83 FR 48353 - Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 1080(A)(I)(C) Relating to Options Floor Based Management System

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 185 (September 24, 2018)

Page Range		48353-48354
FR Document		2018-20659
Federal Register, Volume 83 Issue 185 (Monday, September 24, 2018)
[Federal Register Volume 83, Number 185 (Monday, September 24, 2018)]
[Notices]
[Pages 48353-48354]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-20659]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84180; File No. SR-Phlx-2018-58]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 
1080(A)(I)(C) Relating to Options Floor Based Management System

September 18, 2018.
    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 September 7, 2018, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 1080(a)(i)(C) relating to 
Options Floor Based Management System (``FBMS'') in connection with 
offering an interface to submit orders to a particular Floor Broker on 
the options floor.
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaqphlx.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 offer a new FBMS FIX interface which 
connects to FBMS (``FBMS FIX Interface'') \3\ to allow members and non-
members to submit orders directly \4\ to a Floor Broker on the 
Exchange's trading floor. Today, a market participant desiring to 
submit an order to the trading floor may contact a Floor Broker 
telephonically, electronically using an external order management 
system, or via instant message.\5\ An order submitted via the FBMS FIX 
Interface would be created by the sender and routed to a Floor Broker. 
This order would be systematized so that the Floor Broker \6\ 
automatically receives the order and may then represent the order for 
execution. A member or non-member would not be able to send the order 
directly to the trading system for execution. Orders entered via the 
FBMS FIX Interface will require the interaction of a Floor Broker. 
Orders will continue to be represented in the trading crowd, regardless 
of the method in which the order was received. Orders would be executed 
in the matching engine using FBMS, after all requirements for exposure 
have been met. The proposed new FBMS FIX Interface will allow the 
following types of orders to be submitted directly to a Floor Broker: 
Simple Orders, Multi-leg Orders, Cross and Non-Cross Orders, Simple 
Cancels, Cancel and Replacement Orders and Floor Qualified Contingent 
Cross Orders.
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    \3\ This new interface is a separate and distinct connection 
from the existing FIX interface, which allows members to send orders 
to the electronic match engine.
    \4\ The interface would allow the market participant to 
designate a particular Floor Broker through the use of a FIX tag.
    \5\ An audit trail is maintained today for all orders received 
by a Floor Broker.
    \6\ A Floor Broker's employee may also send an order into FBMS 
or the System on behalf of the Floor Broker.
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    The Exchange believes this new feature will enhance the workflow of 
a Floor Broker by permitting orders to be directly submitted into FBMS 
for handling. The Exchange believes that this new functionality will 
offer market participants another method to direct liquidity to a Floor 
Broker on the trading floor. The Exchange proposes to amend Rule 
1080(a)(i)(C) to add the following sentence to the description of the 
FBMS protocol, ``In addition, a non-member or member may utilize an 
FBMS FIX interface to create and send an order into FBMS to be 
represented by a Floor Broker for execution.''
Implementation
    The Exchange proposes to implement this functionality in Q1 of 
2019. Market participants will be notified of the deployment date by 
way of an Options Trader Alert, which will be posted on the Exchange's 
website.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ 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 proposing another method for market participants to submit orders to 
a particular Floor Broker on the Exchange's trading floor.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    The proposal would offer market participants an alternative to the 
current methods of submitting an order to a Floor Broker which include: 
(i) Calling a Floor Broker; (ii) electronically using an external order 
management system, or (iii) utilizing instant message. The Exchange 
believes that this proposal will promote more efficient work flow and 
provide ease in sending liquidity to the Exchange's trading floor. The 
Exchange notes that the requirements for submission of orders for 
execution within FBMS will continue to exist. The Exchange believes 
that this proposal is consistent with the Act because it will continue 
to remove impediments to and perfect the mechanism of a free and open 
market and a national market system by continuing to require a Floor 
Broker to expose these orders in the trading crowd prior to execution. 
A Floor Broker would continue to submit any orders to the matching 
engine for execution using FBMS, after all requirements for exposure 
have been met. Finally, this proposal is consistent with the Act 
because it protects investors and the public interest by

[[Page 48354]]

continuing to provide an audit trail for orders submitted through the 
FBMS FIX interface.
    The Exchange notes that while it is permitting a broader group of 
market participants to have access to FBMS, in this case with the FBMS 
FIX Interface, the Exchange does not believe that this amendment raises 
concern with respect to the quality of information received by the 
Floor Broker because the Floor Broker remains responsible for ensuring 
the order is in the proper form and contains the appropriate 
information for submission. As noted herein, members and non-members 
would not be able to send orders directly for execution into the 
matching engine through the FBMS FIX Interface. The Exchange believes 
that this expansion only seeks to provide a Floor Broker with an order 
that is available for representation without the need for the Floor 
Broker to manually enter the order into FBMS.

