Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC Relating to Member and Member Organization Participation, 48195-48197 [2011-19991]
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Federal Register / Vol. 76, No. 152 / Monday, August 8, 2011 / Notices
responding to customer requests,
configuring NASDAQ’s systems,
programming to user specifications, and
administering the service, among other
things, and may provide NASDAQ with
a profit to the extent costs are covered.
NASDAQ also believes that the
proposed rule change is consistent with
the provisions of Section 6(b)(5) of the
Act 7 because it is designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in facilitating transactions in securities,
and to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system. PRM is designed to assist
member firms in avoiding entry of
erroneous orders by screening out those
that exceed pre-determined limits,
which otherwise may harm both the
member firm and the quality of the
markets. As such, PRM is an important
compliance tool that members may use
to help maintain the regulatory integrity
of the markets. NASDAQ believes that
the amendments to the fees assessed for
PRM and its services may encourage
more member firms to subscribe to this
useful compliance tool.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
NASDAQ does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
mstockstill on DSK4VPTVN1PROD with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act 8 and
subparagraph (f)(2) of Rule 19b-4
thereunder.9 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
7 15
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(3)(a)(ii).
9 17 CFR 240.19b–4(f)(2).
8 15
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18:57 Aug 05, 2011
Jkt 223001
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2011–099 on the
subject line.
48195
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–20008 Filed 8–5–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65010; File No. SR–Phlx–
2011–100]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NASDAQ
OMX PHLX LLC Relating to Member
and Member Organization Participation
August 2, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1, and Rule 19b–4 2 thereunder,
• Send paper comments in triplicate
notice is hereby given that on July 26,
to Elizabeth M. Murphy, Secretary,
2011, NASDAQ OMX PHLX LLC
Securities and Exchange Commission,
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the
100 F Street, NE., Washington, DC
Securities and Exchange Commission
20549–1090.
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
All submissions should refer to File
and III, below, which Items have been
Number SR–NASDAQ–2011–099. This
prepared by the Exchange. The
file number should be included on the
subject line if e-mail is used. To help the Commission is publishing this notice to
solicit comments on the proposed rule
Commission process and review your
change from interested persons.
comments more efficiently, please use
only one method. The Commission will I. Self-Regulatory Organization’s
post all comments on the Commission’s Statement of the Terms of Substance of
Internet Web site (https://www.sec.gov/
the Proposed Rule Change
rules/sro.shtml). Copies of the
The Exchange proposes to apply
submission, all subsequent
Exchange Rule 3211 entitled ‘‘PSX
amendments, all written statements
Participant Registration’’ to members
with respect to the proposed rule
and member organizations conducting
change that are filed with the
an options business.
Commission, and all written
The text of the proposed rule change
communications relating to the
is available on the Exchange’s Web site
proposed rule change between the
Commission and any person, other than at https://www.nasdaqtrader.com/
micro.aspx?id=PHLXRulefilings, at the
those that may be withheld from the
principal office of the Exchange, and at
public in accordance with the
the Commission’s Public Reference
provisions of 5 U.S.C. 552, will be
Room.
available for Web site viewing and
printing in the Commission’s Public
II. Self-Regulatory Organization’s
Reference Room, 100 F Street, NE.,
Statement of the Purpose of, and
Washington, DC 20549, on official
Statutory Basis for, the Proposed Rule
business days between the hours of 10
Change
a.m. and 3 p.m. Copies of the filing also
In its filing with the Commission, the
will be available for inspection and
Exchange included statements
copying at the principal office of the
concerning the purpose of and basis for
Exchange. All comments received will
the proposed rule change and discussed
be posted without change; the
any comments it received on the
Commission does not edit personal
proposed rule change. The text of these
identifying information from
statements may be examined at the
submissions. You should submit only
places specified in Item IV below. The
information that you wish to make
Exchange has prepared summaries, set
available publicly. All submissions
should refer to File Number SR–
10 17 CFR 200.30–3(a)(12).
