Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend a Pilot Program To Allow Cabinet Trading To Take Place Below $1 per Option Contract, 30380-30382 [2013-12189]

Download as PDF 30380 Federal Register / Vol. 78, No. 99 / Wednesday, May 22, 2013 / Notices that, by eliminating the current NYSE Regulation Bylaw requirement for a minimum of two fair representation candidates on the NYSE Regulation Board, it will be able to improve administrative efficiency and effectiveness by operating with a smaller number of directors while continuing to fulfill its statutory obligations regarding the fair representation of members of the Exchange. The Exchange believes that the proposed rule change will also further the objectives of Section 6(b)(5) of the Act 12 as it will contribute to perfecting the mechanism of a free and open market and a national market system, in a manner that is consistent with the protection of investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change relates solely to the implementation of a more efficient and effective governance structure for NYSE Regulation and will have no effect on the NYSE’s business operations or competitive position. TKELLEY on DSK3SPTVN1PROD with NOTICES C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be 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: SECURITIES AND EXCHANGE COMMISSION Electronic Comments [Release No. 34–69583; File No. SR–Phlx– 2013–53] • 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–NYSE–2013–32 on the subject line. Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend a Pilot Program To Allow Cabinet Trading To Take Place Below $1 per Option Contract Paper Comments May 15, 2013. • 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–NYSE–2013–32. 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 offices 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–NYSE– 2013–32, and should be submitted on or before June 12, 2013. 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 May 8, 2013, 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 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. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–12159 Filed 5–21–13; 8:45 am] I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend the pilot program in Rule 1059, Accommodation Transactions, to allow cabinet trading to take place below $1 per option contract under specified circumstances (the ‘‘pilot program’’). The text of the proposed rule change is set forth below. Proposed new language is underlined; proposed deletions are in brackets. * * * * * NASDAQ OMX PHLX Rules * * U.S.C. 78f(b)(5). VerDate Mar<15>2010 16:59 May 21, 2013 * * * * * * Rule 1059. Accommodation Transactions (a)–(b) No change. . . . Commentary: lllll .01 No change. .02 Limit Orders Priced Below $1: Limit orders with a price of at least $0 but less than $1 per option contract may trade under the terms and conditions in Rule 1059 above in each series of option contracts open for trading on the Exchange, except that: (a)–(c) No change. (d) Unless otherwise extended, the effectiveness of the Commentary .02 BILLING CODE 8011–01–P 13 17 Jkt 229001 * Options Rules 1 15 12 15 * PO 00000 CFR 200.30–3(a)(12). Frm 00114 Fmt 4703 Sfmt 4703 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. E:\FR\FM\22MYN1.SGM 22MYN1 Federal Register / Vol. 78, No. 99 / Wednesday, May 22, 2013 / Notices terminates [June 1, 2013] January 5, 2014 or, upon permanent approval of these procedures by the Securities and Exchange Commission, whichever occurs first. * * * * * 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. TKELLEY on DSK3SPTVN1PROD with NOTICES 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 Registered Options Traders (‘‘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 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. VerDate Mar<15>2010 16:59 May 21, 2013 Jkt 229001 sale order.4 All cabinet transactions were reported to the Exchange following 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 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. 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). PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 30381 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 On November 1, 2012, the Exchange filed an immediately effective proposal that extended the pilot program until June 1, 2013.11 The 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 continue to 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 January 5, 2014. 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,12 in general, and with Section 6(b)(5) of the Act,13 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 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). 11 See Securities Exchange Act Release No. 68201 (November 9, 2012), 77 FR 68871 (November 16, 2012) (SR–Phlx–2012–131). 12 15 U.S.C. 78f. 13 15 U.S.C. 78f(b)(5). E:\FR\FM\22MYN1.SGM 22MYN1 30382 Federal Register / Vol. 78, No. 99 / Wednesday, May 22, 2013 / Notices 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. The proposal does not raise any issues of intra-market competition because it applies to all options participants in the same manner. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act 14 and subparagraph (f)(6) of Rule 19b–4 thereunder.15 A proposed rule change filed under Rule 19b–4(f)(6) 16 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),17 the Commission may 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 operative delay so that the pilot program TKELLEY on DSK3SPTVN1PROD with NOTICES 14 15 U.S.C. 78s(b)(3)(a)(ii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file 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. 16 17 CFR 240.19b–4(f)(6). 17 17 CFR 240.19b–4(f)(6)(iii). 15 17 VerDate Mar<15>2010 16:59 May 21, 2013 Jkt 229001 can continue without interruption. The Commission notes that the proposed rule change does not present any new, unique or substantive issues, but rather is merely extending an existing pilot program and that waiver of the 30-day operative delay will prevent confusion about whether the pilot program continues to be available. Therefore, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest and designates the proposed rule change as operative effective June 1, 2013.18 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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–Phlx–2013–53 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–2013–53. 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 18 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 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– 2013–53 and should be submitted on or before June 12, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Kevin M O’Neill, Deputy Secretary. [FR Doc. 2013–12189 Filed 5–21–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69597; File No. SR–DTC– 2013–06] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Revise Its Fees Related to Certain Corporate Action Events May 16, 2013. 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 May 3, 2013, The Depository Trust Company (‘‘DTC’’) 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 primarily by DTC. DTC filed the proposed rule change pursuant to Section 19(b)(3)(A)(ii) 3 of the Act and Rule 19b–4(f)(2) 4 thereunder, so that the proposed rule 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 1 15 E:\FR\FM\22MYN1.SGM 22MYN1

