Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Extension of a Pilot Program Regarding Price Improvement XL, 42048-42050 [2012-17327]
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42048
Federal Register / Vol. 77, No. 137 / Tuesday, July 17, 2012 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–17351 Filed 7–16–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67399; File No. SR–Phlx–
2012–94]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to the
Extension of a Pilot Program
Regarding Price Improvement XL
July 11, 2012.
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 9,
2012, NASDAQ OMX PHLX LLC
(‘‘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 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 amend
Exchange Rule 1080(n), Price
Improvement XL (‘‘PIXLSM’’) to extend,
through July 18, 2013, a pilot program
(the ‘‘pilot’’) concerning (i) the early
conclusion of the PIXL Auction (as
described below), and (ii) permitting
orders of fewer than 50 contracts into
the PIXL Auction. The current pilot is
scheduled to expire July 18, 2012.
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.
tkelley on DSK3SPTVN1PROD with NOTICES
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
17 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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the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to extend the pilot through
July 18, 2013.
Background
The Exchange adopted PIXL in
October, 2010 as a price-improvement
mechanism on the Exchange.3 PIXL is a
component of the Exchange’s fully
automated options trading system,
PHLX XL® that allows an Exchange
member (an ‘‘Initiating Member’’) to
electronically submit for execution an
order it represents as agent on behalf of
a public customer, broker dealer, or any
other entity (‘‘PIXL Order’’) against
principal interest or against any other
order it represents as agent (an
‘‘Initiating Order’’) provided it submits
the PIXL Order for electronic execution
into the PIXL Auction (‘‘Auction’’)
pursuant to the Rule.
An Initiating Member may initiate a
PIXL Auction by submitting a PIXL
Order in one of three ways:
• First, the Initiating Member could
submit a PIXL Order specifying a single
price at which it seeks to execute the
PIXL Order (a ‘‘stop price’’).
• Second, an Initiating Member could
submit a PIXL Order specifying that it
is willing to automatically match as
principal or as agent on behalf of an
Initiating Order the price and size of all
trading interest and responses to the
PIXL Auction Notification (‘‘PAN,’’ as
described below) (‘‘auto-match’’), in
which case the PIXL Order will be
stopped at the National Best Bid/Offer
(’’NBBO’’) on the Initiating Order side of
the market (if 50 contracts or greater) or,
if less than 50 contracts, the better of: (i)
the PHLX Best Bid/Offer (‘‘PBBO’’) price
on the opposite side of the market from
the PIXL Order improved by at least one
3 See Securities Exchange Act Release No. 63027
(October 1, 2010), 75 FR 62160 (October 7, 2010)
(SR–Phlx–2010–108) (Order Granting Approval to a
Proposed Rule Change Relating to a Proposed Price
Improvement System, Price Improvement XL);
Securities Exchange Act Release No. 65043 (August
5, 2011), 76 FR 49824 (August 11, 2011) (SR–Phlx–
2011–104) (Extending Pilot for Price Improvement
System, Price Improvement XL).
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minimum price improvement
increment, or (ii) the PIXL Order’s limit
price (if the order is a limit order),
provided in either case that such price
is at or better than the NBBO and that
such price is at least one increment
better than the limit of an order on the
book on the same side as the PIXL
Order.
• Third, an Initiating Member could
submit a PIXL Order specifying that it
is willing to either: (i) stop the entire
order at a single stop price and automatch PAN responses, as described
below, together with trading interest, at
a price or prices that improve the stop
price to a specified price above or below
which the Initiating Member will not
trade (a ‘‘Not Worse Than’’ or ‘‘NWT’’
price); (ii) stop the entire order at a
single stop price and auto-match all
PAN responses and trading interest at or
better than the stop price; or (iii) stop
the entire order at the NBBO on the
Initiating Order side (if 50 contracts or
greater) or the better of: (A) the PBBO
price on the opposite side of the market
from the PIXL Order improved by one
minimum price improvement
increment, or (B) the PIXL Order’s limit
price (if the order is a limit order) on the
Initiating Order side provided in either
case that such price is at or better than
the NBBO (if for less than 50 contracts),
and auto-match PAN responses and
trading interest are at a price or prices
that improve the stop price up to the
NWT price. In all cases, if the PBBO on
the same side of the market as the PIXL
Order represents a limit order on the
book, the stop price must be at least one
minimum price improvement increment
better than the booked limit order’s
limit price.
