Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Extension of the Exchange's Penny Pilot Program and Replacement of Penny Pilot Issues That Have Been Delisted, 77509-77511 [2013-30452]
Download as PDF
77509
Federal Register / Vol. 78, No. 246 / Monday, December 23, 2013 / Notices
on Governors’ Decision No. 09–15.
Notice at 1.
tkelley on DSK3SPTVN1PROD with NOTICES
II. Contents of Filing
This filing includes a Notice, along
with the following attachments:
• Attachment 1—an application for
non-public treatment of material filed
under seal;
• Attachment 2—a redacted copy of
Governors’ Decision No. 09–15;
• Attachment 3—a redacted copy of
the new rates; and
• Attachment 4—a copy of the
certification required under 39 CFR
3015.5(c)(2).
The material filed under seal consists
of unredacted copies of the referenced
Governors’ Decision, the new rates and
related financial information. Id. at 3.
The Postal Service filed redacted
versions of the sealed financial
documents in public Excel
spreadsheets. Id. at 2.
Classification and rates. The Notice
incorporates by reference previous
explanations concerning (1) the UPU
Postal Operations Council’s mechanism
for setting base rates for Inbound Air
Parcel Post, and (2) the formal nature of
the Governors’ Decision establishing
those rates for purposes of statutory
compliance. Id.
The Postal Service asserts that the
prices comport with the Governors’
Decision No. 09–15 as they are the
highest possible inward land rates that
the Postal Service is eligible for based
on inflation increases and other factors.
Id. at 2–3. It also asserts that it has met
its burden of providing notice to the
Commission of changed rates within the
scope of Governors’ Decision No. 09–15,
as required by 39 U.S.C. 3632(b)(3). Id.
at 3.
III. Commission Action
The Commission establishes Docket
No. CP2014–14 for consideration of
matters raised in the Notice. Interested
persons may submit comments on
whether the Agreement is consistent
with the requirements of 39 CFR 3015.5
and the policies of 39 U.S.C. 3632 and
3633. Comments are due no later than
December 26, 2013. The public portions
of the Postal Service’s filing can be
accessed via the Commission’s Web site
at https://www.prc.gov. Information on
how to obtain access to nonpublic
material appears at 39 CFR 3007.40.
The Commission appoints Pamela A.
Thompson to represent the interest of
the general public (Public
Representative) in this case.
IV. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket
No. CP2014–14 for consideration of
VerDate Mar<15>2010
18:12 Dec 20, 2013
Jkt 232001
matters raised in the Postal Service’s
Notice.
2. Pursuant to 39 U.S.C. 505, the
Commission designates Pamela A.
Thompson to serve as an officer of the
Commission (Public Representative) to
represent the interests of the general
public in this proceeding.
3. Comments are due no later than
December 26, 2013.
4. The Secretary shall arrange for
publication of this order in the Federal
Register.
The Exchange requests that the
Commission waive the 30-day operative
delay period to the extent needed for
timely industry-wide implementation of
the proposal.
The text of the amended Exchange
rule is set forth immediately below.
Proposed new language is italicized
and proposed deleted language is
[bracketed].
By the Commission.
Shoshana M. Grove,
Secretary.
*
[FR Doc. 2013–30412 Filed 12–20–13; 8:45 am]
(a) Except as provided in subparagraphs (i)(B) and (iii) below, all
options on stocks, index options, and
Exchange Traded Fund Shares quoting
in decimals at $3.00 or higher shall have
a minimum increment of $.10, and all
options on stocks and index options
quoting in decimals under $3.00 shall
have a minimum increment of $.05.
(i)(A) No Change.
(B) For a pilot period scheduled to
expire [December 31, 2013]June 30,
2014 (the ‘‘pilot’’), certain options shall
be quoted and traded on the Exchange
in minimum increments of $0.01 for all
series in such options with a price of
less than $3.00, and in minimum
increments of $0.05 for all series in such
options with a price of $3.00 or higher,
except that options overlying the
PowerShares QQQ Trust (‘‘QQQQ’’)®,
SPDR S&P 500 Exchange Traded Funds
(‘‘SPY’’), and iShares Russell 2000 Index
Funds (‘‘IWM’’) shall be quoted and
traded in minimum increments of $0.01
for all series regardless of the price. A
list of such options shall be
communicated to membership via an
Options Trader Alert (‘‘OTA’’) posted on
the Exchange’s Web site.
