Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order Approving Proposed Rule Change Regarding Streaming Quote Traders and Remote Streaming Quote Traders Entering Certain Option Day Limit Orders, 60566-60567 [2011-25071]
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60566
Federal Register / Vol. 76, No. 189 / Thursday, September 29, 2011 / Notices
Commission estimates that the total
annualized cost burden for Form N–PX
is $6.2 million (6,200 responses ×
$1,000 per response = $6,200,000).
The collection of information under
Form N–PX is mandatory. The
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not kept confidential. An agency may
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not required to respond to, a collection
of information unless it displays a
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Written comments are invited on: (a)
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(b) the accuracy of the agency’s estimate
of the burden of the collection of
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quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
Please direct your written comments
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e-mail to: PRA_Mailbox@sec.gov.
Dated: September 23, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–25076 Filed 9–28–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65389; File No. SR–Phlx–
2011–101]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Order
Approving Proposed Rule Change
Regarding Streaming Quote Traders
and Remote Streaming Quote Traders
Entering Certain Option Day Limit
Orders
tkelley on DSKG8SOYB1PROD with NOTICES
September 23, 2011.
I. Introduction
On July 17, 2011, NASDAQ OMX
PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
1 15
U.S.C. 78s(b)(1).
VerDate Mar<15>2010
15:29 Sep 28, 2011
Jkt 223001
19b–4 thereunder,2 a proposed rule
change to allow Streaming Quote
Traders (‘‘SQTs’’) and Remote
Streaming Quote Traders (‘‘RSQTs’’) to
enter day limit orders. The proposed
rule change was published for comment
in the Federal Register on August 11,
2011.3 The Commission received no
comments on the proposal. This order
approves the proposal.
II. Description of the Proposal
The purpose of the proposal is to
amend two subsections of Exchange
Rule 1080 to allow entry of day limit
orders for the proprietary accounts of
SQTs and RSQTs.
Current Rule 1080 (Phlx XL and XL II)
discusses the Exchange’s enhanced
electronic order, trading, and execution
system (the ‘‘electronic interface’’). The
current iteration of the Exchange’s
electronic interface is known as Phlx XL
II.4 Rule 1080 states that it governs the
orders, execution reports and
administrative order messages
transmitted between the offices of
member organizations and the trading
floors of the Exchange. Rule 1080 also
discusses what agency and proprietary
orders are eligible for entry into the
Exchange’s electronic interface.
Subsection (b)(i)(B)(2) states that the
following types of orders for the
proprietary account(s) of SQTs and
RSQTs are eligible for entry via
electronic interface: limit on opening,
IOC, and ISO. Currently, there is no
ability for SQTs and RSQTs to enter day
limit orders in their proprietary
accounts. The proposal allows day limit
orders for the proprietary account(s) of
SQTs and RSQTs to be entered pursuant
to subsection (b)(i)(B)(2). The proposed
change will promote consistency among
ROTs by allowing SQTs and RSQTs to
do what Rule 1080 and Commentary .04
now allow non-SQT ROTs to do: enter
certain day limit orders (10 or more
contracts) in their proprietary accounts.5
Commentary .04 of Rule 1080 states
that orders for the proprietary accounts
of SQTs, RSQTs and non-SQT ROTs
may be entered for delivery via
electronic interface through the use of
2 17
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 65050
(August 5, 2011), 76 FR 49816.
4 See Securities Exchange Act Release No. 59995
(May 28, 2009), 74 FR 26750 (June 3, 2009) (SR–
Phlx–2009–32) (order approving Phlx XL II). Phlx
XL II is the Exchange’s electronic order delivery
and reporting system, which provides for the
automatic entry and routing of Exchange-listed
equity options, index options and U.S. dollarsettled foreign currency options orders to the
Exchange trading floor. Rule 1080(a).
5 For example, subsection (b)(i)(B)(1) allows nonSQTs and specialists to enter certain day limit
orders (10 or more contracts) in their proprietary
accounts.
