Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Exchange Rule 3315(a)(1)(A) To Reflect a Change in Its Routing Functionality To Allow Routable Orders to Simultaneously Execute Against Exchange Available Shares and Route to Other Markets for Execution of the Remainder of the Order, 62287-62289 [2012-25104]
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Federal Register / Vol. 77, No. 198 / Friday, October 12, 2012 / Notices
that waiver of the 30-day operative
delay period is consistent with the
protection of investors and the public
interest. Specifically, the Commission
believes that the proposal should
increase the likelihood that a routable
order would receive a more complete
fill and should improve the Exchange’s
ability to process such orders. For these
reasons, the Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Therefore, the Commission designates
the proposed rule change to be operative
upon filing with the Commission.11
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.12
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:
wreier-aviles on DSK5TPTVN1PROD with NOTICES
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–BX–2012–064 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–BX–2012–064. 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
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
11 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).
12 15 U.S.C. 78s(b)(3)(C).
VerDate Mar<15>2010
13:59 Oct 11, 2012
Jkt 229001
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–BX–
2012–064 and should be submitted on
or before November 2, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–25105 Filed 10–11–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67991; File No. SR–Phlx–
2012–116]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Exchange Rule 3315(a)(1)(A) To Reflect
a Change in Its Routing Functionality
To Allow Routable Orders to
Simultaneously Execute Against
Exchange Available Shares and Route
to Other Markets for Execution of the
Remainder of the Order
October 5, 2012.
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 25, 2012, NASDAQ OMX
PHLX LLC (‘‘PHLX’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) a
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
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
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62287
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
PHLX proposes to amend Rule
3315(a)(1)(A) to reflect a change in its
routing functionality. The Exchange is
proposing to implement the rule change
as soon as practicable, but in no case
later than thirty calendar days from the
filing date of this proposal. The text of
the proposed rule change is available at
https://
nasdaqomxphlx.cchwallstreet.com, at
PHLX’s principal office, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
PHLX is proposing to amend Rule
3315(a)(1)(A) to reflect a change in
PHLX’s order routing functionality,
which will allow routable orders 3 to
simultaneously execute against PHLX
available shares and route to other
markets for execution of the remainder
of the order. Currently, when a routable
order is entered into the PHLX system,
the PHLX book is first checked for
available shares. If such an order is not
filled or filled only partially, then the
order is routed to away markets with the
best bid or best offer pursuant to PHLX’s
System routing table.4 For example, if a
PHLX member submitted an order to
buy 5,000 shares of a security, and
PHLX had 500 shares displayed with
another 500 shares undisplayed, under
the current routing process 1,000 shares
3 For purposes of this filing, a ‘‘routable order’’ is
an order entered into the PHLX System, which is
not of an Order Type precluded from routing to
other markets.
4 The ‘‘System routing table’’ is the proprietary
process for determining the specific trading venues
to which the System routes orders and the order in
which it routes them. See Rule 3315(a)(1)(A).
E:\FR\FM\12OCN1.SGM
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62288
Federal Register / Vol. 77, No. 198 / Friday, October 12, 2012 / Notices
would be executed on PHLX. Thereafter,
PHLX would route the remaining 4,000
shares of the order to other markets for
execution.
PHLX has observed that upon partial
execution of a routable order at PHLX,
as in the example above, market
participants often react to the order by
cancelling their orders on other markets
and entering new orders at inferior
prices. This occurs because the current
process directs the order to PHLX before
attempting to access available liquidity
at other markets and thereby allows
market participants to react to the
execution (an effect known as ‘‘market
impact’’ or ‘‘information leakage’’). As a
consequence, the available shares at the
away market are no longer available,
resulting in a lower likelihood of
successfully accessing liquidity on away
markets (i.e., the ‘‘fill rate’’) and an
increased likelihood of ultimately
receiving an execution at an inferior
price. As such, PHLX is addressing this
problem by changing how the routing
process will operate.