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's proposal offers 
market participants the ability to send an order via the FBMS FIX 
Interface to a particular Floor Broker. The Exchange believes that 
these proposed amendments do not create a burden on inter-market 
competition because all members and non-members may send orders to a 
Floor Broker via the FBMS FIX Interface. As is the case today, any 
member or non-member may contact a Floor Broker to submit an order to 
the Phlx trading floor. The Exchange notes that the proposed rule 
creates a new modality for member and non-members to send orders to a 
Floor Broker for representation. Floor Brokers conduct an agency 
business. Other market participants that conduct a market making 
business have varied workflows as compared to a Floor Broker and would 
not benefit from a similar FBMS FIX Interface. The Exchange believes 
that this new interface does not create an intra-market burden on 
competition for these reasons.

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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if 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-2018-58 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-2018-58. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-Phlx-2018-58 and should be submitted on 
or before October 15, 2018.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-20659 Filed 9-21-18; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 185 / Monday, September 24, 2018 / Notices 48353

submissions should refer to File concerning the purpose of and basis for handling. The Exchange believes that
Number SR–NYSE–2018–28 and should the proposed rule change and discussed this new functionality will offer market
be submitted on or before October 15, any comments it received on the participants another method to direct
2018. Rebuttal comments should be proposed rule change. The text of these liquidity to a Floor Broker on the
submitted by October 29, 2018. statements may be examined at the trading floor. The Exchange proposes to
For the Commission, by the Division of places specified in Item IV below. The amend Rule 1080(a)(i)(C) to add the
Trading and Markets, pursuant to delegated Exchange has prepared summaries, set following sentence to the description of
authority.41 forth in sections A, B, and C below, of the FBMS protocol, ‘‘In addition, a non-
Eduardo A. Aleman, the most significant aspects of such member or member may utilize an
Assistant Secretary. statements. FBMS FIX interface to create and send
an order into FBMS to be represented by
[FR Doc. 2018–20658 Filed 9–21–18; 8:45 am] A. Self-Regulatory Organization’s
a Floor Broker for execution.’’
BILLING CODE 8011–01–P Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Implementation
Change The Exchange proposes to implement
SECURITIES AND EXCHANGE
1. Purpose this functionality in Q1 of 2019. Market
COMMISSION
participants will be notified of the
[Release No. 34–84180; File No. SR–Phlx–
The Exchange proposes to offer a new deployment date by way of an Options
2018–58] FBMS FIX interface which connects to Trader Alert, which will be posted on
FBMS (‘‘FBMS FIX Interface’’) 3 to allow the Exchange’s website.
Self-Regulatory Organizations; Nasdaq members and non-members to submit
PHLX LLC; Notice of Filing and orders directly 4 to a Floor Broker on the 2. Statutory Basis
Immediate Effectiveness of Proposed Exchange’s trading floor. Today, a The Exchange believes that its
Rule Change To Amend Rule market participant desiring to submit an proposal is consistent with Section 6(b)
1080(A)(I)(C) Relating to Options Floor order to the trading floor may contact a of the Act,7 in general, and furthers the
Based Management System Floor Broker telephonically, objectives of Section 6(b)(5) of the Act,8
electronically using an external order in particular, in that it is designed to
September 18, 2018. management system, or via instant promote just and equitable principles of
Pursuant to Section 19(b)(1) of the message.5 An order submitted via the trade, to remove impediments to and
Securities Exchange Act of 1934 FBMS FIX Interface would be created by perfect the mechanism of a free and
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 the sender and routed to a Floor Broker. open market and a national market
notice is hereby given that on This order would be systematized so system, and, in general to protect
September 7, 2018, Nasdaq PHLX LLC that the Floor Broker 6 automatically investors and the public interest, by
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the receives the order and may then proposing another method for market
Securities and Exchange Commission represent the order for execution. A participants to submit orders to a
(‘‘SEC’’ or ‘‘Commission’’) the proposed member or non-member would not be particular Floor Broker on the
rule change as described in Items I and able to send the order directly to the Exchange’s trading floor.
II below, which Items have been trading system for execution. Orders The proposal would offer market
prepared by the Exchange. The entered via the FBMS FIX Interface will participants an alternative to the current
Commission is publishing this notice to require the interaction of a Floor Broker. methods of submitting an order to a
solicit comments on the proposed rule Orders will continue to be represented Floor Broker which include: (i) Calling
change from interested persons. in the trading crowd, regardless of the a Floor Broker; (ii) electronically using
I. Self-Regulatory Organization’s method in which the order was an external order management system,
Statement of the Terms of Substance of received. Orders would be executed in or (iii) utilizing instant message. The
the Proposed Rule Change the matching engine using FBMS, after Exchange believes that this proposal
all requirements for exposure have been will promote more efficient work flow
The Exchange proposes to amend
met. The proposed new FBMS FIX and provide ease in sending liquidity to
Rule 1080(a)(i)(C) relating to Options
Interface will allow the following types the Exchange’s trading floor. The
Floor Based Management System
of orders to be submitted directly to a Exchange notes that the requirements
(‘‘FBMS’’) in connection with offering
Floor Broker: Simple Orders, Multi-leg for submission of orders for execution
an interface to submit orders to a
Orders, Cross and Non-Cross Orders, within FBMS will continue to exist. The
particular Floor Broker on the options
Simple Cancels, Cancel and Exchange believes that this proposal is
floor.
The text of the proposed rule change Replacement Orders and Floor Qualified consistent with the Act because it will
is available on the Exchange’s website at Contingent Cross Orders. continue to remove impediments to and
The Exchange believes this new perfect the mechanism of a free and
http://nasdaqphlx.cchwallstreet.com/,
feature will enhance the workflow of a open market and a national market
at the principal office of the Exchange,
Floor Broker by permitting orders to be system by continuing to require a Floor
and at the Commission’s Public
directly submitted into FBMS for Broker to expose these orders in the
Reference Room.
trading crowd prior to execution. A
II. Self-Regulatory Organization’s 3 This new interface is a separate and distinct
Floor Broker would continue to submit
Statement of the Purpose of, and connection from the existing FIX interface, which
allows members to send orders to the electronic any orders to the matching engine for
Statutory Basis for, the Proposed Rule execution using FBMS, after all
amozie on DSK3GDR082PROD with NOTICES1