PO 00000
Frm 00120
Fmt 4703
Sfmt 4703
Exchange approved proprietary systems
of members that interface with the
Exchange’s electronic interface.6
Currently, proprietary non-SQT ROT
orders with a size of less than 10
contracts have to be submitted as IOC
and larger orders may be submitted as
day limit and other order types; while
proprietary SQT and RSQT orders may
only be submitted as IOC.
The Exchange is proposing to put all
the ROTs (SQTs, RSQTs and non-SQT
ROTs) on an equal footing. Specifically,
the Exchange proposes to state in
Commentary .04 that orders for the
proprietary account(s) of SQTs, RSQTs,
and non-SQT ROTs with a size of less
than 10 contracts shall be submitted as
IOC only. Thus, where SQT and RSQT
orders under the current rule could only
be submitted as IOC, the proposed
change to Commentary .04 would allow
these SQTs and RSQTs to enter non IOC
orders (e.g. day orders) in proprietary
accounts if they are for 10 or more
contracts.
III. Discussion
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange 7 and, in particular,
the requirements of Section 6 of the
Act.8 Specifically, the Commission finds
that the proposal is consistent with
Section 6(b)(5) of the Act,9 in that the
proposal has been designed to promote
just and equitable principles of trade,
and to protect investors and the public
interest. The Commission believes that
it is consistent with the Act for SQTs
and RSQTs to enter non IOC orders (e.g.
day orders) in proprietary accounts if
they are for 10 or more contracts. The
Commission believes that allowing
these order types should help to
enhance liquidity on the Exchange. The
Commission notes that SQTs and
RSQTs would still be required to
comply with their electronic quoting
obligations.
IV. Conclusion
It Is Therefore Ordered, pursuant to
Section 19(b)(2) of the Act,10 that the
proposed rule change (SR–PHLX–
20011–101) is approved.
6 Such orders have to be for a minimum of one
(1) contract.
7 The Commission has considered the proposed
rule change’s impact on efficiency, competition and
capital formation. 15 U.S.C. 78c(f).
8 15 U.S.C. 78f.
9 15 U.S.C. 78f(b)(5).
10 15 U.S.C. 78s(b)(2).
E:\FR\FM\29SEN1.SGM
29SEN1
Federal Register / Vol. 76, No. 189 / Thursday, September 29, 2011 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–25071 Filed 9–28–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65388; File No. SR–FINRA–
2011–051]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change To Create an
Exemption From Certain Reporting
Obligations Under the Equity Trade
Reporting Rules for Certain Alternative
Trading Systems
September 23, 2011.
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 16, 2011, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) 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 FINRA. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
tkelley on DSKG8SOYB1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to adopt new
Rules 6183 and 6625 to provide FINRA
with authority to exempt a member
alternative trading system (‘‘ATS’’) that
meets the specified criteria from the
trade reporting obligation under the
equity trade reporting rules. In addition,
FINRA is proposing a conforming
change to Rule 9610 to specify that
FINRA has exemptive authority under
proposed Rules 6183 and 6625.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
office of FINRA and at the
Commission’s Public Reference Room.
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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15:29 Sep 28, 2011
Jkt 223001
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA 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. FINRA 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
FINRA trade reporting rules require
that over-the-counter (‘‘OTC’’)
transactions in equity securities 3
between members be reported to FINRA
by the ‘‘executing party.’’ 4 ‘‘Executing
party’’ is defined as the member that
receives an order for handling or
execution or is presented an order
against its quote, does not subsequently
re-route the order, and executes the
transaction. An ATS, which term
includes electronic communications
networks, is the ‘‘executing party’’ and
has the trade reporting obligation where
the transaction is executed on the ATS.5
FINRA is proposing to adopt new
Rules 6183 and 6625 to provide FINRA
with authority to exempt, upon
application and subject to specified
terms and conditions, a member ATS
from the trade reporting obligation
under certain limited circumstances.
FINRA will only grant an exemption
3 Specifically, these transactions are: (1)
Transactions in NMS stocks, as defined in SEC Rule
600(b) of Regulation NMS, effected otherwise than
on an exchange, which are reported through the
Alternative Display Facility or a Trade Reporting
Facility; and (2) transactions in OTC Equity
Securities and Restricted Equity Securities, as those
terms are defined in Rule 6420, which are reported
through the OTC Reporting Facility.