The Exchange may replace any pilot
issues that have been delisted with the
next most actively traded multiply
listed options classes that are not yet
included in the pilot, based on trading
activity in the previous six months. The
replacement issues may be added to the
pilot on the second trading day
following [July 1, 2013] January 1, 2014.
(C) No Change.
(ii)–(v) No Change.
*
*
*
*
*
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxphlx.cchwallstreet.com, at
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71106; File No. SR–Phlx–
2013–123]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change Relating to
Extension of the Exchange’s Penny
Pilot Program and Replacement of
Penny Pilot Issues That Have Been
Delisted
December 17, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1, and Rule 19b–4 2 thereunder,
notice is hereby given that on December
13, 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing with the
Commission a proposal to amend Phlx
Rule 1034 (Minimum Increments) to
extend through June 30, 2014, the Penny
Pilot Program in options classes in
certain issues (‘‘Penny Pilot’’ or ‘‘Pilot’’),
and to change the date when delisted
classes may be replaced in the Penny
Pilot.3
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The Penny Pilot was established in January 2007
and was last extended in June 2013. See Securities
Exchange Act Release Nos. 55153 (January 23,
2007), 72 FR 4553 (January 31, 2007)(SR–Phlx–
2 17
Frm 00093
Fmt 4703
Options Rules
*
*
*
*
Rule 1034. Minimum Increments
BILLING CODE 7710–FW–P
PO 00000
NASDAQ OMX PHLX Rules
Sfmt 4703
2006–74) (notice of filing and approval order
establishing Penny Pilot); and 69786 (June 18,
2013), 78 FR 37863 (June 24, 2013) (SR–Phlx–2013–
64) (notice of filing and immediate effectiveness
extending the Penny Pilot through December 31,
2013).
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Federal Register / Vol. 78, No. 246 / Monday, December 23, 2013 / Notices
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
tkelley on DSK3SPTVN1PROD with NOTICES
The purpose of this filing is to amend
Phlx Rule 1034 to extend the Penny
Pilot through June 30, 2014, and to
change the date when delisted classes
may be replaced in the Penny Pilot.
Under the Penny Pilot, the minimum
price variation for all participating
options classes, except for the Nasdaq100 Index Tracking Stock (‘‘QQQQ’’),
the SPDR S&P 500 Exchange Traded
Fund (‘‘SPY’’) and the iShares Russell
2000 Index Fund (‘‘IWM’’), is $0.01 for
all quotations in options series that are
quoted at less than $3 per contract and
$0.05 for all quotations in options series
that are quoted at $3 per contract or
greater. QQQQ, SPY and IWM are
quoted in $0.01 increments for all
options series. The Penny Pilot is
currently scheduled to expire on
December 31, 2013.
The Exchange proposes to extend the
time period of the Penny Pilot through
June 30, 2014, and to provide revised
dates for adding replacement issues to
the Penny Pilot. The Exchange proposes
that any Penny Pilot Program issues that
have been delisted may be replaced on
the second trading day following
January 1, 2014. The replacement issues
will be selected based on trading
activity in the previous six months.4
4 The replacement issues will be announced to
the Exchange’s membership via an Options Trader
Alert (OTA) posted on the Exchange’s Web site. The
Exchange proposes in its Penny Pilot rule that
replacement issues will be selected based on
trading activity in the previous six months. The
replacement issues would be identified based on
The Option Clearing Corporation’s trading volume
data from June 1, 2013 through November 30, 2013.
The month immediately preceding the replacement
issues’ addition to the Pilot Program (i.e. December)
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18:12 Dec 20, 2013
Jkt 232001
This filing does not propose any
substantive changes to the Penny Pilot
Program; all classes currently
participating in the Penny Pilot will
remain the same and all minimum
increments will remain unchanged. The
Exchange believes the benefits to public
customers and other market participants
who will be able to express their true
prices to buy and sell options have been
demonstrated to outweigh the potential
increase in quote traffic.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 5 in general, and furthers the
objectives of Section 6(b)(5) of the Act 6
in particular, in that it 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 facilitating
transactions in securities, and to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system. In
particular, the proposed rule change,
which extends the Penny Pilot for an
additional six months through June 30,
2014 and changes the date for replacing
Penny Pilot issues that were delisted to
the second trading day following
January 1, 2014, will enable public
customers and other market participants
to express their true prices to buy and
sell options for the benefit of all market
participants. This is consistent with the
Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. To the
contrary, this proposal is procompetitive because it allows Penny
Pilot issues to continue trading on the
Exchange. Moreover, the Exchange
believes that the proposed rule change
will allow for further analysis of the
Pilot and a determination of how the
Pilot should be structured in the future;
and will serve to promote regulatory
clarity and consistency, thereby
reducing burdens on the marketplace
and facilitating investor protection. The
Pilot is an industry wide initiative
supported by all other option
exchanges. The Exchange believes that
extending the Pilot will allow for
would not be used for purposes of the six-month
analysis.