After the PIXL Order is entered, a
PAN is broadcast and a one-second
blind Auction ensues. Anyone may
respond to the PAN by sending orders
or quotes. At the conclusion of the
Auction, the PIXL Order will be
allocated at the best price(s).
Once the Initiating Member has
submitted a PIXL Order for processing,
such PIXL Order may not be modified
or cancelled. Under any of the above
circumstances, the Initiating Member’s
stop price or NWT price may be
improved to the benefit of the PIXL
Order during the Auction, but may not
be cancelled.
After a PIXL Order has been
submitted, a member organization
submitting the order has no ability to
control the timing of the execution. The
execution is carried out by the
Exchange’s PHLX XL® automated
options trading system and pricing is
determined solely by the other orders
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Federal Register / Vol. 77, No. 137 / Tuesday, July 17, 2012 / Notices
and quotes that are present in the
Auction.
The Pilot
Three components of the PILX system
were approved by the Commission on a
pilot basis: (1) paragraphs (n)(i)(A)(2) 4
and (n)(i)(B)(2) of Rule 1080, relating to
auction eligibility requirements; (2)
paragraphs (n)(ii)(B)(4) and (n)(ii)(D) of
Rule 1080, relating to the early
conclusion of the PIXL Auction; and (3)
paragraph (n)(vii) of Rule 1080, stating
that there shall be no minimum size
requirement of orders entered into PIXL.
The pilots were approved for a pilot
period expiring on July 18, 2012.5 The
Exchange notes that during the pilot
period it has been required to submit,
and has been submitting, certain data
periodically as required by the
Commission, to provide supporting
evidence that, among other things, there
is meaningful competition for all size
orders and that there is an active and
liquid market functioning on the
Exchange outside of the Auction
mechanism.6 The Exchange will
continue to provide such data. The
Exchange believes that, because the
pilot has been operating for a relatively
short amount of time, the proposed
extension should afford the Commission
additional time to evaluate the pilot.
The Exchange proposes to extend the
pilot through July 18, 2013.
tkelley on DSK3SPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,7
in general and with Section 6(b)(5) of
the Act,8 in that it is designed to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest; and is not designed to
permit unfair discrimination between
4 On March 9, 2012, the Exchange filed a
proposed rule change to clarify Exchange Rule
1080(n)(i)(A)(2). See Securities Exchange Act
Release No. 66583 (March 13, 2012), 77 FR 16108
(March 19, 2012) (SR–Phlx–2012–032) (Notice of
Filing and Immediate Effectiveness of Proposed
Rule Change Amending Price Improvement System,
Price Improvement XL). The amendment reflected
the correct price—at or better than the NBBO—at
which an Initiating Member must guarantee the
execution of a PIXL Order that the Initiating
Member submits into a PIXL Auction.
5 See supra note 3.
6 See Exchange Rule 1080(n)(vii).
7 15 U.S.C. 78f.
8 15 U.S.C. 78f(b)(5).
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customers, issuers, brokers, or dealers,
or to regulate by virtue of any authority
conferred by the Act matters not related
to the purposes of the Act or the
administration of the Exchange.
The Exchange believes that the
proposed rule change is also consistent
with Section 6(b)(8) of the Act 9 in that
it does not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.
Specifically, the Exchange believes
that PIXL, including the rules to which
the pilot applies, result in increased
liquidity available at improved prices,
with competitive final pricing out of the
Initiating Member’s complete control.
The Exchange believes that PIXL
promotes and fosters competition and
affords the opportunity for price
improvement to more options contracts.
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
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 10 and Rule
19b-4(f)(6) thereunder.11 Because the
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) by its terms,
become operative prior to 30 days from
the date on which it was filed, or such
shorter time as the Commission may
designate, if consistent with the
protection of investors and the public
interest, the proposed rule change has
become effective upon filing with the
Commission pursuant to Section
19(b)(3)(A) of the Act 12 and Rule 19b–
4(f)(6)(iii) thereunder.13
U.S.C. 78f(b)(8).
