Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Exchange Rules 507 and 1014 To Establish Remote Streaming Quote Trader Organizations, 24280-24281 [2013-09681]

Download as PDF tkelley on DSK3SPTVN1PROD with NOTICES 24280 Federal Register / Vol. 78, No. 79 / Wednesday, April 24, 2013 / Notices Arca Equities Rule 9.2(a), which imposes a duty of due diligence on its Equity Trading Permit Holders to learn the essential facts relating to every customer prior to trading the Shares; (c) the risks involved in trading the Shares during the Opening and Late Trading Sessions when an updated PIV will not be calculated or publicly disseminated; (d) how information regarding the PIV is disseminated; (e) the requirement that Equity Trading Permit Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (f) trading information. (5) For initial and/or continued listing, the Fund will be in compliance with Rule 10A–3 under the Act,24 as provided by NYSE Arca Equities Rule 5.3. (6) The Funds will not invest in any non-U.S registered equity securities. The Funds will not invest in options contracts, futures contracts, or swap agreements. Each Fund may hold up to 15% of its net assets in securities that are illiquid (calculated at the time of investment), including Rule 144A Securities. The aggregate value of all of a Fund’s illiquid securities and Rule 144A Securities shall not exceed 15% of a Fund’s total assets. (7) All short-term debt and money market securities acquired by the Funds will be rated investment grade by at least one NRSRO or, if unrated, deemed by the Investment Adviser to be of equivalent quality. The Fund will invest only in corporate bonds that the Investment Adviser deems to be sufficiently liquid at time of investment. Generally a non-U.S. corporate bond must have $200 million (or an equivalent value if denominated in a currency other than United States dollars) or more par amount outstanding and significant par value traded to be considered as an eligible investment, and a U.S. corporate bond must have $100 million (or an equivalent value if denominated in a currency other than United States dollars) or more par amount outstanding and significant par value traded to be considered as an eligible investment. In addition, variable rate demand notes purchased by the Funds will be backed by a letter of credit provided by a highly rated bank or financial institution that meets credit standards deemed appropriate by the Investment Adviser. According to the Exchange, the Funds will purchase variable rate demand notes with hard one or seven-day put options, which will increase the liquidity profile within the Funds that hold them, since they can be converted to cash within one or seven days. (8) Each Fund’s investments will be consistent with such Fund’s investment objective and will not be used to enhance leverage. (9) A minimum of 100,000 Shares of each Fund will be outstanding at the commencement of trading on the Exchange. This approval order is based on all of the Exchange’s representations, including those set forth above and in the Notice, and the Exchange’s description of the Funds. For the foregoing reasons, the Commission finds that the proposed rule change, as modified by Amendment No. 1 thereto, is consistent with Section 6(b)(5) of the Act 25 and the rules and regulations thereunder applicable to a national securities exchange. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,26 that the proposed rule change (SR–NYSEArca2013–18), as modified by Amendment No. 1 thereto, be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–09626 Filed 4–23–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69417; File No. SR–Phlx– 2013–03] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Exchange Rules 507 and 1014 To Establish Remote Streaming Quote Trader Organizations April 19, 2013. I. Introduction On January 4, 2013, NASDAQ OMX PHLX LLC (‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’), and Rule 19b–4 thereunder, a proposed rule change to amend Exchange Rules 507 and 1014 to establish Remote Streaming Quote Trader Organizations. The proposed 25 15 U.S.C. 78f(b)(5). U.S.C. 78s(b)(2). 27 17 CFR 200.30–3(a)(12). 