5 15 U.S.C. 78f(b).
6 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
continued competition between market
participants on the Exchange trading
similar products as their counterparts
on other exchanges, while at the same
time allowing the Exchange to continue
to compete for order flow with other
exchanges in option issues trading as
part of the Pilot.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) 7 of the Act and
subparagraph (f)(6) of Rule 19b–4
thereunder.8 Because the proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) 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)(iii) 9 of the Act and
subparagraph (f)(6) of Rule 19b–4
thereunder.10
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative prior to 30 days after
the date of the filing.11 However,
pursuant to Rule 19b–4(f)(6)(iii),12 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest
because doing so will allow the Pilot
Program to continue without
interruption in a manner that is
consistent with the Commission’s prior
approval of the extension and expansion
7 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
9 15 U.S.C. 78s(b)(3)(A)(iii).
10 17 CFR 240.19b–4(f)(6).
11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change along with a brief
description and the text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission. The
Exchange has satisfied this pre-filing requirement.
12 17 CFR 240.19b–4(f)(6)(iii).
8 17
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Federal Register / Vol. 78, No. 246 / Monday, December 23, 2013 / Notices
of the Pilot Program and will allow the
Exchange and the Commission
additional time to analyze the impact of
the Pilot Program.13 Accordingly, the
Commission designates the proposed
rule change as operative upon filing
with the Commission.14
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–2013–123 on the subject line.
tkelley on DSK3SPTVN1PROD with NOTICES
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–2013–123. 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
13 See Securities Exchange Act Release No. 61061
(November 24, 2009), 74 FR 62857 (December 1,
2009) (SR–NYSEArca–2009–44).
14 For purposes only of waiving the operative
delay for this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
VerDate Mar<15>2010
18:12 Dec 20, 2013
Jkt 232001
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 Phlx. 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–2013–123 and should
be submitted on or before January 13,
2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–30452 Filed 12–20–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71091; File No. SR–FICC–
2013–09]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Order
Approving Proposed Rule Change To
Make the U.S. Department of the
Treasury’s Floating Rate Notes Eligible
for Netting Service and GCF Repo® at
FICC’s Government Securities Division
December 17, 2013.
I. Introduction
On October 28, 2013, the Fixed
Income Clearing Corporation (‘‘FICC’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–FICC–2013–09 pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder.2 The proposed rule
change was published for comment in
the Federal Register on November 14,
2013.3 The Commission received no
comment letters. For the reasons
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 70831
(Nov. 7, 2013), 78 FR 68496 (Nov. 14, 2013) (SR–
FICC–2013–09).
1 15
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
77511
discussed below, the Commission is
approving the proposed rule change.
II. Description
The purpose of this proposed rule
change is to make the U.S. Department
of the Treasury (‘‘Treasury
Department’’) floating rate notes eligible
for the netting service and GCF Repo®
service at the GSD. Last year, the
Treasury Department announced its
plan to issue Treasury notes with a
floating rate coupon (‘‘Floating Rate
Notes’’). The Floating Rate Notes will be
the first new product issued by the U.S.
Treasury since the Treasury InflationProtected Securities (‘‘TIPS’’) were
introduced in 1997. The Treasury
Department anticipates that the first
auction of Floating Rate Notes will
occur in January 2014.4 FICC’s
Government Securities Division
(‘‘GSD’’) is planning to make Floating
Rate Notes eligible for its netting service
starting with the January 2014 auction
of the two-year Floating Rate Notes
(other maturities will be issued later).