U.S.C. 78s(b)(3)(A)(iii).
11 17 CFR 240.19b–4(f)(6).
12 15 U.S.C. 78s(b)(3)(A).
13 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
PO 00000
9 15
10 15
Frm 00083
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42049
The Exchange has requested that the
Commission waive the 30-day operative
delay period. The Commission believes
that waiver of the 30-day operative
delay period is consistent with the
protection of investors and the public
interest because such waiver will allow
the PIXL pilot programs to continue
without interruption. Accordingly, the
Commission designates the proposed
rule change operative upon filing with
the Commission.14
At any time within 60 days of the
filing of such 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 email to rulecomments@sec.gov. Please include File
Number SR–Phlx–2012–94 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–2012–94. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
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 Commission
deems this requirement to have been met.
14 For purposes only of waiving the operative
delay for this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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Federal Register / Vol. 77, No. 137 / Tuesday, July 17, 2012 / Notices
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
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–
2012–94 and should be submitted on or
before August 7, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–17327 Filed 7–16–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67398; File No. SR–Phlx–
2012–88]
at https://www.nasdaqtrader.com/
micro.aspx?id=PHLXfilings, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
Routing Fees to BX Options
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
July 11, 2012.
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
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 June 28,
2012, 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt
certain Routing Fees to recoup costs
incurred by the Exchange when routing
to NASDAQ OMX BX, Inc. (‘‘BX
Options’’).
While the changes proposed herein
are effective upon filing, the Exchange
has designated these changes to be
operative on July 2, 2012.
The text of the proposed rule change
is available on the Exchange’s Web site
Exchange
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this filing is to recoup
costs that the Exchange incurs for
routing and executing certain orders in
equity options to BX Options.
The Exchange’s Pricing Schedule at
Section V currently includes the
following Routing Fees for routing
Customer, Professional, Firm, BrokerDealer and Market Maker 3 orders to
away markets.
Customer
NYSE AMEX ......................................................................................................................................
BATS Penny ......................................................................................................................................
BATS non-Penny ...............................................................................................................................
BOX ...................................................................................................................................................
CBOE .................................................................................................................................................
CBOE orders greater than 99 contracts in RUT, RMN, NDX, MNX, ETFs, ETNs and HOLDRs ....
C2 ......................................................................................................................................................
ISE .....................................................................................................................................................
ISE Select Symbols 13 .......................................................................................................................
NYSE ARCA (Penny Pilot) ................................................................................................................
NYSE ARCA (Standard) ....................................................................................................................
NOM ...................................................................................................................................................
NOM–MNX .........................................................................................................................................
NOM–NDX .........................................................................................................................................
$0.11
0.55
0.86
0.11
0.11
0.29
0.55
0.11
0.31
0.55
0.11
0.54
0.56
0.11
Professional
$0.31
0.55
0.91
0.11
0.31
0.31
0.56
0.29
0.39
0.55
0.11
0.54
0.56
0.81
Firm/
broker-dealer/
specialist/
market maker
$0.55
0.55
0.91
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.81
tkelley on DSK3SPTVN1PROD with NOTICES
13 These fees are applicable to orders routed to ISE that are subject to Rebates and Fees for Adding and Removing Liquidity in Select Symbols. See ISE’s Schedule of Fees for the complete list of symbols that are subject to these fees.
The Exchange is proposing to adopt
the following Routing Fees when
routing to the BX Options:
15 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
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16:53 Jul 16, 2012
2 17
CFR 240.19b–4.
the purposes of Routing Fees, a Market
Maker includes Specialists (see Rule 1020) and
3 For
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ROTs (Rule 1014(b)(i) and (ii), which includes
SQTs (see Rule 1014(b)(ii)(A)) and RSQTs (see Rule
1014(b)(ii)(B)).
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]]>Agencies
[Federal Register Volume 77, Number 137 (Tuesday, July 17, 2012)]
[Notices]
[Pages 42048-42050]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17327]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67399; File No. SR-Phlx-2012-94]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
the Extension of a Pilot Program Regarding Price Improvement XL
July 11, 2012.
