Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Cabinet Trading Pilot Program in Rule 1059, 68871-68873 [2012-27869]

Download as PDF Federal Register / Vol. 77, No. 222 / Friday, November 16, 2012 / Notices inspection and copying at the principal office of CME and on CME’s Web site at https://www.cmegroup.com/marketregulation/rule-filings.html. 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–CME–2012–43 and should be submitted on or before December 7, 2012. mstockstill on DSK4VPTVN1PROD with NOTICES IV. Commission’s Findings and Order Granting Accelerated Approval of Proposed Rule Change Section 19(b) of the Act 7 directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that such proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to such organization. The Commission finds that the proposed rule change is consistent with the requirements of the Act, in particular the requirements of Section 17A of the Act, and the rules and regulations thereunder applicable to CME.8 Specifically, the Commission finds that the proposed rule change is consistent with Section 17A(b)(3)(F) of the Act, which requires, among other things, that the rules of a registered clearing agency be designed to assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible and to protect investors and the public interest.9 In its filing, CME requested that the Commission approve this proposed rule change on an accelerated basis for good cause shown. CME cites as the reason for this request that the proposed changes are necessary to facilitate CME’s compliance with new CFTC regulations that become effective on November 14, 2012. The Commission finds good cause, pursuant to Section 19(b)(2) of the Act,10 for approving the proposed rule change prior to the 30th day after the date of publication of notice in the Federal Register because, as a registered derivatives clearing organization, CME must amend certain of its rules to comply with the CFTC’s Part 22 7 15 U.S.C. 78s(b). U.S.C. 78q–1. In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 9 15 U.S.C. 78q–1(b)(3)(F). 10 15 U.S.C. 78s(b)(2). Regulations that will become effective on November 14, 2012. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (SR–CME–2012– 43) be, and hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–27873 Filed 11–15–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION 15:43 Nov 15, 2012 Jkt 229001 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 [Release No. 34–68201; File No. SR–Phlx– 2012–131] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Cabinet Trading Pilot Program in Rule 1059 November 9, 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 November 1, 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 extend the Cabinet Trading Pilot program in Rule 1059. 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. 8 15 VerDate Mar<15>2010 68871 11 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00141 Fmt 4703 Sfmt 4703 The Exchange proposes to extend the pilot program in Commentary .02 of Exchange Rule 1059, Accommodation Transactions, which sets forth specific procedures for engaging in cabinet trades, to allow the Commission adequate time to consider permanently allowing transactions to take place on the Exchange in open outcry at a price of at least $0 but less than $1 per option contract.3 Prior to the pilot program, Rule 1059 required that all orders placed in the cabinet were assigned priority based upon the sequence in which such orders were received by the specialist. All closing bids and offers would be submitted to the specialist in writing, and the specialist effected all closing cabinet transactions by matching such orders placed with him. Bids or offers on orders to open for the accounts of customer, firm, specialists and ROTs could be made at $1 per option contract, but such orders could not be placed in and must yield to all orders in the cabinet. Specialists effected all cabinet transactions by matching closing purchase or sale orders which were placed in the cabinet or, provided there was no matching closing purchase or sale order in the cabinet, by matching a closing purchase or sale order in the cabinet with an opening purchase or sale order.4 All cabinet transactions were reported to the Exchange following 3 Cabinet or accommodation trading of option contracts is intended to accommodate persons wishing to effect closing transactions in those series of options dealt in on the Exchange for which there is no auction market. 4 Specialists and ROTs are not subject to the requirements of Rule 1014 in respect of orders placed pursuant to this Rule. Also, the provisions of Rule 1033(b) and (c), Rule 1034 and Rule 1038 do not apply to orders placed in the cabinet. Cabinet transactions are not reported on the ticker. E:\FR\FM\16NON1.SGM 16NON1 68872 Federal Register / Vol. 77, No. 222 / Friday, November 16, 2012 / Notices the close of each business day.5 Any (i) member, (ii) member organization, or (iii) other person who was a nonmember broker or dealer and who directly or indirectly controlled, was controlled by, or was under common control with, a member or member organization (any such other person being referred to as an affiliated person) could effect any transaction as principal in the over-the-counter market in any class of option contracts listed on the Exchange for a premium not in excess of $1.00 per contract. On December 30, 2010, the Exchange filed an immediately effective proposal that established the pilot program being extended by this filing. The pilot program allowed transactions to take place in open outcry at a price of at least $0 but less than $1 per option contract until June 1, 2011.6 These lower priced transactions are traded pursuant to the same procedures applicable to $1 cabinet trades, except that pursuant to the pilot program (i) bids and offers for opening transactions are only permitted to accommodate closing transactions in order to limit use of the procedure to liquidations of existing positions, and (ii) the procedures are also made available for trading in options participating in the Penny Pilot Program.7 On May 31, 2011, the Exchange filed an immediately effective proposal that extended the pilot program until December 1, 2011 to consider whether to seek permanent approval of the temporary procedure.8 On November 30, 2011, the Exchange filed an immediately effective proposal that extended the pilot program until June 1, 2012.9 On May 29, 2012, the Exchange filed an immediately effective proposal that extended the pilot program until December 1, 2012.10 The 5 See Exchange Rule 1059. Rule 1059, Commentary .02; See Securities Exchange Act Release No. 63626 (December 30, 2010), 76 FR 812 (January 6, 2011) (SR–Phlx–2010– 185). 7 Prior to the pilot, the $1 cabinet trading procedures were limited to options classes traded in $0.05 or $0.10 standard increments. The $1 cabinet trading procedures were not available in Penny Pilot Program classes because in those classes, an option series could trade in a standard increment as low as $0.01 per share (or $1.00 per option contract with a 100 share multiplier). The pilot allows trading below $0.01 per share (or $1.00 per option contract with a 100 share multiplier) in all classes, including those classes participating in the Penny Pilot Program. 