NASDAQ–2011–099 and should be
1 15 U.S.C. 78s(b)(1).
submitted on or before August 29, 2011.
2 17 CFR 240.19b–4.
Paper Comments
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48196
Federal Register / Vol. 76, No. 152 / Monday, August 8, 2011 / Notices
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
mstockstill on DSK4VPTVN1PROD with NOTICES
The purpose of the proposed rule
change is to apply Exchange Rule 3211,
entitled ‘‘PSX Participant Registration’’
to members and member organizations
transacting options. The Exchange
proposes to clearly specify requirements
for all members and member
organizations to access the Exchange’s
trading system.
The Exchange currently requires PSX
Participants to comply with certain
requirements to access the Exchange’s
trading system as specified in Exchange
Rule 3211.3 The Exchange proposes to
apply substantially the same
requirements in new Exchange Rule 911
to members and member organizations
transacting options, by eliminating
paragraphs (a) through (c) in Exchange
Rule 3211, located in the PSX Rules,
and adopting new Exchange Rule 911,
which is proposed to be located in the
Rules of the Exchange, and making it
applicable to all members of the
Exchange. The Exchange proposes to
add new Exchange Rule 911 to the list
of Rules in Exchange Rule 3202, entitled
‘‘Application of Other Rules of the
Exchange,’’ so that paragraphs (a)
through (c) in Exchange Rule 911 would
continue to apply to PSX Participants.
Also, the Exchange proposes to rename
Exchange Rule 3211 ‘‘Sponsored
Participants’’ to accurately reflect the
substance of the remaining language in
3211(d), which the Exchange would
rename as paragraph ‘‘a’’ to reflect the
removal of the previous paragraphs.
Today, the Exchange’s trading system
is accessible to all Exchange members
and member organizations, transacting
equities or options, that meet the
registration, qualification and other
membership requirements set forth in
the Exchange Rules. The Exchange’s
trading system, for purposes of this Rule
911, shall include NASDAQ OMX PSX
(‘‘PSX’’),4 PHLX XL® 5 and the Floor
3 See Exchange Rule 3211 entitled ‘‘PSX
Participant Registration,’’ which is applicable to
PSX Participants.
4 PSX is a cash equities electronic trading
platform. Specifically, PSX is an open-access fully
electronic integrated order display and execution
system for NMS stocks.
5 PHLX XL® is the Exchange’s automated options
trading system. This proposal refers to ‘‘PHLX XL’’
as the Exchange’s automated options trading
system. In May 2009 the Exchange enhanced the
system and adopted corresponding rules referring to
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18:57 Aug 05, 2011
Jkt 223001
Broker Management System (‘‘FBMS’’),6
(collectively ‘‘System’’).7
Specifically, the Exchange proposes to
apply the provisions of new proposed
Rule 911 to options members and
member organizations. The provisions
in section (a) are clarifying amendments
as options members are required to
comply with these provisions today. For
example, the obligation to register in
paragraph (a) and to execute all
applicable agreements applies today to
option members.8 The requirement to
have a membership in or arrangement
with a clearing agency also applies
today to option members.9 Compliance
with all applicable Rules and
procedures is specified in By-Law
Article VI, Section 6–1 entitled ‘‘Rights
and Privileges’’ and Section 6–12
entitled ‘‘Dealing on the Exchange,’’
which By-Laws apply to all Exchange
members.10 The maintenance of
physical security of the equipment
located on the premises of the member
or member organization and improper
use of the Exchange’s System is also
currently enumerated in the Rules
which are applicable to options
members.11 The acceptance and
settlement of trades effected by a
member or member organization is
delineated in the Rules today and
applicable to option members.12 The
the system as ‘‘Phlx XL II.’’ See Securities Exchange
Act Release No. 59995 (May 28, 2009), 74 FR 26750
(June 3, 2009) (SR–Phlx–2009–32). The Exchange
intends to submit a separate technical proposed
rule change that would change all references to the
system from ‘‘Phlx XL II’’ to ‘‘PHLX XL’’ for
branding purposes.
