘‘Exchange’’) filed with the Securities 3 The term ‘‘Market Makers’’ refers to ‘‘Lead
comments more efficiently, please use and Exchange Commission Market Makers’’, ‘‘Primary Lead Market Makers’’
only one method. The Commission will (‘‘Commission’’) a proposed rule change and ‘‘Registered Market Makers’’ collectively. The
post all comments on the Commission’s as described in Items I, II, and III below, term ‘‘Lead Market Maker’’ means a Member
which Items have been prepared by the registered with the Exchange for the purpose of
Internet Web site (http://www.sec.gov/ making markets in securities traded on the
rules/sro.shtml). Copies of the Exchange. The Commission is Exchange and that is vested with the rights and
submission, all subsequent publishing this notice to solicit responsibilities specified in chapter VI of the
amendments, all written statements comments on the proposed rule change Exchange’s Rules with respect to Lead Market
from interested persons. Makers. When a Lead Market Maker is appointed
with respect to the proposed rule to act in the capacity of a Primary Lead Market
change that are filed with the I. Self-Regulatory Organization’s Maker, the additional rights and responsibilities of
Commission, and all written Statement of the Terms of Substance of a Primary Lead Market Maker specified in chapter
communications relating to the VI of the Exchange’s Rules will apply. The term
the Proposed Rule Change ‘‘Primary Lead Market Maker’’ means a Lead Market
proposed rule change between the Maker appointed by the Exchange to act as the
Commission and any person, other than The Exchange is filing a proposal to Primary Lead Market Maker for the purpose of
those that may be withheld from the amend the MIAX Options Fee Schedule making markets in securities traded on the
public in accordance with the (the ‘‘Fee Schedule’’). Exchange. The Primary Lead Market Maker is
vested with the rights and responsibilities specified
provisions of 5 U.S.C. 552, will be The text of the proposed rule change in chapter VI of the Exchange’s Rules with respect
available for Web site viewing and to Primary Lead Market Makers. The term
asabaliauskas on DSK3SPTVN1PROD with NOTICES
is available on the Exchange’s Web site
printing in the Commission’s Public at http://www.miaxoptions.com/filter/ ‘‘Registered Market Maker’’ means a Member
Reference Room, 100 F Street NE., registered with the Exchange for the purpose of
wotitle/rule_filing, at MIAX’s principal making markets in securities traded on the
Washington, DC 20549, on official office, and at the Commission’s Public Exchange, who is not a Lead Market Maker and is
business days between the hours of Reference Room. vested with the rights and responsibilities specified
in chapter VI of the Exchange’s Rules with respect
15 For purposes only of waiving the operative to Registered Market Makers. See Exchange Rule
16 17 CFR 200.30–3(a)(12).
delay, the Commission has considered the proposed 100.
1 15 U.S.C. 78s(b)(1).
rule’s impact on efficiency, competition, and capital 4 See Exchange Rule 515A. See also Securities
formation. See 15 U.S.C. 78c(f). 2 17 CFR 240.19b–4. Exchange Act Release Nos. 71640 (March 4, 2014),
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Document Created: 2016-07-16 02:28:27
Document Modified: 2016-07-16 02:28:27
| 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 46731 |
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