With respect to the GCF Repo®
service, Floating Rate Notes will be
included in GSD’s existing Treasury
Generic CUSIP Numbers.5 However,
because of their adjustable coupon,
Floating Rate Notes will not be eligible
for collateral allocation obligations or
substitutions with respect to the GCF
Repo® Generic CUSIPs representing
TIPS, separate trading of registered
interest and principal securities
(‘‘STRIPS’’), or fixed-rate mortgagebacked securities issued by Federal
National Mortgage Association (‘‘Fannie
Mae’’), Federal Home Loan Mortgage
Corporation (‘‘Freddie Mac’’) and
Government National Mortgage
Association (‘‘Ginnie Mae’’). As a result,
GSD Rule 20, Section 3, has been
revised to reflect this change.
In order for GSD to process Floating
Rate Notes, various enhancements to
FICC’s systems and member output have
been made in the following areas:
• Creation and maintenance of a
historical database of reference indices.
This data is necessary for determining
coupon, which is used in valuing
positions for settlement purposes and
4 See Press Release, U.S. Department of the
Treasury August 2013 Quarterly Refunding
Statement of Assistant Secretary Rutherford (Jul.
31, 2013), available at www.treasury.gov.
5 Pursuant to Rule 1 of the GSD Rulebook,
(‘‘Definitions’’), the term ‘‘Generic CUSIP Number’’
means a Committee on Uniform Securities
Identification Procedures identifying number
established for a category of securities, as opposed
to a specific security. Rule 1 also requires GSD to
use separate Generic CUSIP Numbers for General
Collateral Repo Transactions and GCF Repo
Transactions.
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Agencies
[Federal Register Volume 78, Number 246 (Monday, December 23, 2013)]
[Notices]
[Pages 77509-77511]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-30452]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71106; File No. SR-Phlx-2013-123]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
to Extension of the Exchange's Penny Pilot Program and Replacement of
Penny Pilot Issues That Have Been Delisted
December 17, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given
that on December 13, 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.
---------------------------------------------------------------------------
\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 is filing with the Commission a proposal to amend Phlx
Rule 1034 (Minimum Increments) to extend through June 30, 2014, the
Penny Pilot Program in options classes in certain issues (``Penny
Pilot'' or ``Pilot''), and to change the date when delisted classes may
be replaced in the Penny Pilot.\3\
---------------------------------------------------------------------------
\3\ The Penny Pilot was established in January 2007 and was last
extended in June 2013. See Securities Exchange Act Release Nos.
55153 (January 23, 2007), 72 FR 4553 (January 31, 2007)(SR-Phlx-
2006-74) (notice of filing and approval order establishing Penny
Pilot); and 69786 (June 18, 2013), 78 FR 37863 (June 24, 2013) (SR-
Phlx-2013-64) (notice of filing and immediate effectiveness
extending the Penny Pilot through December 31, 2013).
---------------------------------------------------------------------------
The Exchange requests that the Commission waive the 30-day
operative delay period to the extent needed for timely industry-wide
implementation of the proposal.
The text of the amended Exchange rule is set forth immediately
below.
Proposed new language is italicized and proposed deleted language
is [bracketed].
NASDAQ OMX PHLX Rules
Options Rules
* * * * *
Rule 1034. Minimum Increments
(a) Except as provided in sub-paragraphs (i)(B) and (iii) below,
all options on stocks, index options, and Exchange Traded Fund Shares
quoting in decimals at $3.00 or higher shall have a minimum increment
of $.10, and all options on stocks and index options quoting in
decimals under $3.00 shall have a minimum increment of $.05.
(i)(A) No Change.
(B) For a pilot period scheduled to expire [December 31, 2013]June
30, 2014 (the ``pilot''), certain options shall be quoted and traded on
the Exchange in minimum increments of $0.01 for all series in such
options with a price of less than $3.00, and in minimum increments of
$0.05 for all series in such options with a price of $3.00 or higher,
except that options overlying the PowerShares QQQ Trust
(``QQQQ'')[supreg], SPDR S&P 500 Exchange Traded Funds (``SPY''), and
iShares Russell 2000 Index Funds (``IWM'') shall be quoted and traded
in minimum increments of $0.01 for all series regardless of the price.
A list of such options shall be communicated to membership via an
Options Trader Alert (``OTA'') posted on the Exchange's Web site.
The Exchange may replace any pilot issues that have been delisted
with the next most actively traded multiply listed options classes that
are not yet included in the pilot, based on trading activity in the
previous six months. The replacement issues may be added to the pilot
on the second trading day following [July 1, 2013] January 1, 2014.
(C) No Change.
(ii)-(v) No Change.