26 15 24 See 17 CFR 240.10A–3. VerDate Mar<15>2010 18:05 Apr 23, 2013 Jkt 229001 PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 rule change was published in the Federal Register on January 25, 2013.1 On March 8, 2013, the Exchange filed an extension to extend the action date to March 25, 2013. On March 22, 2013, the Exchange filed a second extension to extend the action date to April 8, 2013. On April 8, 2013, the Exchange filed a third extension to extend the action date to April 22, 2013. On April 16, 2013, the Exchange filed Partial Amendment No. 1 to the proposal.2 The Commission received no comments on the proposal. This order approves the proposal, as modified by Amendment No. 1. II. Description of the Proposal The Exchange proposes to add a new category of member organizations, called Remote Streaming Quote Trader Organizations (‘‘RSQTOs’’), to be eligible to register as Registered Options Traders (‘‘ROTs’’) on the Exchange. A ROT is an Exchange member located on the trading floor who trades in options for his own account.3 The term ROT includes a Streaming Quote Trader (‘‘SQT’’) and a Remote Streaming Quote Trader (‘‘RSQT’’). Currently, a ROT may apply to be an SQT and an RSQT.4 An SQT generates and submits option quotes electronically in assigned options, while physically present on the Exchange floor.5 On the other hand, an RSQT 1 See Securities Exchange Act Release No. 68689 (January 18, 2013), 78 FR 5518. 2 In Partial Amendment No. 1, the Exchange provided clarification for the deleted rule text in Exchange Rule 1014(b)(ii)(B), pertaining to the restriction of persons directly or indirectly affiliated with an RSQT from submitting quotations as a specialist, SQT, RSQT or non-SQT ROT in options in which such affiliated RSQT is assigned. The Exchange proposed to delete this restriction, which would allow affiliated persons with an RSQT to submit quotations in options in which the affiliated RSQT is assigned. The Exchange stated that the restriction was appropriate when the Exchange market was a traditional open outcry floor, but is no longer applicable in the current predominantly electronic trading environment. According to the Exchange, the following reasons support the removal of this restriction: (1) The prohibition was never applicable to SQTs but only to the off-floor RSQTs, and so removing the prohibition for RSQTs would treat the on and off-floor traders equally; (2) RSQTs are no longer an unknown quantity, but rather over the years have evolved into an integral and tested component of the current electronic trading system; (3) while there may have been a desire to prohibit affiliates of RSQTs from submitting competitive quotes at the beginning of the RSQT program when RSQT options assignments were instituted at the corporate level, that is no longer the case with options assignments being made at the individual RSQT level pursuant to this proposal; and (4) removal of the prohibition comports with the growth of competitive quoting to the benefit of investors. Because Amendment No. 1 is technical in nature, it is not subject to notice and comment. 3 See Exchange Rule 1014(b). 4 See Exchange Rule 1014(b)(ii). 5 See Exchange Rule 1014(b)(ii)(A). E:\FR\FM\24APN1.SGM 24APN1 Federal Register / Vol. 78, No. 79 / Wednesday, April 24, 2013 / Notices generates and submits option quotes electronically in assigned options while maintaining no physical presence on the Exchange floor.6 An RSQT could be an Exchange member or member organization. The Exchange proposes to add RSQTOs, which would consist of member organizations only, and reclassify RSQTs as Exchange members.7 The Exchange would allow a maximum of three RSQTs at any time to be affiliated with an RSQTO.8 Current Exchange member organizations operating as RSQTs would be deemed to be RSQTOs.9 The converted RSQTOs would have 21 days to notify the Exchange of their affiliated RSQTs.10 Currently, the criteria that must be met in order to be eligible as a RSQT is the same as the criteria to be eligible as an SQT, with two exceptions; specifically, the RSQT must demonstrate the existence of order flow commitments, and the willingness to accept allocations as an RSQT in options overlying 400 or more securities. The Exchange proposes that all of the current RSQT application criteria (including the provisions described above) will become the application criteria for RSQTOs. In addition, all of the current SQT application criteria will apply equally to SQTs and RSQTs. As proposed by the Exchange, an RSQTO must submit its application in writing in a form and format prescribed by the Exchange.11 The application must include, at a minimum, the name of the application, the Exchange account number, and the name of each affiliated RSQT.12 The Exchange proposes to amend the current SQT application process by including RSQTs and adding a requirement that they be affiliated with an RSQTO.13 The Exchange also proposes to amend the application and assignment in options for RSQTOs, RSQTs, and SQTs. The Exchange would require the name of the RSQTO with whom the RSQT is affiliated, and the member organization with whom the SQT is affiliated.14 Lastly, the Exchange would allow more than one RSQT to submit a quote in assigned options. Currently, Exchange Rule 1014(b)(ii)(B) prohibits a person who is directly or indirectly affiliated with an RSQT to submit tkelley on DSK3SPTVN1PROD with NOTICES 6 See Exchange Rule 1014(b)(ii)(B). proposed Exchange Rule 507(a). 