6 FBMS is designed to enable floor brokers and/
or their employees to enter, route, and report
transactions stemming from options orders received
on the Exchange. FBMS also is designed to establish
an electronic audit trail for options orders
represented and executed by floor brokers on the
Exchange. See Exchange Rule 1080, commentary
.06
7 PSX Participants are not subject to this Rule, but
are subject to Exchange Rule 3211. See Exchange
Rule 3211.
8 See Exchange Rules 600 (Registration), 604
(Registration and Termination of Registered
Persons), 620 (Trading Floor Registration), 640
(Continuing Education for Registered Persons), 901
(Denials of and Conditions to Membership), Rule
908 (Rights and Privileges of A–1 Permits) and Rule
910 (Qualification as Member Organization), among
other Rules.
9 See Exchange Rule 59 (Deliveries through
Registered Clearing Agencies).
10 See also Exchange Rule 1080 (Phlx XL and
PHLX XL II) describes PHLX XL and the obligations
of options members.
11 See Exchange By-Law Article VI, Section 6–3
(Use of Facilities of Exchange), Rule 606
(Communication and Equipment), Option Floor
Procedure Advice F–31 (Communications and
Equipment), By-Law Article VII, Sec. 7–3
(Membership Qualifications) and Exchange Rule
1080 (Phlx XL and PHLX XL II) describes PHLX XL
and the obligations of options members.
12 See Exchange Rules 1035 (Acceptance of Bid or
Offer), 1044 (Delivery and Payment) and 1052
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input of accurate information into the
Exchange’s System 13 and the effective
date of a member or member
organization’s registration, are described
in the Rules regarding registration of
members and member organizations,
which are applicable to option
members.14
The member and member
organization’s continuing obligation to
report any noncompliance with
registration requirements is inferred
today in the Exchange’s Rules.15 The
Exchange believes that this provision in
section (b) of proposed Rule 911 should
be equally applied to option members as
it is currently applicable to PSX
Participants today.
Finally, the provision in section (c) to
impose temporary restrictions upon the
automated entry or updating of orders or
quotes/orders as the Exchange may
determine is not currently applicable to
options members but only PSX members
today. The Exchange is proposing to
apply this provision to options members
in order that the Exchange uniformly
may apply its rules regarding System
access to all members of the Exchange.
The Exchange believes that this
provision of the proposed Rule is
necessary to protect the integrity of the
Exchange’s systems. For example, such
temporary restrictions may be necessary
to address a system problem at a
particular member or member
organization or at the Exchange, or an
unexpected period of extremely high
message traffic. The scope of any such
restrictions shall be communicated to
the affected options member or member
organization in writing.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 16 in general, and furthers the
objectives of Section 6(b)(5) of the Act 17
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
(Responsibility of Clearing Options Members for
Exchange Options Transactions). These Rules are
applicable to options members today.
13 See Exchange Rule 1053 (Filing Of Trade
Information), 1055 (Reporting of Compared Trades
to Options Clearing Corporation) and 1063
(Responsibilities of Floor Brokers). These Rules are
applicable to options members today.
14 See Exchange Rules 600 (Registration), 604
(Registration and Termination of Registered
Persons) and 620 (Trading Floor Registration).
These Rules are applicable to options members
today.
15 See Exchange Rule 908 (Rights and Privileges
of A–1 Permits) which provides that permit holders
must abide by the By-Laws and Rules of the
Exchange.
16 15 U.S.C. 78f(b).
17 15 U.S.C. 78f(b)(5).
E:\FR\FM\08AUN1.SGM
08AUN1
Federal Register / Vol. 76, No. 152 / Monday, August 8, 2011 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
open market and a national market
system, and, in general to protect
investors and the public interest, by
further clarifying the Exchange’s Rules
with respect to its members and member
organizations transacting options. The
Exchange believes that equally applying
the rule to both options members and
member organizations and PSX
Participants further protects the public
interest.