8 See Securities Exchange Act Release No. 64571 (May 31, 2011), 76 FR 32385 (June 6, 2011) (SR– Phlx–2011–72). 9 See Securities Exchange Act Release No. 65852 (November 30, 2011), 76 FR 76212 (December 6, 2011) (SR–Phlx–2011–156). 10 See Securities Exchange Act Release No. 67106 (June 4, 2012), 77 FR 34108 (June 8, 2012) (SR– Phlx–2012–74). mstockstill on DSK4VPTVN1PROD with NOTICES 6 Phlx VerDate Mar<15>2010 15:43 Nov 15, 2012 Jkt 229001 Exchange now proposes an extension of the pilot program to allow additional time to consider its effects while the pilot program continues uninterrupted. The Exchange believes that allowing a price of at least $0 but less than $1 will better accommodate the closing of options positions in series that are worthless or not actively traded, particularly due to recent market conditions which have resulted in a significant number of series being outof-the-money. For example, a market participant might have a long position in a call series with a strike price of $100 and the underlying stock might now be trading at $30. In such an instance, there might not otherwise be a market for that person to close-out its position even at the $1 cabinet price (e.g., the series might be quoted no bid). The Exchange hereby seeks to extend the pilot period for such $1 cabinet trading until June 1, 2013. The Exchange seeks this extension to allow the procedures to continue without interruption. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,11 in general, and with Section 6(b)(5) of the Act,12 in particular, in that the proposal is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in 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. Specifically, the Exchange believes that allowing for liquidations at a price less than $1 per option contract pursuant to the pilot program will better facilitate the closing of options positions that are worthless or not actively trading, especially in Penny Pilot issues where cabinet trades are not otherwise permitted. The Exchange believes the extension is of sufficient length to allow the Commission to assess the impact of the Exchange’s authority to allow transactions to take place in open outcry at a price of at least $0 but less than $1 per option in accordance with its attendant obligations and conditions. 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 proposed rule change is effective upon filing pursuant to Section 19(b)(3)(A) of the Act 13 and paragraph (f)(6) of Rule 19b-4 thereunder,14 in that the proposed rule change: (i) Does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) does not become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest; provided the selfregulatory organization has given the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission.15 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: 13 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 15 The Exchange has fulfilled this requirement. 11 15 U.S.C. 78f. 12 15 U.S.C. 78f(b)(5). PO 00000 Frm 00142 Fmt 4703 14 17 Sfmt 4703 E:\FR\FM\16NON1.SGM 16NON1 Federal Register / Vol. 77, No. 222 / Friday, November 16, 2012 / 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–Phlx–2012–131 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. mstockstill on DSK4VPTVN1PROD with NOTICES All submissions should refer to File Number SR–Phlx–2012–131. 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 the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–Phlx– 2012–131 and should be submitted on or before December 7, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–27869 Filed 11–15–12; 8:45 am] BILLING CODE 8011–01–P 16 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 15:43 Nov 15, 2012 Jkt 229001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68199; File No. SR– NASDAQ–2012–059] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Designation of Longer Period for Commission Action on Proceedings to Determine Whether to Approve or Disapprove Proposed Rule Change To Establish ‘‘Benchmark Orders’’ Under NASDAQ Rule 4751(f) November 9, 2012. On May 1, 2012, The NASDAQ Stock Market LLC (‘‘NASDAQ’’ 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 establish various ‘‘Benchmark Orders’’ under NASDAQ Rule 4751(f). The proposed rule change was published for comment in the Federal Register on May 17, 2012.3 On June 26, 2012, the Commission extended to August 15, 2012, the time period in which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.4 On August 14, 2012, the Commission instituted proceedings to determine whether to approve or disapprove the proposed rule change.5 In response to the Order Instituting Proceedings, the Commission received two comment letters on the proposed rule change.6 Section 19(b)(2) of the Act 7 provides that, after initiating proceedings, the Commission shall issue an order approving or disapproving the proposed rule change not later than 180 days after the date of publication of notice of the filing. The Commission may, however, extend the period for issuing an order approving or disapproving the proposed rule change by up to 60 days if the Commission determines that a longer period is appropriate and publishes the reasons for such determination. In this 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 66972 (May 11, 2012), 77 FR 29435 (May 17, 2012) (‘‘Notice’’). 4 See Securities Exchange Act Release No. 67258 (June 26, 2012), 77 FR 39314 (July 2, 2012). 5 See Securities Exchange Act Release No. 67655 (August 14, 2012), 77 FR 50191 (August 20, 2012) (‘‘Order Instituting Proceedings.’’). 6 See Letters to the Commission from James J. Angel, dated August 16, 2012; and Theodore R. Lazo, Managing Director and Associate General Counsel, SIFMA, dated October 5, 2012. 7 15 U.S.C. 78s(b)(2). 2 17 PO 00000 Frm 00143 Fmt 4703 Sfmt 4703 68873 case, the proposed rule change was published for notice and comment in the Federal Register on May 17, 2012; November 13, 2012, is 180 days from that date, and January 12, 2013, is 240 days from that date. The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposal and the issues that commenters have raised concerning the proposal. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,8 designates January 12, 2013, as the date by which the Commission shall either approve or disapprove the proposed rule change (File No. SR–NASDAQ– 2012–059). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–27868 Filed 11–15–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68206; File No. SR–NSX– 2012–18] Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee and Rebate Schedule November 9, 2012. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule 19b-4 thereunder,2 notice is hereby given that on October 31, 2012 National Stock Exchange, Inc. (‘‘NSX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘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 is proposing to amend its Fee and Rebate Schedule (the ‘‘Fee Schedule’’) issued pursuant to Exchange 8 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(57). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 9 17 E:\FR\FM\16NON1.SGM 16NON1