PHLX is proposing to execute routable
orders against the PHLX book for
available shares and to simultaneously
route any remaining shares to additional
markets. Specifically, under the
proposed change a routable order would
attempt to execute against the available
shares at PHLX and, to the extent the
order would not be filled by such
available shares, PHLX would
simultaneously route the remainder of
the order to other venues, according to
PHLX’s System routing table, in a
manner consistent with Regulation NMS
(i.e., satisfying all displayed protected
quotes). For example, using the scenario
above, if a member enters a routable
order to buy 5,000 shares of a security
and PHLX is displaying 500 shares of
that security, with 500 undisplayed,
PHLX would execute against the 500
displayed shares and 500 undisplayed
shares, while simultaneously routing the
remaining 4,000 shares to other venues
for execution. In the event that the
amount of shares on other markets is
insufficient to completely fill the order,
or the order fails to completely execute,
PHLX would then post the remaining
shares on the PHLX book or cancel the
remaining shares per the routed order’s
instructions. PHLX believes that this
simultaneous execution against PHLX
available shares and routing to other
venues’ shares will avoid the
deleterious effect of market impact
discussed above and result in overall
faster and better executions of its
members’ routable orders.
PHLX notes that it is not changing the
execution and routing sequence of all
routable orders. The PTFY, PMOP, and
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13:59 Oct 11, 2012
Jkt 229001
PCRT orders are designed to execute
serially as part of their strategies, which
is generally to reduce the blended fees
associated with transacting on multiple
markets. As such, simultaneous routing
of such orders would not result in a
better execution in terms of the goals of
these routable order types.
The proposed change is based on the
recently-approved change to the
analogous NASDAQ Stock Market LLC
(‘‘NASDAQ’’) rule.5 Although PHLX
does not have all of the order types that
NASDAQ has, it is making the identical
changes applicable to the analogous
routable order types shared in common
with NASDAQ. The Exchange will
implement the proposed change as soon
as practicable and in no event later than
30 calendar days from the filing date of
this proposal.
2. Statutory Basis
The statutory basis for the proposed
rule change is Section 6(b)(5) of the
Act,6 which requires the rules of an
exchange to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest. The Exchange believes
that the proposed rule meets these
requirements in that it promotes
efficiency in the market, and increases
the speed of execution and likelihood
that a routable order will be filled at the
best price possible. In this regard, the
Exchange notes that simultaneous
execution minimizes the market impact
a routable order has on other markets
under the current multi-step execution
and routing process, thus improving fill
rates. Accordingly, the proposed rule
change will serve to improve execution
quality for investors sending their
routable orders to the Exchange.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange 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.
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.
5 See Securities Exchange Act Release No. 67639
(August 10, 2012), 77 FR 49034 (August 15, 2012)
(SR–NASDAQ–2012–071).
6 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
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)
of the Act 7 and Rule 19b–4(f)(6) 8
thereunder because the proposal 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 for 30 days
from the date on which it was filed, or
such shorter time as the Commission
may designate.9
A proposed rule change filed under
Rule 19b–4(f)(6) normally may not
become operative prior to 30 days after
the date of filing. However, Rule 19b–
4(f)(6)(iii) 10 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. 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. Specifically, the Commission
believes that the proposal should
increase the likelihood that a routable
order would receive a more complete
fill and should improve the Exchange’s
ability to process such orders. For these
reasons, the Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Therefore, the Commission designates
the proposed rule change to be operative
upon filing with the Commission.11
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.12
7 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
9 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 Exchange has satisfied this
requirement.
10 17 CFR 240.19b–4(f)(6)(iii).
11 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).
12 15 U.S.C. 78s(b)(3)(C).
8 17
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Federal Register / Vol. 77, No. 198 / Friday, October 12, 2012 / Notices
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:
• 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–2012–116 on the
subject line.
Paper Comments
wreier-aviles on DSK5TPTVN1PROD with NOTICES
• 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–2012–116. 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
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–
2012–116 and should be submitted on
or before November 2, 2012.
13:59 Oct 11, 2012
[FR Doc. 2012–25104 Filed 10–11–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
VerDate Mar<15>2010
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
Jkt 229001
[Release No. 34–67998; File No. SR–ICEEU–
2012–07]
Self-Regulatory Organizations; ICE
Clear Europe Limited; Notice of Filing
and Order Granting Accelerated
Approval of Proposed Rule Change To
Revise CDS Procedures Related to
Clearing Certainty Requirements
October 5, 2012.
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 25, 2012, ICE Clear Europe
Limited (‘‘ICE Clear Europe’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change described in Items
I and II below, which items have been
prepared primarily by ICE Clear Europe.
The Commission is publishing this
Notice and Order to solicit comments on
the proposed rule change from
interested persons and to approve the
proposed rule change on an accelerated
basis.