The Exchange believes that this
proposed rule would, in part, clarify the
obligations of an option member or
member organization with respect to the
provisions in section (a)(1) through (6)
of the proposed Rule. As specified
herein, the Exchange believes that
option members today are subject to
these requirements and the proposal
merely serves to clarify these obligations
in a single Rule. These requirements in
section (a) of the proposed rule seek to
ensure that the option members and
member organizations are required to
maintain certain standards to protect the
integrity of the Exchange’s systems, as is
the case today for PSX Participants.
The Exchange believes that an options
member and member organization’s
continuing obligation to report any
noncompliance with registration
requirements is inferred in the Rules
today as described herein. The
application of proposed Rule 911 to
option members would adopt a clear
Rule for option members regarding their
obligation to report noncompliance with
any registration requirement, as is the
case today for PSX Participants. The
Exchange believes this provision is
instrumental in assisting the Exchange
with its regulatory responsibilities.
Finally, the Exchange proposes to add
a new provision, that it may impose
temporary restrictions upon the
automated entry or updating of orders or
quotes/orders as the Exchange may
determine to be necessary to protect the
integrity of the Exchange’s systems, for
option members. This provision is
applicable today to PSX Participants.
The Exchange believes that this ability
to impose a temporary restriction upon
members and member organizations
transacting options would assist the
Exchange in maintaining the integrity of
the market and protecting investors and
the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
18:57 Aug 05, 2011
Jkt 223001
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 after the date of
the filing, or such shorter time as the
Commission may designate, it has
become effective pursuant to 19(b)(3)(A)
of the Act 18 and Rule 19b–4(f)(6) 19
thereunder.
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Phlx–2011–100 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.
18 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
19 17
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.
VerDate Mar<15>2010
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
PO 00000
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48197
All submissions should refer to File
Number SR–Phlx–2011–100. 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 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–
2011–100 and should be submitted on
or before August 29, 2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–19991 Filed 8–5–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65015; File No. SR–
MSRB–2011–08]
Self-Regulatory Organizations;
Municipal Securities Rulemaking
Board; Notice of Filing of Proposed
New Rule A–11, on Municipal Advisor
Assessments, and New Form A–11–
Interim
August 2, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
20 17
E:\FR\FM\08AUN1.SGM
CFR 200.30–3(a)(12).
08AUN1
Agencies
[Federal Register Volume 76, Number 152 (Monday, August 8, 2011)]
[Notices]
[Pages 48195-48197]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-19991]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65010; File No. SR-Phlx-2011-100]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC Relating
to Member and Member Organization Participation
August 2, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given
that on July 26, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III, below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\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 apply Exchange Rule 3211 entitled ``PSX
Participant Registration'' to members and member organizations
conducting an options business.
The text of the proposed rule change is available on the Exchange's
Web site at https://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings,
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
[[Page 48196]]
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 apply Exchange Rule
3211, entitled ``PSX Participant Registration'' to members and member
organizations transacting options. The Exchange proposes to clearly
specify requirements for all members and member organizations to access
the Exchange's trading system.
The Exchange currently requires PSX Participants to comply with
certain requirements to access the Exchange's trading system as
specified in Exchange Rule 3211.\3\ The Exchange proposes to apply
substantially the same requirements in new Exchange Rule 911 to members
and member organizations transacting options, by eliminating paragraphs
(a) through (c) in Exchange Rule 3211, located in the PSX Rules, and
adopting new Exchange Rule 911, which is proposed to be located in the
Rules of the Exchange, and making it applicable to all members of the
Exchange. The Exchange proposes to add new Exchange Rule 911 to the
list of Rules in Exchange Rule 3202, entitled ``Application of Other
Rules of the Exchange,'' so that paragraphs (a) through (c) in Exchange
Rule 911 would continue to apply to PSX Participants. Also, the
Exchange proposes to rename Exchange Rule 3211 ``Sponsored
Participants'' to accurately reflect the substance of the remaining
language in 3211(d), which the Exchange would rename as paragraph ``a''
to reflect the removal of the previous paragraphs.