8 See proposed Exchange Rule 507(a). 9 See proposed Exchange Rule 507(a). 10 See proposed Exchange Rule 507(a). 11 See proposed Exchange Rule 507(a). 12 See proposed Exchange Rule 507(a). 13 See proposed Exchange Rule 507(b)(i). 14 See proposed Exchange Rule 507(b)(i). 7 See VerDate Mar<15>2010 18:05 Apr 23, 2013 Jkt 229001 quotes as a specialist, SQT, RSQT or non-SQT ROT in options in which the affiliated RSQT is assigned. III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to national securities exchanges.15 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,16 which requires that the rules of an exchange be designed, among other things, 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 prevent fraudulent and manipulative acts, to remove impediments to and to perfect the mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest. The Commission believes that the proposal is consistent with the requirements of the Act. The proposal would reclassify RSQTs as Exchange members and create a new category of Exchange participants known as RSQTOs, which would be Exchange member organizations only. The Commission finds that this classification is consistent with the requirements of the Act and would foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities. The proposal would also convert current Exchange member organizations operating as RSQTs into the proposed RSQTOs, and allow an application process for future RSQTOs. The Commission believes that the proposal is consistent with the requirements of the Act and should promote just and equitable principles of trade. Finally, the Commission believes that the proposal to allow more than one RSQT to submit a quote in assigned options is consistent with the requirements of the Act. The Exchange represented that the proposal is in response to customers’ requests and that the Exchange has adequate surveillance program in place to monitor the impact of this proposal. 15 In approving the proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition and capital formation. See 15 U.S.C. 78c(f). 16 15 U.S.C. 78f(b)(5). PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 24281 For the reasons stated above, the Commission believes that the proposal is consistent with the requirements of the Act and is designed to promote just and equitable principles of trade, to remove impediments to and to perfect the mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,17 that the proposed rule change, as modified by Amendment No. 1 (SR–Phlx–2013–03), be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Elizabeth M. Murphy, Secretary. [FR Doc. 2013–09681 Filed 4–23–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69402; File No. SR– NASDAQ–2013–032] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Designation of a Longer Period for Commission Action on Proposed Rule Change To Require That Listed Companies Have an Internal Audit Function April 18, 2013. On February 20, 2013, The NASDAQ Stock Market LLC (‘‘Nasdaq’’) 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 require that listed companies have an internal audit function. The proposed rule change was published for comment in the Federal Register on March 8, 2013.3 The Commission received 38 comments on the proposal.4 17 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 69030 (March 4, 2013), 78 FR 15075. 4 See letters to Elizabeth M. Murphy, Secretary, Commission from William F. Derbyshire, dated March 5, 2013; Rainer Lenz, Ph.D., dated March 9, 2013; Raymond A. Link, Chief Financial Officer, FEI Company, dated March 11, 2013; Ann Marie Kim, dated March 12, 2013; Jeff A. Killian, Chief Financial Officer, Cascade Microtech, Inc., dated March 14, 2013; Matthew Hogan, dated March 18, 2013; Ann Rhoads, Chief Financial Officer, Zogenix, dated March 18, 2013; Daniel P. 18 17 E:\FR\FM\24APN1.SGM Continued 24APN1