I. Self-Regulatory Organization’s
Statement of Terms of Substance of the
Proposed Rule Change
ICE Clear Europe is in regular
communication with representatives of
its Clearing Members, as that term is
defined in the CDS Procedures of ICE
Clear Europe (the ‘‘CDS Procedures’’) in
relation to the operation of clearing
processes and arrangements. The
purpose of the proposed rule changes is
to implement in its CDS Procedures new
clearing certainty requirements under
Commodity Futures Trading
Commission (‘‘CFTC’’) Rules 39.12(b)(7)
and 1.74(b), which become effective on
October 1, 2012. All capitalized terms
not defined herein are defined in the
CDS Procedures.
II. Self-Regulatory Organization’s
Statement of Purpose of, and Statutory
Basis for, the Proposed Rule Change
In its filing with the Commission, ICE
Clear Europe included statements
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
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62289
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 III below. ICE
Clear Europe 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 Purpose of, and Statutory
Basis for, the Proposed Rule Change
As noted above, the principal purpose
of the proposed procedure amendments
is to update the particular
characteristics of the CDS Procedures
applicable to the clearing of CDS
Contracts. Specifically, the proposed
rule changes affect Part 4 of the CDS
Procedures by addressing the timeframe
under which trades must be accepted or
rejected for clearing under new CFTC
rules and adding certain clarifying
language around the weekly CDS
clearing cycle. Each of these changes is
described in detail as follows.
Paragraph 4.4(b) and 4.5 of the CDS
Procedures will be revised to clarify the
acceptance timing and procedures for
the weekly CDS clearing cycle in light
of the new clearing certainty
requirements under CFTC rules.
Under paragraph 4.19 of the revised
CDS Procedures, ICE Clear Europe will
incorporate new CFTC Rule
39.12(b)(7)(ii), which requires, among
other things, that ICE Clear Europe
accept or reject trades submitted for
clearance that are executed
competitively on or subject to the rules
of a designated contract market or swap
execution facility (or similar facility) as
soon after execution as would be
technologically practicable if fully
automated systems were used.
Under paragraph 4.20 of the revised
CDS Procedures, ICE Clear Europe will
incorporate new CFTC Rule
39.12(b)(7)(iii), which requires, among
other things, that ICE Clear Europe
accept or reject trades submitted for
clearance that are not executed
competitively on or subject to the rules
of a designated contract market or swap
execution facility (or similar facility) as
soon after submission for clearing
would be technologically practicable if
fully automated systems were used.
Finally, under paragraph 4.21 of the
revised CDS Procedures, ICE Clear
Europe will implement the standards of
CFTC Rule 1.74(b) that require Clearing
Members to accept or reject each Trade
submitted by or for the Clearing Member
as quickly as would be technologically
practicable if fully automated systems
were used. Clearing Members would
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]]>Agencies
[Federal Register Volume 77, Number 198 (Friday, October 12, 2012)]
[Notices]
[Pages 62287-62289]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-25104]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67991; File No. SR-Phlx-2012-116]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Exchange Rule 3315(a)(1)(A) To Reflect a Change in Its Routing
Functionality To Allow Routable Orders to Simultaneously Execute
Against Exchange Available Shares and Route to Other Markets for
Execution of the Remainder of the Order
October 5, 2012.
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 25, 2012, NASDAQ OMX PHLX LLC (``PHLX'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') a
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
PHLX proposes to amend Rule 3315(a)(1)(A) to reflect a change in
its routing functionality. The Exchange is proposing to implement the
rule change as soon as practicable, but in no case later than thirty
calendar days from the filing date of this proposal. The text of the
proposed rule change is available at https://nasdaqomxphlx.cchwallstreet.com, at PHLX's principal office, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
PHLX is proposing to amend Rule 3315(a)(1)(A) to reflect a change
in PHLX's order routing functionality, which will allow routable orders
\3\ to simultaneously execute against PHLX available shares and route
to other markets for execution of the remainder of the order.
Currently, when a routable order is entered into the PHLX system, the
PHLX book is first checked for available shares. If such an order is
not filled or filled only partially, then the order is routed to away
markets with the best bid or best offer pursuant to PHLX's System
routing table.\4\ For example, if a PHLX member submitted an order to
buy 5,000 shares of a security, and PHLX had 500 shares displayed with
another 500 shares undisplayed, under the current routing process 1,000
shares
[[Page 62288]]
would be executed on PHLX. Thereafter, PHLX would route the remaining
4,000 shares of the order to other markets for execution.
---------------------------------------------------------------------------
\3\ For purposes of this filing, a ``routable order'' is an
order entered into the PHLX System, which is not of an Order Type
precluded from routing to other markets.