---------------------------------------------------------------------------
\3\ See Exchange Rule 3211 entitled ``PSX Participant
Registration,'' which is applicable to PSX Participants.
---------------------------------------------------------------------------
Today, the Exchange's trading system is accessible to all Exchange
members and member organizations, transacting equities or options, that
meet the registration, qualification and other membership requirements
set forth in the Exchange Rules. The Exchange's trading system, for
purposes of this Rule 911, shall include NASDAQ OMX PSX (``PSX''),\4\
PHLX XL[supreg] \5\ and the Floor Broker Management System
(``FBMS''),\6\ (collectively ``System'').\7\
---------------------------------------------------------------------------
\4\ PSX is a cash equities electronic trading platform.
Specifically, PSX is an open-access fully electronic integrated
order display and execution system for NMS stocks.
\5\ PHLX XL[supreg] is the Exchange's automated options trading
system. This proposal refers to ``PHLX XL'' as the Exchange's
automated options trading system. In May 2009 the Exchange enhanced
the system and adopted corresponding rules referring to the system
as ``Phlx XL II.'' See Securities Exchange Act Release No. 59995
(May 28, 2009), 74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32). The
Exchange intends to submit a separate technical proposed rule change
that would change all references to the system from ``Phlx XL II''
to ``PHLX XL'' for branding purposes.
\6\ FBMS is designed to enable floor brokers and/or their
employees to enter, route, and report transactions stemming from
options orders received on the Exchange. FBMS also is designed to
establish an electronic audit trail for options orders represented
and executed by floor brokers on the Exchange. See Exchange Rule
1080, commentary .06
\7\ PSX Participants are not subject to this Rule, but are
subject to Exchange Rule 3211. See Exchange Rule 3211.
---------------------------------------------------------------------------
Specifically, the Exchange proposes to apply the provisions of new
proposed Rule 911 to options members and member organizations. The
provisions in section (a) are clarifying amendments as options members
are required to comply with these provisions today. For example, the
obligation to register in paragraph (a) and to execute all applicable
agreements applies today to option members.\8\ The requirement to have
a membership in or arrangement with a clearing agency also applies
today to option members.\9\ Compliance with all applicable Rules and
procedures is specified in By-Law Article VI, Section 6-1 entitled
``Rights and Privileges'' and Section 6-12 entitled ``Dealing on the
Exchange,'' which By-Laws apply to all Exchange members.\10\ The
maintenance of physical security of the equipment located on the
premises of the member or member organization and improper use of the
Exchange's System is also currently enumerated in the Rules which are
applicable to options members.\11\ The acceptance and settlement of
trades effected by a member or member organization is delineated in the
Rules today and applicable to option members.\12\ The input of accurate
information into the Exchange's System \13\ and the effective date of a
member or member organization's registration, are described in the
Rules regarding registration of members and member organizations, which
are applicable to option members.\14\
---------------------------------------------------------------------------
\8\ See Exchange Rules 600 (Registration), 604 (Registration and
Termination of Registered Persons), 620 (Trading Floor
Registration), 640 (Continuing Education for Registered Persons),
901 (Denials of and Conditions to Membership), Rule 908 (Rights and
Privileges of A-1 Permits) and Rule 910 (Qualification as Member
Organization), among other Rules.
\9\ See Exchange Rule 59 (Deliveries through Registered Clearing
Agencies).
\10\ See also Exchange Rule 1080 (Phlx XL and PHLX XL II)
describes PHLX XL and the obligations of options members.