Agencies

[Federal Register Volume 77, Number 222 (Friday, November 16, 2012)]
[Notices]
[Pages 68871-68873]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-27869]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68201; File No. SR-Phlx-2012-131]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend 
the Cabinet Trading Pilot Program in Rule 1059

November 9, 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 November 1, 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.
---------------------------------------------------------------------------

    \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 extend the Cabinet Trading Pilot program 
in Rule 1059. 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 Exchange proposes to extend the pilot program in Commentary .02 
of Exchange Rule 1059, Accommodation Transactions, which sets forth 
specific procedures for engaging in cabinet trades, to allow the 
Commission adequate time to consider permanently allowing transactions 
to take place on the Exchange in open outcry at a price of at least $0 
but less than $1 per option contract.\3\ Prior to the pilot program, 
Rule 1059 required that all orders placed in the cabinet were assigned 
priority based upon the sequence in which such orders were received by 
the specialist. All closing bids and offers would be submitted to the 
specialist in writing, and the specialist effected all closing cabinet 
transactions by matching such orders placed with him. Bids or offers on 
orders to open for the accounts of customer, firm, specialists and ROTs 
could be made at $1 per option contract, but such orders could not be 
placed in and must yield to all orders in the cabinet. Specialists 
effected all cabinet transactions by matching closing purchase or sale 
orders which were placed in the cabinet or, provided there was no 
matching closing purchase or sale order in the cabinet, by matching a 
closing purchase or sale order in the cabinet with an opening purchase 
or sale order.\4\ All cabinet transactions were reported to the 
Exchange following

[[Page 68872]]

the close of each business day.\5\ Any (i) member, (ii) member 
organization, or (iii) other person who was a non-member broker or 
dealer and who directly or indirectly controlled, was controlled by, or 
was under common control with, a member or member organization (any 
such other person being referred to as an affiliated person) could 
effect any transaction as principal in the over-the-counter market in 
any class of option contracts listed on the Exchange for a premium not 
in excess of $1.00 per contract.
---------------------------------------------------------------------------

