Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify NASDAQ OMX PSX's Optional Anti-Internalization Functionality, 9522-9523 [2014-03565]
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9522
Federal Register / Vol. 79, No. 33 / Wednesday, February 19, 2014 / Notices
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–BX–2014–009 and should
be submitted on or before March 12,
2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–03557 Filed 2–18–14; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–71535; File No. SR–Phlx–
2014–011]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Modify
NASDAQ OMX PSX’s Optional AntiInternalization Functionality
February 12, 2014.
EMCDONALD on DSK67QTVN1PROD with NOTICES
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 February
4, 2014, NASDAQ OMX PHLX LLC
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to modify the
optional anti-internalization
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Mar<15>2010
16:15 Feb 18, 2014
Jkt 232001
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
SECURITIES AND EXCHANGE
COMMISSION
10 17
functionality of NASDAQ OMX PSX
(‘‘PSX’’).
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxphlx.cchwallstreet.com/, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
Phlx is proposing to modify PSX’s
voluntary anti-internalization
functionality to provide an additional
option under that functionality. In
addition, the proposed rule change
contains certain clarifications to the text
of the rule. Anti-internalization
functionality is designed to assist
market participants in complying with
certain rules and regulations of the
Employee Retirement Income Security
Act (‘‘ERISA’’) that preclude and/or
limit broker-dealers managing accounts
governed by ERISA from trading as
principal with orders generated for
those accounts. The functionality can
also assist market participants in
avoiding execution fees that may result
from the interaction of executable buy
and sell trading interest from the same
firm. Phlx notes that use of the
functionality does not relieve or
otherwise modify the duty of best
execution owed to orders received from
public customers. As such, market
participants using anti-internalization
functionality will need to take
appropriate steps to ensure that public
customer orders that do not execute
because of the use of anti-internalization
functionality ultimately receive the
same execution price (or better) they
would have originally obtained if
execution of the order was not inhibited
by the functionality.
PO 00000
Frm 00067
Fmt 4703
Sfmt 4703
Currently, market participants may
apply anti-internalization logic to all
quotes/orders entered through a
particular MPID, or to all orders entered
through a particular order entry port, to
which a unique group identification
modifier is then appended. In other
words, the logic may be applied on an
MPID-by-MPID, or on a port-by-port
basis.3 Currently, two forms of antiinternalization logic may be applied: (i)
If quotes/orders are equivalent in size,
both quotes/orders will be cancelled, or
if they are not equivalent in size, the
smaller will be cancelled and the size of
the larger will be reduced by the size of
the smaller; or (ii) regardless of the size
of the quotes/orders, the oldest quote/
order will be cancelled in full. The
applicable logic may be applied to an
entire MPID, or alternatively, different
logic may be applied to different order
entry ports under a particular MPID.4
In response to member input, the
proposed rule change will add an
additional form of anti-internalization
logic that a market participant could
choose to apply, under which the most
recent quote/order would be cancelled.
As with the two existing forms of antiinternalization logic, the logic could be
applied to an entire MPID, or to selected
order entry ports under a particular
MPID.5 Phlx believes that the change
will provide members with an
additional tool for managing the book of
orders that they submit to PSX and the
associated execution costs.
2. Statutory Basis
Phlx believes that the proposed rule
change is consistent with the provisions
of Section 6 of the Act,6 in general, and
with Section 6(b)(5) of the Act 7 in
particular, in that the proposal is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
3 In the proposed rule change that introduced the
ability to assign a group identification modifier
with respect to anti-internalization processing, Phlx
stated that the modifier may be assigned ‘‘at the
port level.’’ Securities Exchange Act Release No.
65869 (December 2, 2011), 76 FR 76793 (December
8, 2011) (SR–Phlx–2011–080). However, this level
of specificity was not included in the text of Rule
3307. In addition, although the rule indicates that
designation of functionality at the port level is an
option available to the market participant, the rule
does not make it clear that in order to make use of
these options, market participants must use PSX’s
OUCH order entry protocol. Thus, the proposed
rule change also adds additional specificity to the
rule text with respect to these aspects of the antiinternalization functionality.
4 With respect to this functionality also,
participants wishing to make designations on the
order port level must use the OUCH order entry
protocol.
5 Id.
6 15 U.S.C. 78f.
7 15 U.S.C. 78f(b)(5).
E:\FR\FM\19FEN1.SGM
19FEN1
Federal Register / Vol. 79, No. 33 / Wednesday, February 19, 2014 / Notices
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, Phlx
believes that the change, which is
responsive to member input, will
facilitate transactions in securities and
perfect the mechanism of a free and
open market by providing members
with additional optional functionality
that may assist them with managing the
book of orders that they submit to PSX
and the associated execution costs.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Phlx 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.
Specifically, by offering market
participants additional options with
regard to preventing inadvertent
internalization of orders submitted to
PSX, the change has the potential to
enhance PSX’s competitiveness with
respect to other trading venues, thereby
promoting greater competition.
Moreover, the change does not burden
competition in that its use is optional
and provided at no additional cost to
members.
EMCDONALD on DSK67QTVN1PROD 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 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 8 and
subparagraph (f)(6) of Rule 19b–4
thereunder.9
8 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
9 17
VerDate Mar<15>2010
16:15 Feb 18, 2014
Jkt 232001
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–2014–011 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–2014–011. 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
Commission. The Exchange has satisfied this
requirement.
PO 00000
Frm 00068
Fmt 4703
Sfmt 4703
9523
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–2014–011 and should
be submitted on or before March 12,
2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–03565 Filed 2–18–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71534; File No. SR–FINRA–
2014–005]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change Relating to
Broadening Arbitrators’ Authority To
Make Referrals During an Arbitration
Proceeding
February 12, 2014.