Agencies

[Federal Register Volume 78, Number 79 (Wednesday, April 24, 2013)]
[Notices]
[Pages 24280-24281]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-09681]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69417; File No. SR-Phlx-2013-03]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order 
Approving a Proposed Rule Change, as Modified by Amendment No. 1, To 
Amend Exchange Rules 507 and 1014 To Establish Remote Streaming Quote 
Trader Organizations

April 19, 2013.

I. Introduction

    On January 4, 2013, NASDAQ OMX PHLX LLC (``Exchange'') filed with 
the Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''), and 
Rule 19b-4 thereunder, a proposed rule change to amend Exchange Rules 
507 and 1014 to establish Remote Streaming Quote Trader Organizations. 
The proposed rule change was published in the Federal Register on 
January 25, 2013.\1\ On March 8, 2013, the Exchange filed an extension 
to extend the action date to March 25, 2013. On March 22, 2013, the 
Exchange filed a second extension to extend the action date to April 8, 
2013. On April 8, 2013, the Exchange filed a third extension to extend 
the action date to April 22, 2013. On April 16, 2013, the Exchange 
filed Partial Amendment No. 1 to the proposal.\2\ The Commission 
received no comments on the proposal. This order approves the proposal, 
as modified by Amendment No. 1.
---------------------------------------------------------------------------

    \1\ See Securities Exchange Act Release No. 68689 (January 18, 
2013), 78 FR 5518.
    \2\ In Partial Amendment No. 1, the Exchange provided 
clarification for the deleted rule text in Exchange Rule 
1014(b)(ii)(B), pertaining to the restriction of persons directly or 
indirectly affiliated with an RSQT from submitting quotations as a 
specialist, SQT, RSQT or non-SQT ROT in options in which such 
affiliated RSQT is assigned. The Exchange proposed to delete this 
restriction, which would allow affiliated persons with an RSQT to 
submit quotations in options in which the affiliated RSQT is 
assigned. The Exchange stated that the restriction was appropriate 
when the Exchange market was a traditional open outcry floor, but is 
no longer applicable in the current predominantly electronic trading 
environment. According to the Exchange, the following reasons 
support the removal of this restriction: (1) The prohibition was 
never applicable to SQTs but only to the off-floor RSQTs, and so 
removing the prohibition for RSQTs would treat the on and off-floor 
traders equally; (2) RSQTs are no longer an unknown quantity, but 
rather over the years have evolved into an integral and tested 
component of the current electronic trading system; (3) while there 
may have been a desire to prohibit affiliates of RSQTs from 
submitting competitive quotes at the beginning of the RSQT program 
when RSQT options assignments were instituted at the corporate 
level, that is no longer the case with options assignments being 
made at the individual RSQT level pursuant to this proposal; and (4) 
removal of the prohibition comports with the growth of competitive 
quoting to the benefit of investors. Because Amendment No. 1 is 
technical in nature, it is not subject to notice and comment.
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange proposes to add a new category of member 
organizations, called Remote Streaming Quote Trader Organizations 
(``RSQTOs''), to be eligible to register as Registered Options Traders 
(``ROTs'') on the Exchange. A ROT is an Exchange member located on the 
trading floor who trades in options for his own account.\3\ The term 
ROT includes a Streaming Quote Trader (``SQT'') and a Remote Streaming 
Quote Trader (``RSQT'').
---------------------------------------------------------------------------

    \3\ See Exchange Rule 1014(b).
---------------------------------------------------------------------------

    Currently, a ROT may apply to be an SQT and an RSQT.\4\ An SQT 
generates and submits option quotes electronically in assigned options, 
while physically present on the Exchange floor.\5\ On the other hand, 
an RSQT

[[Page 24281]]

generates and submits option quotes electronically in assigned options 
while maintaining no physical presence on the Exchange floor.\6\ An 
RSQT could be an Exchange member or member organization.
---------------------------------------------------------------------------

    \4\ See Exchange Rule 1014(b)(ii).
    \5\ See Exchange Rule 1014(b)(ii)(A).
    \6\ See Exchange Rule 1014(b)(ii)(B).
---------------------------------------------------------------------------

    The Exchange proposes to add RSQTOs, which would consist of member 
organizations only, and reclassify RSQTs as Exchange members.\7\ The 
Exchange would allow a maximum of three RSQTs at any time to be 
affiliated with an RSQTO.\8\ Current Exchange member organizations 
operating as RSQTs would be deemed to be RSQTOs.\9\ The converted 
RSQTOs would have 21 days to notify the Exchange of their affiliated 
RSQTs.\10\
---------------------------------------------------------------------------

