Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Its Rules Relating to Directed Orders and Eligible Orders, 36132-36134 [2010-15267]

Download as PDF 36132 Federal Register / Vol. 75, No. 121 / Thursday, June 24, 2010 / Notices At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate 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. 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: emcdonald on DSK2BSOYB1PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2010–46 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2010–46. This file number should be included on the subject line if e-mail 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 (https://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 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the along with a brief description and text of the proposed rule change, at least five business days prior to the filing of the proposed rule change, or such shorter time as designated by the Commission. The Commission notes that the Exchange has satisfied this requirement. VerDate Mar<15>2010 16:47 Jun 23, 2010 Jkt 220001 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 No. SR–NYSEArca– 2010–46 and should be submitted on or before July 15, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–15248 Filed 6–23–10; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–62320; File No. SR–Phlx– 2010–83] Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Its Rules Relating to Directed Orders and Eligible Orders June 17, 2010. 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 June 14, 2010, NASDAQ OMX PHLX, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to clarify the definition of ‘‘Directed Order’’ in Rule 1080(l)(i)(A) by removing the limiting word ‘‘customer’’ before the word ‘‘order.’’ A conforming change to the definition of ‘‘Order Flow Provider’’ is proposed to be made in Rule 1080(l)(i)(B). Second, amendments to Rule 1080(b)(i)(C) are proposed which specify that orders for the account of an 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). 1 15 PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 off-floor broker dealer may be entered into the Exchange’s enhanced electronic trading platform for options, Phlx XL,5 by an agent of the off-floor broker dealer. Third, the Exchange is adding opening-only-market orders and limit on opening orders to the list of eligible orders in Rule 1080(b)(i), as order types eligible for entry into the trading system. The Exchange proposes to add a definition of limit on opening order to Rule 1066. The text of the proposed rule change is available on the Exchange’s Internet Web site at https://www.nasdaqtrader.com/ micro.aspx?id=PHLXRulefilings, on the Commission’s Internet Web site at https://www.sec.gov, 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 self-regulatory organization 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 those 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 parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose In May 2005 the Exchange adopted rules for Phlx XL that permit Exchange specialists, Streaming Quote Traders (‘‘SQTs’’),6 and Remote Streaming Quote Traders (‘‘RSQTs’’) 7 to receive Directed Orders, and to provide a participation guarantee to specialists, SQTs and 5 See Securities Exchange Act Release No. 59995 (May 28, 2009), 74 FR 26750 (June 3, 2009) (SR– Phlx–2009–32). 6 An SQT is an Exchange Registered Options Trader (‘‘ROT’’) who has received permission from the Exchange to generate and submit option quotations electronically through Phlx XL in eligible options to which such SQT is assigned. An SQT may only submit such quotations while such SQT is physically present on the floor of the Exchange. See Phlx Rule 1014(b)(ii)(A). 7 An RSQT is an ROT that is a member or member organization with no physical trading floor presence who has received permission from the Exchange to generate and submit option quotations electronically through Phlx XL in eligible options to which such RSQT has been assigned. An RSQT may only submit such quotations electronically from off the floor of the Exchange. See Phlx Rule 1014(b)(ii)(B). E:\FR\FM\24JNN1.SGM 24JNN1 emcdonald on DSK2BSOYB1PROD with NOTICES Federal Register / Vol. 75, No. 121 / Thursday, June 24, 2010 / Notices RSQTs that receive Directed Orders.8 The proposed amendment to Rule 1080(l)(i)(A) is intended to clarify that Rule 1080(1)(i)(A) does not limit Directed Orders to public customer orders. The Exchange notes that other exchanges’ Directed Orders rules do not limit Directed Orders to public customer orders.9 Currently, the term ‘‘Directed Order’’ is defined in Rule 1080(l)(i)(A) as ‘‘any customer order (other than a stop or stop-limit order as defined in Rule 1066) to buy or sell which has been directed to a particular specialist, RSQT, or SQT by an Order Flow Provider * * *’’ The Exchange proposes to remove the word ‘‘customer’’ from this definition to avoid any suggestion that Directed Orders are limited to orders of ‘‘public’’ customers. Directed Orders can be broker-dealer orders as well as public customer orders. Rule 1080(b)(i)(A) provides in relevant part that ‘‘[f]or purposes of Exchange options trading, an agency order is any order entered on behalf of a public customer, and does not include any order entered for the account of a broker-dealer, or any account in which a broker-dealer or an associated person of a broker-dealer has any direct or indirect interest.’’ In adopting the Directed Order program, the Exchange did not limit Directed Orders to agency orders as defined in Rule 1080(b)(i)(A). The Exchange believes, however, that use of the word ‘‘customer’’ in the definition of Directed Order is potentially confusing and unnecessary and is therefore deleting it. For the same reason, the modifier ‘‘customer’’ is deleted before the word ‘‘order’’ in the definition of Order Flow Provider in Rule 1080(l)(i)(B). Accordingly, this change clarifies that Directed Orders can be sent not only on behalf of public customers but also on behalf of broker dealers. Directed Orders are limited to orders sent on an agency basis by Order Flow Providers and not on behalf of the sender’s proprietary account. Currently, Rule 1080(b)(i)(C) provides that certain ‘‘off-floor broker-dealer’’ limit orders may be entered into Phlx XL. The rule currently defines ‘‘off-floor broker-dealer’’ as a broker-dealer that delivers orders from off the floor of the Exchange for the proprietary account(s) of such broker-dealer. Rule 1080(b)(i)(C) is being revised to specify that orders for an off-floor broker-dealer’s proprietary account may be entered into Phlx XL by 8 See Securities Exchange Act Release No. 51759 (May 27, 2005), 70 FR 32860 (June 6, 2005). See also Phlx Rule 1014(g)(viii) (setting forth the automatic trade allocation algorithm for Directed Orders). 9 See, e.g., NYSE Amex Rule 900.3NY(s), NYSE Arca Rule 6.62(z) and ISE Rule 811(a)(1). VerDate Mar<15>2010 16:47 Jun 23, 2010 Jkt 220001 an agent, on behalf of the off-floor broker-dealer as well as by the off-floor broker-dealer itself. This situation occurs, for example, where the off-floor broker-dealer is not itself a Phlx member and uses a Phlx member for execution of its proprietary orders on Phlx. Rule 1080(b)(i) lists the types of orders that are eligible for entry into the Phlx XL trading system by various categories of market participants. The Exchange is proposing to add openingonly-market orders to the list of agency orders eligible for entry into the system in Rule 1080(b)(i)(A).10 It also proposes to add limit-on-opening orders to each of the lists of eligible orders that market participants are permitted to enter in Rules 1080(b)(i)(A), (B) and(C). ‘‘Limiton-Opening Order’’ would be defined in new Section 9 of Rule 1066(c) as meaning a limit order which is to be executed in whole or in part during the opening rotation of an options series or not at all. Phlx notes that at least one other options exchange already accepts opening only limit and market orders.11 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 12 in general, and furthers the objectives of Section 6(b)(5) of the Act 13 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 permitting the Exchange to modify its rules relating to Directed Orders and eligible orders for the benefit of investors. 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. 10 Rule 1066(c)(5) provides that ‘‘[a]n openingonly-market order is a market order which is to be executed in whole or in part during the opening rotation of an options series or not at all.’’ 11 See NYSE Arca Rule 6.62(r) which defines an ‘‘Opening Only Order’’ as ‘‘a market order or limit order which is to be executed in whole or in part during the opening auction of an options series or not at all. Any portion not so executed is to be treated as cancelled.’’ 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(5). PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 36133 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 rule 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, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 14 and Rule 19b–4(f)(6) thereunder.15 At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate 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. 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 (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rule-comments@sec.gov. Please include File Number SR–Phlx–2010–83 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–Phlx-2010–83. This file number should be included on the 14 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). Rule 19b–4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its 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. 15 17 E:\FR\FM\24JNN1.SGM 24JNN1 36134 Federal Register / Vol. 75, No. 121 / Thursday, June 24, 2010 / Notices subject line if e-mail 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 (https://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, on official business days between the hours of 10 a.m. and 3 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–2010–83 and should be submitted on or before July 15, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–15267 Filed 6–23–10; 8:45 am] BILLING CODE 8010–01–P 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. (ii) Market Maker Plus; 4 (iii) Non-ISE Market Maker; 5 (iv) Firm Proprietary; (v) Customer (Professional); 6 (vi) Priority Customer,7 100 or more contracts; and (vii) Priority Customer, less than 100 contracts.8 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Current Transaction Charges for Adding and Removing Liquidity The ISE is proposing to amend its Schedule of Fees in order to increase the number of options classes to be included in the Exchange’s current schedule of transaction fees and rebates for adding and removing liquidity. The text of the proposed rule change is available on the Exchange’s Web site (https://www.ise.com), at the principal office of the Exchange, at the Commission’s Public Reference Room, and on the Commission’s Web site at https://www.sec.gov. 