    \3\ Cabinet or accommodation trading of option contracts is 
intended to accommodate persons wishing to effect closing 
transactions in those series of options dealt in on the Exchange for 
which there is no auction market.
    \4\ Specialists and ROTs are not subject to the requirements of 
Rule 1014 in respect of orders placed pursuant to this Rule. Also, 
the provisions of Rule 1033(b) and (c), Rule 1034 and Rule 1038 do 
not apply to orders placed in the cabinet. Cabinet transactions are 
not reported on the ticker.
    \5\ See Exchange Rule 1059.
---------------------------------------------------------------------------

    On December 30, 2010, the Exchange filed an immediately effective 
proposal that established the pilot program being extended by this 
filing. The pilot program allowed transactions to take place in open 
outcry at a price of at least $0 but less than $1 per option contract 
until June 1, 2011.\6\ These lower priced transactions are traded 
pursuant to the same procedures applicable to $1 cabinet trades, except 
that pursuant to the pilot program (i) bids and offers for opening 
transactions are only permitted to accommodate closing transactions in 
order to limit use of the procedure to liquidations of existing 
positions, and (ii) the procedures are also made available for trading 
in options participating in the Penny Pilot Program.\7\ On May 31, 
2011, the Exchange filed an immediately effective proposal that 
extended the pilot program until December 1, 2011 to consider whether 
to seek permanent approval of the temporary procedure.\8\ On November 
30, 2011, the Exchange filed an immediately effective proposal that 
extended the pilot program until June 1, 2012.\9\ On May 29, 2012, the 
Exchange filed an immediately effective proposal that extended the 
pilot program until December 1, 2012.\10\ The Exchange now proposes an 
extension of the pilot program to allow additional time to consider its 
effects while the pilot program continues uninterrupted.
---------------------------------------------------------------------------

    \6\ Phlx Rule 1059, Commentary .02; See Securities Exchange Act 
Release No. 63626 (December 30, 2010), 76 FR 812 (January 6, 2011) 
(SR-Phlx-2010-185).
    \7\ Prior to the pilot, the $1 cabinet trading procedures were 
limited to options classes traded in $0.05 or $0.10 standard 
increments. The $1 cabinet trading procedures were not available in 
Penny Pilot Program classes because in those classes, an option 
series could trade in a standard increment as low as $0.01 per share 
(or $1.00 per option contract with a 100 share multiplier). The 
pilot allows trading below $0.01 per share (or $1.00 per option 
contract with a 100 share multiplier) in all classes, including 
those classes participating in the Penny Pilot Program.
    \8\ See Securities Exchange Act Release No. 64571 (May 31, 
2011), 76 FR 32385 (June 6, 2011) (SR-Phlx-2011-72).
    \9\ See Securities Exchange Act Release No. 65852 (November 30, 
2011), 76 FR 76212 (December 6, 2011) (SR-Phlx-2011-156).
    \10\ See Securities Exchange Act Release No. 67106 (June 4, 
2012), 77 FR 34108 (June 8, 2012) (SR-Phlx-2012-74).
---------------------------------------------------------------------------

    The Exchange believes that allowing a price of at least $0 but less 
than $1 will better accommodate the closing of options positions in 
series that are worthless or not actively traded, particularly due to 
recent market conditions which have resulted in a significant number of 
series being out-of-the-money. For example, a market participant might 
have a long position in a call series with a strike price of $100 and 
the underlying stock might now be trading at $30. In such an instance, 
there might not otherwise be a market for that person to close-out its 
position even at the $1 cabinet price (e.g., the series might be quoted 
no bid).
    The Exchange hereby seeks to extend the pilot period for such $1 
cabinet trading until June 1, 2013. The Exchange seeks this extension 
to allow the procedures to continue without interruption.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\11\ in general, and with 
Section 6(b)(5) of the Act,\12\ in particular, in that the proposal is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in 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. Specifically, 
the Exchange believes that allowing for liquidations at a price less 
than $1 per option contract pursuant to the pilot program will better 
facilitate the closing of options positions that are worthless or not 
actively trading, especially in Penny Pilot issues where cabinet trades 
are not otherwise permitted. The Exchange believes the extension is of 
sufficient length to allow the Commission to assess the impact of the 
Exchange's authority to allow transactions to take place in open outcry 
at a price of at least $0 but less than $1 per option in accordance 
with its attendant obligations and conditions.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 proposed rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) of the Act \13\ and paragraph (f)(6) of Rule 19b-4 
thereunder,\14\ in that the proposed rule change: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) does not become operative for 30 days after the date of the 
filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest; 
provided the self-regulatory organization has given the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.\15\
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ The Exchange has fulfilled this requirement.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

[[Page 68873]]

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-2012-131 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-2012-131. 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 the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-Phlx-2012-131 and should be 
submitted on or before December 7, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27869 Filed 11-15-12; 8:45 am]
BILLING CODE 8011-01-P
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