\11\ See Exchange By-Law Article VI, Section 6-3 (Use of
Facilities of Exchange), Rule 606 (Communication and Equipment),
Option Floor Procedure Advice F-31 (Communications and Equipment),
By-Law Article VII, Sec. 7-3 (Membership Qualifications) and
Exchange Rule 1080 (Phlx XL and PHLX XL II) describes PHLX XL and
the obligations of options members.
\12\ See Exchange Rules 1035 (Acceptance of Bid or Offer), 1044
(Delivery and Payment) and 1052 (Responsibility of Clearing Options
Members for Exchange Options Transactions). These Rules are
applicable to options members today.
\13\ See Exchange Rule 1053 (Filing Of Trade Information), 1055
(Reporting of Compared Trades to Options Clearing Corporation) and
1063 (Responsibilities of Floor Brokers). These Rules are applicable
to options members today.
\14\ See Exchange Rules 600 (Registration), 604 (Registration
and Termination of Registered Persons) and 620 (Trading Floor
Registration). These Rules are applicable to options members today.
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The member and member organization's continuing obligation to
report any noncompliance with registration requirements is inferred
today in the Exchange's Rules.\15\ The Exchange believes that this
provision in section (b) of proposed Rule 911 should be equally applied
to option members as it is currently applicable to PSX Participants
today.
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\15\ See Exchange Rule 908 (Rights and Privileges of A-1
Permits) which provides that permit holders must abide by the By-
Laws and Rules of the Exchange.
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Finally, the provision in section (c) to impose temporary
restrictions upon the automated entry or updating of orders or quotes/
orders as the Exchange may determine is not currently applicable to
options members but only PSX members today. The Exchange is proposing
to apply this provision to options members in order that the Exchange
uniformly may apply its rules regarding System access to all members of
the Exchange. The Exchange believes that this provision of the proposed
Rule is necessary to protect the integrity of the Exchange's systems.
For example, such temporary restrictions may be necessary to address a
system problem at a particular member or member organization or at the
Exchange, or an unexpected period of extremely high message traffic.
The scope of any such restrictions shall be communicated to the
affected options member or member organization in writing.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \16\ in general, and furthers the objectives of Section
6(b)(5) of the Act \17\ 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
[[Page 48197]]
open market and a national market system, and, in general to protect
investors and the public interest, by further clarifying the Exchange's
Rules with respect to its members and member organizations transacting
options. The Exchange believes that equally applying the rule to both
options members and member organizations and PSX Participants further
protects the public interest.
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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that this proposed rule would, in part,
clarify the obligations of an option member or member organization with
respect to the provisions in section (a)(1) through (6) of the proposed
Rule. As specified herein, the Exchange believes that option members
today are subject to these requirements and the proposal merely serves
to clarify these obligations in a single Rule. These requirements in
section (a) of the proposed rule seek to ensure that the option members
and member organizations are required to maintain certain standards to
protect the integrity of the Exchange's systems, as is the case today
for PSX Participants.
The Exchange believes that an options member and member
organization's continuing obligation to report any noncompliance with
registration requirements is inferred in the Rules today as described
herein. The application of proposed Rule 911 to option members would
adopt a clear Rule for option members regarding their obligation to
report noncompliance with any registration requirement, as is the case
today for PSX Participants. The Exchange believes this provision is
instrumental in assisting the Exchange with its regulatory
responsibilities.
Finally, the Exchange proposes to add a new provision, that it may
impose temporary restrictions upon the automated entry or updating of
orders or quotes/orders as the Exchange may determine to be necessary
to protect the integrity of the Exchange's systems, for option members.
This provision is applicable today to PSX Participants. The Exchange
believes that this ability to impose a temporary restriction upon
members and member organizations transacting options would assist the
Exchange in maintaining the integrity of the market and protecting
investors and the public interest.
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 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 after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act \18\ and Rule 19b-4(f)(6) \19\
thereunder.
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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 (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Phlx-2011-100 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-2011-100. 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 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-2011-100 and should be
submitted on or before August 29, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-19991 Filed 8-5-11; 8:45 am]
BILLING CODE 8011-01-P