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 self-regulatory organization 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 self-regulatory organization 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 SECURITIES AND EXCHANGE COMMISSION 1. Purpose [Release No. 34–62319; File No. SR–ISE– 2010–57] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Fees and Rebates for Adding and Removing Liquidity The Exchange proposes to increase liquidity and attract order flow by amending its transaction fees and rebates for adding and removing liquidity (‘‘maker/taker fees’’).3 The Exchange’s maker/taker fees currently apply to the following categories of market participants: (i) Market Maker; emcdonald on DSK2BSOYB1PROD with NOTICES June 17, 2010. 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 June 1, 2010, the International Securities Exchange, LLC (the ‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule 16 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 16:47 Jun 23, 2010 Jkt 220001 3 These fees are similar to the ‘‘maker/taker’’ fees currently assessed by NASDAQ OMX PHLX (‘‘PHLX’’). PHLX currently charges a fee for removing liquidity to the following class of market participants: (i) Customer, (ii) Directed Participant, (iii) Specialist, ROT, SQT and RSQT, (iv) Firm, (v) Broker-Dealer, and (vi) Professional. PHLX also provides a rebate for adding liquidity to the following class of market participants: (i) Customer, (ii) Directed Participant, (iii) Specialist, ROT, SQT and RSQT, and (iv) Professional. See Securities Exchange Act Release Nos. 61684 (March 10, 2010), 75 FR 13189 (March 18, 2010); 61932 (April 16, 2010), 75 FR 21375 (April 23, 2010); and 61961 (April 22, 2010), 75 FR 22881 (April 30, 2010). PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 The Exchange currently assesses a per contract transaction charge to market participants that remove, or ‘‘take,’’ liquidity from the Exchange in the following 20 options classes: PowerShares QQQ trust (‘‘QQQQ’’), Bank of America Corporation (‘‘BAC’’), Citigroup, Inc. (‘‘C’’), Standard and Poor’s Depositary Receipts/SPDRs (‘‘SPY’’), iShares Russell 2000 (‘‘IWM’’), Financial Select Sector SPDR (‘‘XLF’’), Apple, Inc. (‘‘AAPL’’), General Electric Company (‘‘GE’’), JPMorgan Chase & Co. (‘‘JPM’’), Intel Corporation (‘‘INTC’’), Goldman Sachs Group, Inc. (‘‘GS’’), Research in Motion Limited (‘‘RIMM’’), AT&T, Inc. (‘‘T’’), Verizon 4 A Market Maker Plus is a market maker who is on the National Best Bid or National Best Offer 80% of the time in that symbol during the current trading month for series trading between $0.03 and $5.00 in premium. The Exchange determines whether a market maker qualifies as a Market Maker Plus at the end of each month by looking back at each market maker’s quoting statistics during that month. If at the end of the month, a market maker meets the 80% criteria, the Exchange rebates $0.10 per contract for transactions executed by that market maker during that month. The Exchange provides market makers a report on a daily basis with quoting statistics so that market makers can determine whether or not they are meeting the 80% criteria. On May 26, 2010, the Exchange submitted a proposed rule change, SR–ISE–2010–54, to be effective on June 1, 2010, to amend the qualification standards for market makers to receive the $0.10 per contract rebate. Pursuant to that proposed rule change, a market maker must be on the National Best Bid or National Best Offer 80% of the time for series trading between $0.03 and $5.00 in premium in each of the front two expiration months and 80% of the time for all series trading between $0.03 and $5.00 in order to receive the rebate. 5 A Non-ISE Market Maker, or Far Away Market Maker (‘‘FARMM’’), is a market maker as defined in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended (‘‘Exchange Act’’), registered in the same options class on another options exchange. 6 A Customer (Professional) is a person who is not a broker/dealer and is not a Priority Customer. 7 A Priority Customer is defined in ISE Rule 100(a)(37A) as a person or entity that is not a broker/dealer in securities, and does not place more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). 8 The Chicago Board Options Exchange (‘‘CBOE’’) currently makes a similar distinction between large size customer orders that are fee liable and small size customer orders whose fees are waived. CBOE currently waives fees for customer orders of 99 contracts or less in options on exchange-traded funds (‘‘ETFs’’) and Holding Company Depositary Receipts (‘‘HOLDRs’’) and charges a transaction fee for customer orders that exceed 99 contracts. See Securities Exchange Act Release No. 59892 (May 8, 2009), 74 FR 22790 (May 14, 2009). E:\FR\FM\24JNN1.SGM 24JNN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 75, Number 121 (Thursday, June 24, 2010)]
[Notices]
[Pages 36132-36134]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-15267]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62320; File No. SR-Phlx-2010-83]


Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
Its Rules Relating to Directed Orders and Eligible Orders

June 17, 2010.
    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 June 14, 2010, NASDAQ OMX PHLX, Inc. (``Phlx'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Exchange filed the proposed 
rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and 
Rule 19b-4(f)(6) thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to clarify the definition of ``Directed 
Order'' in Rule 1080(l)(i)(A) by removing the limiting word 
``customer'' before the word ``order.'' A conforming change to the 
definition of ``Order Flow Provider'' is proposed to be made in Rule 
1080(l)(i)(B). Second, amendments to Rule 1080(b)(i)(C) are proposed 
which specify that orders for the account of an off-floor broker dealer 
may be entered into the Exchange's enhanced electronic trading platform 
for options, Phlx XL,\5\ by an agent of the off-floor broker dealer. 
Third, the Exchange is adding opening-only-market orders and limit on 
opening orders to the list of eligible orders in Rule 1080(b)(i), as 
order types eligible for entry into the trading system. The Exchange 
proposes to add a definition of limit on opening order to Rule 1066.
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    \5\ See Securities Exchange Act Release No. 59995 (May 28, 
2009), 74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32).
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    The text of the proposed rule change is available on the Exchange's 
Internet Web site at https://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings, on the Commission's Internet Web site at 
https://www.sec.gov, 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 self-regulatory organization 
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 those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In May 2005 the Exchange adopted rules for Phlx XL that permit 
Exchange specialists, Streaming Quote Traders (``SQTs''),\6\ and Remote 
Streaming Quote Traders (``RSQTs'') \7\ to receive Directed Orders, and 
to provide a participation guarantee to specialists, SQTs and

[[Page 36133]]