    \7\ See proposed Exchange Rule 507(a).
    \8\ See proposed Exchange Rule 507(a).
    \9\ See proposed Exchange Rule 507(a).
    \10\ See proposed Exchange Rule 507(a).
---------------------------------------------------------------------------

    Currently, the criteria that must be met in order to be eligible as 
a RSQT is the same as the criteria to be eligible as an SQT, with two 
exceptions; specifically, the RSQT must demonstrate the existence of 
order flow commitments, and the willingness to accept allocations as an 
RSQT in options overlying 400 or more securities. The Exchange proposes 
that all of the current RSQT application criteria (including the 
provisions described above) will become the application criteria for 
RSQTOs. In addition, all of the current SQT application criteria will 
apply equally to SQTs and RSQTs.
    As proposed by the Exchange, an RSQTO must submit its application 
in writing in a form and format prescribed by the Exchange.\11\ The 
application must include, at a minimum, the name of the application, 
the Exchange account number, and the name of each affiliated RSQT.\12\ 
The Exchange proposes to amend the current SQT application process by 
including RSQTs and adding a requirement that they be affiliated with 
an RSQTO.\13\
---------------------------------------------------------------------------

    \11\ See proposed Exchange Rule 507(a).
    \12\ See proposed Exchange Rule 507(a).
    \13\ See proposed Exchange Rule 507(b)(i).
---------------------------------------------------------------------------

    The Exchange also proposes to amend the application and assignment 
in options for RSQTOs, RSQTs, and SQTs. The Exchange would require the 
name of the RSQTO with whom the RSQT is affiliated, and the member 
organization with whom the SQT is affiliated.\14\
---------------------------------------------------------------------------

    \14\ See proposed Exchange Rule 507(b)(i).
---------------------------------------------------------------------------

    Lastly, the Exchange would allow more than one RSQT to submit a 
quote in assigned options. Currently, Exchange Rule 1014(b)(ii)(B) 
prohibits a person who is directly or indirectly affiliated with an 
RSQT to submit quotes as a specialist, SQT, RSQT or non-SQT ROT in 
options in which the affiliated RSQT is assigned.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to national securities exchanges.\15\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\16\ which requires that the 
rules of an exchange be designed, among other things, 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 prevent fraudulent and manipulative acts, to remove 
impediments to and to perfect the mechanism for a free and open market 
and a national market system, and, in general, to protect investors and 
the public interest.
---------------------------------------------------------------------------

    \15\ In approving the proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition and 
capital formation. See 15 U.S.C. 78c(f).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the proposal is consistent with the 
requirements of the Act. The proposal would reclassify RSQTs as 
Exchange members and create a new category of Exchange participants 
known as RSQTOs, which would be Exchange member organizations only. The 
Commission finds that this classification is consistent with the 
requirements of the Act and would foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities. The proposal would also convert current Exchange member 
organizations operating as RSQTs into the proposed RSQTOs, and allow an 
application process for future RSQTOs. The Commission believes that the 
proposal is consistent with the requirements of the Act and should 
promote just and equitable principles of trade. Finally, the Commission 
believes that the proposal to allow more than one RSQT to submit a 
quote in assigned options is consistent with the requirements of the 
Act. The Exchange represented that the proposal is in response to 
customers' requests and that the Exchange has adequate surveillance 
program in place to monitor the impact of this proposal.
    For the reasons stated above, the Commission believes that the 
proposal is consistent with the requirements of the Act and is designed 
to promote just and equitable principles of trade, to remove 
impediments to and to perfect the mechanism for a free and open market 
and a national market system, and, in general, to protect investors and 
the public interest.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule change, as modified by Amendment No. 1 
(SR-Phlx-2013-03), be, and it hereby is, approved.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-09681 Filed 4-23-13; 8:45 am]
BILLING CODE 8011-01-P
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