* * * * *
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqomxphlx.cchwallstreet.com, at
[[Page 77510]]
the principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to amend Phlx Rule 1034 to extend the
Penny Pilot through June 30, 2014, and to change the date when delisted
classes may be replaced in the Penny Pilot.
Under the Penny Pilot, the minimum price variation for all
participating options classes, except for the Nasdaq-100 Index Tracking
Stock (``QQQQ''), the SPDR S&P 500 Exchange Traded Fund (``SPY'') and
the iShares Russell 2000 Index Fund (``IWM''), is $0.01 for all
quotations in options series that are quoted at less than $3 per
contract and $0.05 for all quotations in options series that are quoted
at $3 per contract or greater. QQQQ, SPY and IWM are quoted in $0.01
increments for all options series. The Penny Pilot is currently
scheduled to expire on December 31, 2013.
The Exchange proposes to extend the time period of the Penny Pilot
through June 30, 2014, and to provide revised dates for adding
replacement issues to the Penny Pilot. The Exchange proposes that any
Penny Pilot Program issues that have been delisted may be replaced on
the second trading day following January 1, 2014. The replacement
issues will be selected based on trading activity in the previous six
months.\4\
---------------------------------------------------------------------------
\4\ The replacement issues will be announced to the Exchange's
membership via an Options Trader Alert (OTA) posted on the
Exchange's Web site. The Exchange proposes in its Penny Pilot rule
that replacement issues will be selected based on trading activity
in the previous six months. The replacement issues would be
identified based on The Option Clearing Corporation's trading volume
data from June 1, 2013 through November 30, 2013. The month
immediately preceding the replacement issues' addition to the Pilot
Program (i.e. December) would not be used for purposes of the six-
month analysis.
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This filing does not propose any substantive changes to the Penny
Pilot Program; all classes currently participating in the Penny Pilot
will remain the same and all minimum increments will remain unchanged.
The Exchange believes the benefits to public customers and other market
participants who will be able to express their true prices to buy and
sell options have been demonstrated to outweigh the potential increase
in quote traffic.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \5\ in general, and furthers the objectives of Section
6(b)(5) of the Act \6\ in particular, in that it 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 facilitating transactions in securities, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system. In particular, the proposed rule
change, which extends the Penny Pilot for an additional six months
through June 30, 2014 and changes the date for replacing Penny Pilot
issues that were delisted to the second trading day following January
1, 2014, will enable public customers and other market participants to
express their true prices to buy and sell options for the benefit of
all market participants. This is consistent with the Act.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. To the contrary, this proposal
is pro-competitive because it allows Penny Pilot issues to continue
trading on the Exchange. Moreover, the Exchange believes that the
proposed rule change will allow for further analysis of the Pilot and a
determination of how the Pilot should be structured in the future; and
will serve to promote regulatory clarity and consistency, thereby
reducing burdens on the marketplace and facilitating investor
protection. The Pilot is an industry wide initiative supported by all
other option exchanges. The Exchange believes that extending the Pilot
will allow for continued competition between market participants on the
Exchange trading similar products as their counterparts on other
exchanges, while at the same time allowing the Exchange to continue to
compete for order flow with other exchanges in option issues trading as
part of the Pilot.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) \7\ of the Act and subparagraph (f)(6) of Rule 19b-4
thereunder.\8\ Because the proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
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)(iii) \9\ of the Act and
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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\7\ 15 U.S.C. 78s(b)(3)(A)(iii).
\8\ 17 CFR 240.19b-4(f)(6).
\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of the filing.\11\
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because doing so will
allow the Pilot Program to continue without interruption in a manner
that is consistent with the Commission's prior approval of the
extension and expansion
[[Page 77511]]
of the Pilot Program and will allow the Exchange and the Commission
additional time to analyze the impact of the Pilot Program.\13\
Accordingly, the Commission designates the proposed rule change as
operative upon filing with the Commission.\14\
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\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change along with a
brief description and the text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this pre-filing requirement.
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ See Securities Exchange Act Release No. 61061 (November 24,
2009), 74 FR 62857 (December 1, 2009) (SR-NYSEArca-2009-44).
\14\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of 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-2013-123 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-2013-123. 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 Phlx. 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.
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\15\ 17 CFR 200.30-3(a)(12).
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All submissions should refer to File Number SR-Phlx-2013-123 and
should be submitted on or before January 13, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-30452 Filed 12-20-13; 8:45 am]
BILLING CODE 8011-01-P