match engine.
Change 4 The interface would allow the market requirements for exposure have been
In its filing with the Commission, the participant to designate a particular Floor Broker met. Finally, this proposal is consistent
through the use of a FIX tag.
Exchange included statements 5 An audit trail is maintained today for all orders
with the Act because it protects
received by a Floor Broker. investors and the public interest by
41 17 CFR 200.30–3(a)(57). 6 A Floor Broker’s employee may also send an
1 15 U.S.C. 78s(b)(1). 7 15 U.S.C. 78f(b).
order into FBMS or the System on behalf of the
2 17 CFR 240.19b–4. Floor Broker. 8 15 U.S.C. 78f(b)(5).

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48354 Federal Register / Vol. 83, No. 185 / Monday, September 24, 2018 / Notices

continuing to provide an audit trail for III. Date of Effectiveness of the submission, all subsequent
orders submitted through the FBMS FIX Proposed Rule Change and Timing for amendments, all written statements
interface. Commission Action with respect to the proposed rule
The Exchange notes that while it is Because the foregoing proposed rule change that are filed with the
change does not: (i) Significantly affect Commission, and all written
permitting a broader group of market
the protection of investors or the public communications relating to the
participants to have access to FBMS, in
interest; (ii) impose any significant proposed rule change between the
this case with the FBMS FIX Interface, Commission and any person, other than
the Exchange does not believe that this burden on competition; and (iii) become
operative for 30 days from the date on those that may be withheld from the
amendment raises concern with respect public in accordance with the
to the quality of information received by which it was filed, or such shorter time
as the Commission may designate, it has provisions of 5 U.S.C. 552, will be
the Floor Broker because the Floor available for website viewing and
Broker remains responsible for ensuring become effective pursuant to Section
printing in the Commission’s Public
the order is in the proper form and 19(b)(3)(A) of the Act 9 and Rule 19b–
Reference Room, 100 F Street NE,
4(f)(6) thereunder.10
contains the appropriate information for At any time within 60 days of the Washington, DC 20549 on official
submission. As noted herein, members filing of the proposed rule change, the business days between the hours of
and non-members would not be able to Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the
send orders directly for execution into temporarily suspend such rule change if filing also will be available for
the matching engine through the FBMS it appears to the Commission that such inspection and copying at the principal
FIX Interface. The Exchange believes action is: (i) Necessary or appropriate in office of the Exchange. All comments
that this expansion only seeks to the public interest; (ii) for the protection received will be posted without change.
provide a Floor Broker with an order Persons submitting comments are
of investors; or (iii) otherwise in
that is available for representation cautioned that we do not redact or edit
furtherance of the purposes of the Act.
without the need for the Floor Broker to personal identifying information from
If the Commission takes such action, the
comment submissions. You should
manually enter the order into FBMS. Commission shall institute proceedings
submit only information that you wish
to determine whether the proposed rule
B. Self-Regulatory Organization’s to make available publicly. All
should be approved or disapproved.
Statement on Burden on Competition submissions should refer to File
IV. Solicitation of Comments Number SR–Phlx–2018–58 and should
The Exchange does not believe that be submitted on or before October
Interested persons are invited to