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 9, 2012, NASDAQ OMX PHLX LLC (``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 Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Exchange Rule 1080(n), Price
Improvement XL (``PIXL\SM\'') to extend, through July 18, 2013, a pilot
program (the ``pilot'') concerning (i) the early conclusion of the PIXL
Auction (as described below), and (ii) permitting orders of fewer than
50 contracts into the PIXL Auction. The current pilot is scheduled to
expire July 18, 2012.
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 forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to extend the pilot
through July 18, 2013.
Background
The Exchange adopted PIXL in October, 2010 as a price-improvement
mechanism on the Exchange.\3\ PIXL is a component of the Exchange's
fully automated options trading system, PHLX XL[supreg] that allows an
Exchange member (an ``Initiating Member'') to electronically submit for
execution an order it represents as agent on behalf of a public
customer, broker dealer, or any other entity (``PIXL Order'') against
principal interest or against any other order it represents as agent
(an ``Initiating Order'') provided it submits the PIXL Order for
electronic execution into the PIXL Auction (``Auction'') pursuant to
the Rule.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 63027 (October 1,
2010), 75 FR 62160 (October 7, 2010) (SR-Phlx-2010-108) (Order
Granting Approval to a Proposed Rule Change Relating to a Proposed
Price Improvement System, Price Improvement XL); Securities Exchange
Act Release No. 65043 (August 5, 2011), 76 FR 49824 (August 11,
2011) (SR-Phlx-2011-104) (Extending Pilot for Price Improvement
System, Price Improvement XL).
---------------------------------------------------------------------------
An Initiating Member may initiate a PIXL Auction by submitting a
PIXL Order in one of three ways:
First, the Initiating Member could submit a PIXL Order
specifying a single price at which it seeks to execute the PIXL Order
(a ``stop price'').
Second, an Initiating Member could submit a PIXL Order
specifying that it is willing to automatically match as principal or as
agent on behalf of an Initiating Order the price and size of all
trading interest and responses to the PIXL Auction Notification
(``PAN,'' as described below) (``auto-match''), in which case the PIXL
Order will be stopped at the National Best Bid/Offer (''NBBO'') on the
Initiating Order side of the market (if 50 contracts or greater) or, if
less than 50 contracts, the better of: (i) the PHLX Best Bid/Offer
(``PBBO'') price on the opposite side of the market from the PIXL Order
improved by at least one minimum price improvement increment, or (ii)
the PIXL Order's limit price (if the order is a limit order), provided
in either case that such price is at or better than the NBBO and that
such price is at least one increment better than the limit of an order
on the book on the same side as the PIXL Order.
Third, an Initiating Member could submit a PIXL Order
specifying that it is willing to either: (i) stop the entire order at a
single stop price and auto-match PAN responses, as described below,
together with trading interest, at a price or prices that improve the
stop price to a specified price above or below which the Initiating
Member will not trade (a ``Not Worse Than'' or ``NWT'' price); (ii)
stop the entire order at a single stop price and auto-match all PAN
responses and trading interest at or better than the stop price; or
(iii) stop the entire order at the NBBO on the Initiating Order side
(if 50 contracts or greater) or the better of: (A) the PBBO price on
the opposite side of the market from the PIXL Order improved by one
minimum price improvement increment, or (B) the PIXL Order's limit
price (if the order is a limit order) on the Initiating Order side
provided in either case that such price is at or better than the NBBO
(if for less than 50 contracts), and auto-match PAN responses and
trading interest are at a price or prices that improve the stop price
up to the NWT price. In all cases, if the PBBO on the same side of the
market as the PIXL Order represents a limit order on the book, the stop
price must be at least one minimum price improvement increment better
than the booked limit order's limit price.
After the PIXL Order is entered, a PAN is broadcast and a one-
second blind Auction ensues. Anyone may respond to the PAN by sending
orders or quotes. At the conclusion of the Auction, the PIXL Order will
be allocated at the best price(s).
Once the Initiating Member has submitted a PIXL Order for
processing, such PIXL Order may not be modified or cancelled. Under any
of the above circumstances, the Initiating Member's stop price or NWT
price may be improved to the benefit of the PIXL Order during the
Auction, but may not be cancelled.