\4\ The ``System routing table'' is the proprietary process for
determining the specific trading venues to which the System routes
orders and the order in which it routes them. See Rule
3315(a)(1)(A).
---------------------------------------------------------------------------
PHLX has observed that upon partial execution of a routable order
at PHLX, as in the example above, market participants often react to
the order by cancelling their orders on other markets and entering new
orders at inferior prices. This occurs because the current process
directs the order to PHLX before attempting to access available
liquidity at other markets and thereby allows market participants to
react to the execution (an effect known as ``market impact'' or
``information leakage''). As a consequence, the available shares at the
away market are no longer available, resulting in a lower likelihood of
successfully accessing liquidity on away markets (i.e., the ``fill
rate'') and an increased likelihood of ultimately receiving an
execution at an inferior price. As such, PHLX is addressing this
problem by changing how the routing process will operate.
PHLX is proposing to execute routable orders against the PHLX book
for available shares and to simultaneously route any remaining shares
to additional markets. Specifically, under the proposed change a
routable order would attempt to execute against the available shares at
PHLX and, to the extent the order would not be filled by such available
shares, PHLX would simultaneously route the remainder of the order to
other venues, according to PHLX's System routing table, in a manner
consistent with Regulation NMS (i.e., satisfying all displayed
protected quotes). For example, using the scenario above, if a member
enters a routable order to buy 5,000 shares of a security and PHLX is
displaying 500 shares of that security, with 500 undisplayed, PHLX
would execute against the 500 displayed shares and 500 undisplayed
shares, while simultaneously routing the remaining 4,000 shares to
other venues for execution. In the event that the amount of shares on
other markets is insufficient to completely fill the order, or the
order fails to completely execute, PHLX would then post the remaining
shares on the PHLX book or cancel the remaining shares per the routed
order's instructions. PHLX believes that this simultaneous execution
against PHLX available shares and routing to other venues' shares will
avoid the deleterious effect of market impact discussed above and
result in overall faster and better executions of its members' routable
orders.
PHLX notes that it is not changing the execution and routing
sequence of all routable orders. The PTFY, PMOP, and PCRT orders are
designed to execute serially as part of their strategies, which is
generally to reduce the blended fees associated with transacting on
multiple markets. As such, simultaneous routing of such orders would
not result in a better execution in terms of the goals of these
routable order types.
The proposed change is based on the recently-approved change to the
analogous NASDAQ Stock Market LLC (``NASDAQ'') rule.\5\ Although PHLX
does not have all of the order types that NASDAQ has, it is making the
identical changes applicable to the analogous routable order types
shared in common with NASDAQ. The Exchange will implement the proposed
change as soon as practicable and in no event later than 30 calendar
days from the filing date of this proposal.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 67639 (August 10,
2012), 77 FR 49034 (August 15, 2012) (SR-NASDAQ-2012-071).
---------------------------------------------------------------------------
2. Statutory Basis
The statutory basis for the proposed rule change is Section 6(b)(5)
of the Act,\6\ which requires the rules of an exchange to promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system
and, in general, to protect investors and the public interest. The
Exchange believes that the proposed rule meets these requirements in
that it promotes efficiency in the market, and increases the speed of
execution and likelihood that a routable order will be filled at the
best price possible. In this regard, the Exchange notes that
simultaneous execution minimizes the market impact a routable order has
on other markets under the current multi-step execution and routing
process, thus improving fill rates. Accordingly, the proposed rule
change will serve to improve execution quality for investors sending
their routable orders to the Exchange.
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\6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended.
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) of the Act \7\ and Rule 19b-4(f)(6) \8\ thereunder because
the proposal 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 for 30 days from
the date on which it was filed, or such shorter time as the Commission
may designate.\9\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6).
\9\ 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 Exchange has satisfied this
requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \10\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. 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. Specifically,
the Commission believes that the proposal should increase the
likelihood that a routable order would receive a more complete fill and
should improve the Exchange's ability to process such orders. For these
reasons, the Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest. Therefore, the Commission designates the proposed rule change
to be operative upon filing with the Commission.\11\
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\10\ 17 CFR 240.19b-4(f)(6)(iii).
\11\ 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 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.\12\
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\12\ 15 U.S.C. 78s(b)(3)(C).
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[[Page 62289]]
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-2012-116 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-2012-116. 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 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-2012-116 and should be
submitted on or before November 2, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25104 Filed 10-11-12; 8:45 am]
BILLING CODE 8011-01-P