the proposed rule change will impose 15,2018.
submit written data, views, and
any burden on competition not arguments concerning the foregoing, For the Commission, by the Division of
necessary or appropriate in furtherance including whether the proposed rule Trading and Markets, pursuant to delegated
of the purposes of the Act. The change is consistent with the Act. authority.11
Exchange’s proposal offers market Comments may be submitted by any of Eduardo A. Aleman,
participants the ability to send an order the following methods: Assistant Secretary.
via the FBMS FIX Interface to a [FR Doc. 2018–20659 Filed 9–21–18; 8:45 am]
particular Floor Broker. The Exchange Electronic Comments
BILLING CODE 8011–01–P
believes that these proposed • Use the Commission’s internet
amendments do not create a burden on comment form (http://www.sec.gov/
inter-market competition because all rules/sro.shtml); or SECURITIES AND EXCHANGE
members and non-members may send • Send an email to rule-comments@ COMMISSION
orders to a Floor Broker via the FBMS sec.gov. Please include File Number SR–
[Release No. 34–84179; File No. SR–
FIX Interface. As is the case today, any Phlx–2018–58 on the subject line. Nasdaq–2018–074]
member or non-member may contact a Paper Comments
Floor Broker to submit an order to the Self-Regulatory Organizations; The
• Send paper comments in triplicate Nasdaq Stock Market LLC; Notice of
Phlx trading floor. The Exchange notes to Secretary, Securities and Exchange
that the proposed rule creates a new Filing and Immediate Effectiveness of
Commission, 100 F Street NE, Proposed Rule Change To Eliminate
modality for member and non-members Washington, DC 20549–1090.
to send orders to a Floor Broker for the Market Quality Program (Rule 5950)
All submissions should refer to File
representation. Floor Brokers conduct Number SR–Phlx–2018–58. This file September 18, 2018.
an agency business. Other market number should be included on the Pursuant to Section 19(b)(1) 1 of the
participants that conduct a market subject line if email is used. To help the Securities Exchange Act of 1934
making business have varied workflows Commission process and review your (‘‘Act’’) 2 and Rule 19b–4 thereunder,3
as compared to a Floor Broker and comments more efficiently, please use notice is hereby given that, on
would not benefit from a similar FBMS only one method. The Commission will September 7, 2018, The Nasdaq Stock
FIX Interface. The Exchange believes post all comments on the Commission’s Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’)
that this new interface does not create internet website (http://www.sec.gov/ filed with the Securities and Exchange
an intra-market burden on competition rules/sro.shtml). Copies of the Commission (‘‘Commission’’) the
for these reasons. proposed rule change as described in
Items I and II below, which Items have
amozie on DSK3GDR082PROD with NOTICES1

9 15 U.S.C. 78s(b)(3)(A).
C. Self-Regulatory Organization’s 10 17 CFR 240.19b–4(f)(6). As required under Rule been prepared by the Exchange. The
Statement on Comments on the 19b–4(f)(6)(iii), the Exchange provided the Commission is publishing this notice to
Proposed Rule Change Received From Commission with written notice of its intent to file
the proposed rule change, along with a brief
Members, Participants, or Others description and the text of the proposed rule
11 17 CFR 200.30–3(a)(12).
1 15 U.S.C.78s(b)(1).
change, at least five business days prior to the date
No written comments were either of filing of the proposed rule change, or such 2 15 U.S.C. 78a.

solicited or received. shorter time as designated by the Commission. 3 17 CFR 240.19b–4.

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Document Created: 2018-09-22 00:33:33
Document Modified: 2018-09-22 00:33:33
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		83 FR 48353