RSQTs that receive Directed Orders.\8\ The proposed amendment to Rule 
1080(l)(i)(A) is intended to clarify that Rule 1080(1)(i)(A) does not 
limit Directed Orders to public customer orders. The Exchange notes 
that other exchanges' Directed Orders rules do not limit Directed 
Orders to public customer orders.\9\
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    \6\ An SQT is an Exchange Registered Options Trader (``ROT'') 
who has received permission from the Exchange to generate and submit 
option quotations electronically through Phlx XL in eligible options 
to which such SQT is assigned. An SQT may only submit such 
quotations while such SQT is physically present on the floor of the 
Exchange. See Phlx Rule 1014(b)(ii)(A).
    \7\ An RSQT is an ROT that is a member or member organization 
with no physical trading floor presence who has received permission 
from the Exchange to generate and submit option quotations 
electronically through Phlx XL in eligible options to which such 
RSQT has been assigned. An RSQT may only submit such quotations 
electronically from off the floor of the Exchange. See Phlx Rule 
1014(b)(ii)(B).
    \8\ See Securities Exchange Act Release No. 51759 (May 27, 
2005), 70 FR 32860 (June 6, 2005). See also Phlx Rule 1014(g)(viii) 
(setting forth the automatic trade allocation algorithm for Directed 
Orders).
    \9\ See, e.g., NYSE Amex Rule 900.3NY(s), NYSE Arca Rule 6.62(z) 
and ISE Rule 811(a)(1).
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    Currently, the term ``Directed Order'' is defined in Rule 
1080(l)(i)(A) as ``any customer order (other than a stop or stop-limit 
order as defined in Rule 1066) to buy or sell which has been directed 
to a particular specialist, RSQT, or SQT by an Order Flow Provider * * 
*'' The Exchange proposes to remove the word ``customer'' from this 
definition to avoid any suggestion that Directed Orders are limited to 
orders of ``public'' customers. Directed Orders can be broker-dealer 
orders as well as public customer orders.
    Rule 1080(b)(i)(A) provides in relevant part that ``[f]or purposes 
of Exchange options trading, an agency order is any order entered on 
behalf of a public customer, and does not include any order entered for 
the account of a broker-dealer, or any account in which a broker-dealer 
or an associated person of a broker-dealer has any direct or indirect 
interest.'' In adopting the Directed Order program, the Exchange did 
not limit Directed Orders to agency orders as defined in Rule 
1080(b)(i)(A). The Exchange believes, however, that use of the word 
``customer'' in the definition of Directed Order is potentially 
confusing and unnecessary and is therefore deleting it. For the same 
reason, the modifier ``customer'' is deleted before the word ``order'' 
in the definition of Order Flow Provider in Rule 1080(l)(i)(B). 
Accordingly, this change clarifies that Directed Orders can be sent not 
only on behalf of public customers but also on behalf of broker 
dealers. Directed Orders are limited to orders sent on an agency basis 
by Order Flow Providers and not on behalf of the sender's proprietary 
account.
    Currently, Rule 1080(b)(i)(C) provides that certain ``off-floor 
broker-dealer'' limit orders may be entered into Phlx XL. The rule 
currently defines ``off-floor broker-dealer'' as a broker-dealer that 
delivers orders from off the floor of the Exchange for the proprietary 
account(s) of such broker-dealer. Rule 1080(b)(i)(C) is being revised 
to specify that orders for an off-floor broker-dealer's proprietary 
account may be entered into Phlx XL by an agent, on behalf of the off-
floor broker-dealer as well as by the off-floor broker-dealer itself. 
This situation occurs, for example, where the off-floor broker-dealer 
is not itself a Phlx member and uses a Phlx member for execution of its 
proprietary orders on Phlx.
    Rule 1080(b)(i) lists the types of orders that are eligible for 
entry into the Phlx XL trading system by various categories of market 
participants. The Exchange is proposing to add opening-only-market 
orders to the list of agency orders eligible for entry into the system 
in Rule 1080(b)(i)(A).\10\ It also proposes to add limit-on-opening 
orders to each of the lists of eligible orders that market participants 
are permitted to enter in Rules 1080(b)(i)(A), (B) and(C). ``Limit-on-
Opening Order'' would be defined in new Section 9 of Rule 1066(c) as 
meaning a limit order which is to be executed in whole or in part 
during the opening rotation of an options series or not at all. Phlx 
notes that at least one other options exchange already accepts opening 
only limit and market orders.\11\
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    \10\ Rule 1066(c)(5) provides that ``[a]n opening-only-market 
order is a market order which is to be executed in whole or in part 
during the opening rotation of an options series or not at all.''
    \11\ See NYSE Arca Rule 6.62(r) which defines an ``Opening Only 
Order'' as ``a market order or limit order which is to be executed 
in whole or in part during the opening auction of an options series 
or not at all. Any portion not so executed is to be treated as 
cancelled.''
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \12\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \13\ 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 permitting the Exchange to modify its rules relating to 
Directed Orders and eligible orders for the benefit of investors.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 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.

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 rule 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, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-4(f)(6) 
thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). Rule 19b-4(f)(6)(iii) requires a 
self-regulatory organization to give the Commission written notice 
of its 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.
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission may summarily abrogate 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.

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 (https://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2010-83 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2010-83. This file 
number should be included on the

[[Page 36134]]

subject line if e-mail 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 
(https://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, on official business days between the hours of 10 a.m. 
and 3 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-2010-83 and should be 
submitted on or before July 15, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-15267 Filed 6-23-10; 8:45 am]
BILLING CODE 8010-01-P

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