Agencies

[Federal Register Volume 78, Number 99 (Wednesday, May 22, 2013)]
[Notices]
[Pages 30380-30382]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-12189]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69583; File No. SR-Phlx-2013-53]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend a 
Pilot Program To Allow Cabinet Trading To Take Place Below $1 per 
Option Contract

May 15, 2013.
    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 May 8, 2013, 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 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the pilot program in Rule 1059, 
Accommodation Transactions, to allow cabinet trading to take place 
below $1 per option contract under specified circumstances (the ``pilot 
program'').
    The text of the proposed rule change is set forth below. Proposed 
new language is underlined; proposed deletions are in brackets.
* * * * *

NASDAQ OMX PHLX Rules

* * * * *

Options Rules

* * * * *

Rule 1059. Accommodation Transactions

    (a)-(b) No change.

. . . Commentary: ----------

    .01 No change.
    .02 Limit Orders Priced Below $1: Limit orders with a price of at 
least $0 but less than $1 per option contract may trade under the terms 
and conditions in Rule 1059 above in each series of option contracts 
open for trading on the Exchange, except that:
    (a)-(c) No change.
    (d) Unless otherwise extended, the effectiveness of the Commentary 
.02

[[Page 30381]]

terminates [June 1, 2013] January 5, 2014 or, upon permanent approval 
of these procedures by the Securities and Exchange Commission, 
whichever occurs first.
* * * * *

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 
Registered Options Traders (``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 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.
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    \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.
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    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\ On November 1, 2012, the 
Exchange filed an immediately effective proposal that extended the 
pilot program until June 1, 2013.\11\ 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).
    \11\ See Securities Exchange Act Release No. 68201 (November 9, 
2012), 77 FR 68871 (November 16, 2012) (SR-Phlx-2012-131).
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    The Exchange believes that allowing a price of at least $0 but less 
than $1 will continue to 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 January 5, 2014. 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,\12\ in general, and with 
Section 6(b)(5) of the Act,\13\ 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

[[Page 30382]]

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.
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    \12\ 15 U.S.C. 78f.
    \13\ 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. The 
proposal does not raise any issues of intra-market competition because 
it applies to all options participants in the same manner.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(ii) of the Act \14\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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) \16\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission 
may 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 operative delay so that the 
pilot program can continue without interruption. The Commission notes 
that the proposed rule change does not present any new, unique or 
substantive issues, but rather is merely extending an existing pilot 
program and that waiver of the 30-day operative delay will prevent 
confusion about whether the pilot program continues to be available. 
Therefore, the Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest and designates the proposed rule change as operative effective 
June 1, 2013.\18\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ For purposes only of waiving the 30-day operative delay, 
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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2013-53 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-2013-53. 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-2013-53 and should be 
submitted on or before June 12, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Kevin M O'Neill,
Deputy Secretary.
[FR Doc. 2013-12189 Filed 5-21-13; 8:45 am]
BILLING CODE 8011-01-P
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