After a PIXL Order has been submitted, a member organization
submitting the order has no ability to control the timing of the
execution. The execution is carried out by the Exchange's PHLX
XL[supreg] automated options trading system and pricing is determined
solely by the other orders
[[Page 42049]]
and quotes that are present in the Auction.
The Pilot
Three components of the PILX system were approved by the Commission
on a pilot basis: (1) paragraphs (n)(i)(A)(2) \4\ and (n)(i)(B)(2) of
Rule 1080, relating to auction eligibility requirements; (2) paragraphs
(n)(ii)(B)(4) and (n)(ii)(D) of Rule 1080, relating to the early
conclusion of the PIXL Auction; and (3) paragraph (n)(vii) of Rule
1080, stating that there shall be no minimum size requirement of orders
entered into PIXL. The pilots were approved for a pilot period expiring
on July 18, 2012.\5\ The Exchange notes that during the pilot period it
has been required to submit, and has been submitting, certain data
periodically as required by the Commission, to provide supporting
evidence that, among other things, there is meaningful competition for
all size orders and that there is an active and liquid market
functioning on the Exchange outside of the Auction mechanism.\6\ The
Exchange will continue to provide such data. The Exchange believes
that, because the pilot has been operating for a relatively short
amount of time, the proposed extension should afford the Commission
additional time to evaluate the pilot.
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\4\ On March 9, 2012, the Exchange filed a proposed rule change
to clarify Exchange Rule 1080(n)(i)(A)(2). See Securities Exchange
Act Release No. 66583 (March 13, 2012), 77 FR 16108 (March 19, 2012)
(SR-Phlx-2012-032) (Notice of Filing and Immediate Effectiveness of
Proposed Rule Change Amending Price Improvement System, Price
Improvement XL). The amendment reflected the correct price--at or
better than the NBBO--at which an Initiating Member must guarantee
the execution of a PIXL Order that the Initiating Member submits
into a PIXL Auction.
\5\ See supra note 3.
\6\ See Exchange Rule 1080(n)(vii).
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The Exchange proposes to extend the pilot through July 18, 2013.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\7\ in general and with
Section 6(b)(5) of the Act,\8\ in that it is designed to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest; and is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers, or to regulate by virtue of any authority conferred by the Act
matters not related to the purposes of the Act or the administration of
the Exchange.
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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change is also
consistent with Section 6(b)(8) of the Act \9\ in that it does not
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
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\9\ 15 U.S.C. 78f(b)(8).
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Specifically, the Exchange believes that PIXL, including the rules
to which the pilot applies, result in increased liquidity available at
improved prices, with competitive final pricing out of the Initiating
Member's complete control. The Exchange believes that PIXL promotes and
fosters competition and affords the opportunity for price improvement
to more options contracts.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
Because the 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) by its terms, become
operative prior to 30 days from the date on which it was filed, or such
shorter time as the Commission may designate, if consistent with the
protection of investors and the public interest, the proposed rule
change has become effective upon filing with the Commission pursuant to
Section 19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6)(iii)
thereunder.\13\
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the Exchange to give the Commission written
notice of the Exchange's intent to file the proposed rule change,
along with a brief description and text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Commission deems this requirement to have been met.
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The Exchange has requested that the Commission waive the 30-day
operative delay period. The Commission believes that waiver of the 30-
day operative delay period is consistent with the protection of
investors and the public interest because such waiver will allow the
PIXL pilot programs to continue without interruption. Accordingly, the
Commission designates the proposed rule change operative upon filing
with the Commission.\14\
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\14\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such 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 email to rule-comments@sec.gov. Please include
File Number SR-Phlx-2012-94 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-2012-94. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the
[[Page 42050]]
submission, all subsequent amendments, all written statements with
respect to the proposed rule change that are filed with the Commission,
and all written communications relating to the proposed rule change
between the Commission and any person, other than those that may be
withheld from the public in accordance with the provisions of 5 U.S.C.
552, will be available for Web site viewing and printing in the
Commission's Public Reference Room, 100 F Street NE., Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such 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-2012-94 and should be
submitted on or before August 7, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17327 Filed 7-16-12; 8:45 am]
BILLING CODE 8011-01-P