FINRA notes that the proposed rule change
applies to OTC transactions in equity securities
only. It does not apply to TRACE-eligible securities,
nor does it impact the reporting rules applicable to
transactions in TRACE-eligible securities, which are
subject to a separate reporting structure under the
Rule 6700 Series.
4 See Rules 6282(b), 6380A(b), 6380B(b) and
6622(b). For transactions between a member and a
non-member or customer, the member must report
the trade.
5 See Securities Exchange Act Release No. 58903
(November 5, 2008), 73 FR 67905 (November 17,
2008) (Order Approving File No. SR–FINRA–2008–
011); and Regulatory Notice 09–08 (January 2009).
See also, e.g., Trade Reporting Frequently Asked
Questions, Sections 307 and 308, available at https://
www.finra.org/Industry/Regulation/Guidance/
P038942.
PO 00000
Frm 00121
Fmt 4703
Sfmt 4703
60567
where all of the conditions set forth in
the proposed rule are satisfied.
First, trades must be between ATS
subscribers that are both FINRA
members. For any trades between nonmembers or a FINRA member and a
non-member, the exemption will not
apply, and the ATS will have the trade
reporting obligation under FINRA rules.
The ATS also must demonstrate that
it meets the following criteria. First, the
member subscribers must be fully
disclosed to one another at all times on
the ATS. Second, although the system
brings together the orders of buyers and
sellers and uses established, nondiscretionary methods under which
such orders interact with each other, the
system does not permit automatic
execution. A member subscriber must
take affirmative steps beyond the
submission of an order to agree to a
trade with another member subscriber.
Third, the trade does not pass through
any ATS account, and the ATS does not
in any way hold itself out to be a party
to the trade. Fourth, the ATS does not
exchange shares or funds on behalf of
the member subscribers, take either side
of the trade for clearing or settlement
purposes, including, but not limited to,
at DTC or otherwise, or in any other way
insert itself into the trade.
In addition, the ATS and the member
subscribers must acknowledge and agree
in writing that the ATS shall not be
deemed a party to the trade for purposes
of trade reporting and that trades shall
be reported by the member subscriber
that, as between the two member
subscribers, would satisfy the definition
of ‘‘executing party’’ under FINRA trade
reporting rules. An ATS that is granted
an exemption must obtain such written
agreements from all of its member
subscribers prior to relying on the
exemption.6
Finally, the ATS must agree to
provide to FINRA on a monthly basis,
or such other basis as prescribed by
FINRA, data relating to the volume of
trades by security executed by the ATS’s
member subscribers using the ATS’s
system (e.g., number of trades, number
of shares traded and total settlement
value for each security traded).
Importantly, although an ATS exempted
under the proposed rule will not have
trade reporting obligations under FINRA
rules, the trading occurring through the
ATS is still considered volume of the
ATS for purposes of, among other
6 FINRA reminds members of their books and
records obligations under FINRA rules, the
Exchange Act and applicable Exchange Act rules.
Thus, any ATS that is granted an exemption under
the proposed rule change would be required to
retain the written agreements and be able to
produce them to FINRA upon request.
E:\FR\FM\29SEN1.SGM
29SEN1
]]>Agencies
[Federal Register Volume 76, Number 189 (Thursday, September 29, 2011)]
[Notices]
[Pages 60566-60567]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-25071]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65389; File No. SR-Phlx-2011-101]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order
Approving Proposed Rule Change Regarding Streaming Quote Traders and
Remote Streaming Quote Traders Entering Certain Option Day Limit Orders
September 23, 2011.
I. Introduction
On July 17, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
allow Streaming Quote Traders (``SQTs'') and Remote Streaming Quote
Traders (``RSQTs'') to enter day limit orders. The proposed rule change
was published for comment in the Federal Register on August 11,
2011.\3\ The Commission received no comments on the proposal. This
order approves the proposal.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 65050 (August 5,
2011), 76 FR 49816.
---------------------------------------------------------------------------
II. Description of the Proposal
The purpose of the proposal is to amend two subsections of Exchange
Rule 1080 to allow entry of day limit orders for the proprietary
accounts of SQTs and RSQTs.