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 January
29, 2014, the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’),
the proposed rule change as described
in Items I, II, and III below, which Items
have been substantially prepared by
FINRA.3 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
FINRA is proposing to amend Rule
12104 of the Code of Arbitration
Procedure for Customer Disputes
(‘‘Customer Code’’) and Rule 13104 of
the Code of Arbitration Procedure for
Industry Disputes (‘‘Industry Code’’)
(together, ‘‘Codes’’) to broaden
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 This notice includes some clarifying changes
from the Form 19b–4 filed with the Commission
that were discussed with FINRA. Telephone
conversation on February 12, 2014 among Mignon
McLemore of FINRA and John Fahey and Darren
Vieira of the Commission.
1 15
E:\FR\FM\19FEN1.SGM
19FEN1
]]>Agencies
[Federal Register Volume 79, Number 33 (Wednesday, February 19, 2014)]
[Notices]
[Pages 9522-9523]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-03565]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71535; File No. SR-Phlx-2014-011]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Modify
NASDAQ OMX PSX's Optional Anti-Internalization Functionality
February 12, 2014.
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 February 4, 2014, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify the optional anti-internalization
functionality of NASDAQ OMX PSX (``PSX'').
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqomxphlx.cchwallstreet.com/, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Phlx is proposing to modify PSX's voluntary anti-internalization
functionality to provide an additional option under that functionality.
In addition, the proposed rule change contains certain clarifications
to the text of the rule. Anti-internalization functionality is designed
to assist market participants in complying with certain rules and
regulations of the Employee Retirement Income Security Act (``ERISA'')
that preclude and/or limit broker-dealers managing accounts governed by
ERISA from trading as principal with orders generated for those
accounts. The functionality can also assist market participants in
avoiding execution fees that may result from the interaction of
executable buy and sell trading interest from the same firm. Phlx notes
that use of the functionality does not relieve or otherwise modify the
duty of best execution owed to orders received from public customers.
As such, market participants using anti-internalization functionality
will need to take appropriate steps to ensure that public customer
orders that do not execute because of the use of anti-internalization
functionality ultimately receive the same execution price (or better)
they would have originally obtained if execution of the order was not
inhibited by the functionality.
Currently, market participants may apply anti-internalization logic
to all quotes/orders entered through a particular MPID, or to all
orders entered through a particular order entry port, to which a unique
group identification modifier is then appended. In other words, the
logic may be applied on an MPID-by-MPID, or on a port-by-port basis.\3\
Currently, two forms of anti-internalization logic may be applied: (i)
If quotes/orders are equivalent in size, both quotes/orders will be
cancelled, or if they are not equivalent in size, the smaller will be
cancelled and the size of the larger will be reduced by the size of the
smaller; or (ii) regardless of the size of the quotes/orders, the
oldest quote/order will be cancelled in full. The applicable logic may
be applied to an entire MPID, or alternatively, different logic may be
applied to different order entry ports under a particular MPID.\4\
---------------------------------------------------------------------------
\3\ In the proposed rule change that introduced the ability to
assign a group identification modifier with respect to anti-
internalization processing, Phlx stated that the modifier may be
assigned ``at the port level.'' Securities Exchange Act Release No.
65869 (December 2, 2011), 76 FR 76793 (December 8, 2011) (SR-Phlx-
2011-080). However, this level of specificity was not included in
the text of Rule 3307. In addition, although the rule indicates that
designation of functionality at the port level is an option
available to the market participant, the rule does not make it clear
that in order to make use of these options, market participants must
use PSX's OUCH order entry protocol. Thus, the proposed rule change
also adds additional specificity to the rule text with respect to
these aspects of the anti-internalization functionality.
\4\ With respect to this functionality also, participants
wishing to make designations on the order port level must use the
OUCH order entry protocol.
---------------------------------------------------------------------------
In response to member input, the proposed rule change will add an
additional form of anti-internalization logic that a market participant
could choose to apply, under which the most recent quote/order would be
cancelled. As with the two existing forms of anti-internalization
logic, the logic could be applied to an entire MPID, or to selected
order entry ports under a particular MPID.\5\ Phlx believes that the
change will provide members with an additional tool for managing the
book of orders that they submit to PSX and the associated execution
costs.
---------------------------------------------------------------------------
\5\ Id.
---------------------------------------------------------------------------
2. Statutory Basis
Phlx believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\6\ in general, and with Section
6(b)(5) of the Act \7\ in particular, in that the proposal is designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of
[[Page 9523]]
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, Phlx believes that the change, which is
responsive to member input, will facilitate transactions in securities
and perfect the mechanism of a free and open market by providing
members with additional optional functionality that may assist them
with managing the book of orders that they submit to PSX and the
associated execution costs.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f.
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
Phlx 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. Specifically, by
offering market participants additional options with regard to
preventing inadvertent internalization of orders submitted to PSX, the
change has the potential to enhance PSX's competitiveness with respect
to other trading venues, thereby promoting greater competition.
Moreover, the change does not burden competition in that its use is
optional and provided at no additional cost to members.
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 \8\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\9\
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78s(b)(3)(a)(ii).
\9\ 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.
---------------------------------------------------------------------------
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-2014-011 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-2014-011. 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-2014-011 and
should be submitted on or before March 12, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
---------------------------------------------------------------------------
\10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-03565 Filed 2-18-14; 8:45 am]
BILLING CODE 8011-01-P