Current Rule 1080 (Phlx XL and XL II) discusses the Exchange's
enhanced electronic order, trading, and execution system (the
``electronic interface''). The current iteration of the Exchange's
electronic interface is known as Phlx XL II.\4\ Rule 1080 states that
it governs the orders, execution reports and administrative order
messages transmitted between the offices of member organizations and
the trading floors of the Exchange. Rule 1080 also discusses what
agency and proprietary orders are eligible for entry into the
Exchange's electronic interface.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 59995 (May 28,
2009), 74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32) (order approving
Phlx XL II). Phlx XL II is the Exchange's electronic order delivery
and reporting system, which provides for the automatic entry and
routing of Exchange-listed equity options, index options and U.S.
dollar-settled foreign currency options orders to the Exchange
trading floor. Rule 1080(a).
---------------------------------------------------------------------------
Subsection (b)(i)(B)(2) states that the following types of orders
for the proprietary account(s) of SQTs and RSQTs are eligible for entry
via electronic interface: limit on opening, IOC, and ISO. Currently,
there is no ability for SQTs and RSQTs to enter day limit orders in
their proprietary accounts. The proposal allows day limit orders for
the proprietary account(s) of SQTs and RSQTs to be entered pursuant to
subsection (b)(i)(B)(2). The proposed change will promote consistency
among ROTs by allowing SQTs and RSQTs to do what Rule 1080 and
Commentary .04 now allow non-SQT ROTs to do: enter certain day limit
orders (10 or more contracts) in their proprietary accounts.\5\
---------------------------------------------------------------------------
\5\ For example, subsection (b)(i)(B)(1) allows non-SQTs and
specialists to enter certain day limit orders (10 or more contracts)
in their proprietary accounts.
---------------------------------------------------------------------------
Commentary .04 of Rule 1080 states that orders for the proprietary
accounts of SQTs, RSQTs and non-SQT ROTs may be entered for delivery
via electronic interface through the use of Exchange approved
proprietary systems of members that interface with the Exchange's
electronic interface.\6\ Currently, proprietary non-SQT ROT orders with
a size of less than 10 contracts have to be submitted as IOC and larger
orders may be submitted as day limit and other order types; while
proprietary SQT and RSQT orders may only be submitted as IOC.
---------------------------------------------------------------------------
\6\ Such orders have to be for a minimum of one (1) contract.
---------------------------------------------------------------------------
The Exchange is proposing to put all the ROTs (SQTs, RSQTs and non-
SQT ROTs) on an equal footing. Specifically, the Exchange proposes to
state in Commentary .04 that orders for the proprietary account(s) of
SQTs, RSQTs, and non-SQT ROTs with a size of less than 10 contracts
shall be submitted as IOC only. Thus, where SQT and RSQT orders under
the current rule could only be submitted as IOC, the proposed change to
Commentary .04 would allow these SQTs and RSQTs to enter non IOC orders
(e.g. day orders) in proprietary accounts if they are for 10 or more
contracts.
III. Discussion
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange \7\
and, in particular, the requirements of Section 6 of the Act.\8\
Specifically, the Commission finds that the proposal is consistent with
Section 6(b)(5) of the Act,\9\ in that the proposal has been designed
to promote just and equitable principles of trade, and to protect
investors and the public interest. The Commission believes that it is
consistent with the Act for SQTs and RSQTs to enter non IOC orders
(e.g. day orders) in proprietary accounts if they are for 10 or more
contracts. The Commission believes that allowing these order types
should help to enhance liquidity on the Exchange. The Commission notes
that SQTs and RSQTs would still be required to comply with their
electronic quoting obligations.
---------------------------------------------------------------------------
\7\ The Commission has considered the proposed rule change's
impact on efficiency, competition and capital formation. 15 U.S.C.
78c(f).
\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
IV. Conclusion
It Is Therefore Ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-PHLX-20011-101) is approved.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(2).
[[Page 60567]]
---------------------------------------------------------------------------
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-25071 Filed 9-28-11; 8:45 am]
BILLING CODE 8011-01-P
