Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Eliminate the Midpoint Peg Post-Only Order and Modify the Minimum Quantity Order on NASDAQ OMX PSX, 40175-40177 [2014-16189]
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Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Notices
B. Self-Regulatory Organization’s
Statement on Burden on Competition
investors, or otherwise in furtherance of
the purposes of the Act.
NASDAQ does not believe that the
proposed rule changes will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.5
NASDAQ notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment,
NASDAQ must continually adjust its
fees to remain competitive with other
exchanges and with alternative trading
systems that have been exempted from
compliance with the statutory standards
applicable to exchanges. Because
competitors are free to modify their own
fees in response, and because market
participants may readily adjust their
order routing practices, NASDAQ
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited. In this instance, the
establishment of a new fee tier for
members that provide a daily average of
at least 4 million shares of liquidity,
which includes greater than 1.5 million
shares per day of non-displayed
liquidity, excluding midpoint orders,
reflects this.
Accordingly, NASDAQ does not
believe that the proposed changes will
impair the ability of members or
competing order execution venues to
maintain their competitive standing in
the financial markets.
IV. Solicitation of Comments
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
tkelley on DSK3SPTVN1PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing change has become
effective pursuant to Section 19(b)(3)(A)
of the Act,6 and paragraph (f) 7 of Rule
19b–4, thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
5 15
U.S.C. 78f(b)(8).
U.S.C. 78s(b)(3)(A).
7 17 CFR 240.19b–4(f).
6 15
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20:23 Jul 10, 2014
Jkt 232001
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–
NASDAQ–2014–069 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2014–069. 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–
NASDAQ–2014–069, and should be
submitted on or beforeAugust 1, 2014.
PO 00000
Frm 00118
Fmt 4703
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40175
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Kevin M. O’ Neill,
Deputy Secretary.
[FR Doc. 2014–16192 Filed 7–10–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72546; File No. SR–Phlx–
2014–40]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Eliminate
the Midpoint Peg Post-Only Order and
Modify the Minimum Quantity Order on
NASDAQ OMX PSX
July 7, 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 June 23,
2014, NASDAQ OMX PHLX LLC
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to eliminate
the Midpoint Peg Post-Only Order and
to modify the functioning of the
Minimum Quantity Order on NASDAQ
OMX PSX (‘‘PSX’’). The text of the
proposed rule change is available at
https://
nasdaqomxphlx.cchwallstreet.com/
nasdaqomxphlx/phlx/, at the
Exchange’s principal office, 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
8 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\11JYN1.SGM
11JYN1
40176
Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Notices
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
tkelley on DSK3SPTVN1PROD with NOTICES
1. Purpose
Phlx is proposing two modifications
to order types on PSX. First, Phlx is
proposing to eliminate the Midpoint Peg
Post-Only Order. Like a regular
Midpoint Pegged Order, a Midpoint Peg
Post-Only Order is a non-displayed
order that is priced at the midpoint
between the national best bid and best
offer (‘‘NBBO’’). However, like a PostOnly Order, the Midpoint Peg Post-Only
Order does not remove liquidity from
PSX upon entry if it would lock a nondisplayed order on PSX. Rather, the
Midpoint Peg Post-Only Order posts and
locks the pre-existing order, but remains
undisplayed. If a Midpoint Peg PostOnly Order would cross a pre-existing
order, however, the crossing orders will
execute. A Midpoint Peg Post-Only
Order that posts to the book and locks
a pre-existing non-displayed order
executes against an incoming order only
if the price of the incoming buy (sell)
order is higher (lower) than the price of
the pre-existing order. If a Midpoint
Pegged Order and a Midpoint Peg PostOnly Order are locked, and a Midpoint
Pegged Order is entered on the same
side of the market as the Midpoint Peg
Post-Only Order, the new order executes
against the original Midpoint Pegged
Order, because the market participant
entering the Midpoint Peg Post-Only
Order has expressed its intention not to
execute against posted liquidity, and
therefore cedes execution priority to the
new order.
In a pricing environment
characterized by fees on one side of a
trade being used to fund rebates on the
other side, the Midpoint Peg Post-Only
Order and similar orders were
introduced on PSX and various other
markets to allow market participants to
structure their trading activity in a
manner that is more likely to avoid a fee
and earn a rebate. In exchange, the party
entering the order also generally
provides price improvement to its
counterparty. In order to simplify order
processing and evaluate the effect of the
order type on overall market quality,
however, PSX is proposing to eliminate
the Midpoint Peg Post-Only Order,
while retaining the Midpoint Pegged
Order as a means by which market
participants may offer hidden liquidity
VerDate Mar<15>2010
20:23 Jul 10, 2014
Jkt 232001
with price improvement at the midpoint
between the NBBO.3
Phlx is also proposing to modify the
functioning of PSX’s Minimum Quantity
Order. A Minimum Quantity Order is an
order that will not execute unless a
specified minimum quantity of shares
can be obtained. Minimum Quantity
Orders are not displayed, and upon
entry must have a size and a minimum
quantity condition of at least one round
lot. In the event that the shares
remaining in the size of the order
following a partial execution thereof are
less than the minimum quantity
specified by the market participant
entering the order, the minimum
quantity value of the order is reduced to
the number of shares remaining. Phlx is
proposing to modify this final
condition, so that if the shares
remaining in the size of the order are
less than one round lot, the minimum
quantity condition will be removed
from the order. The change will simplify
processing of Minimum Quantity Orders
by ensuring that once a partially
executed order is reduced in size to less
than one round lot (generally 100
shares), no restrictions prevent
execution of the remainder of the order.
The change is also consistent with the
existing requirement that a Minimum
Quantity Order must be entered with a
size and a minimum quantity restriction
of at least one round lot. Phlx believes
that the change will improve the
efficiency of order processing on PSX by
limiting the extent to which small
Minimum Quantity Orders remain on
the PSX book.
Phlx proposes to implement the rule
change on or shortly after a date that is
thirty days after the date of this
proposed rule change, and will notify
members of the date of implementation
through a widely disseminated notice.
2. Statutory Basis
Phlx believes that the proposed rule
change is consistent with the provisions
of Section 6 of the Act,4 in general, and
with Section 6(b)(5) of the Act,5 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
3 In addition to eliminating the order description
from Rule 3301, Phlx is also making conforming
changes to Rule 3305 and the NASDAQ OMX PHLX
LLC Pricing Schedule.
4 15 U.S.C. 78f.
5 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00119
Fmt 4703
Sfmt 4703
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest.
Although the availability of the
Midpoint Peg Post-Only Order is
consistent with the Act because the
order type was designed to provide
market participants with better control
over their execution costs and to
provide a means to offer price
improvement opportunities, Phlx
believes that the elimination of the
order type, together with the continued
availability of the Midpoint Pegged
Order are likewise consistent with the
Act. Specifically, the proposal would
allow market participants that seek to
provide liquidity at the midpoint
between the NBBO to use the Midpoint
Pegged Order to do so. Accordingly, the
change is designed to facilitate
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, by reducing the
complexity of order-type interaction on
PSX while still allowing for liquidity
provision with price improvement at the
midpoint.
The proposed change to Minimum
Quantity Orders is consistent with the
Act because it will promote the
complete execution of partially
executed Minimum Quantity Orders
once the order is reduced in size to less
than one round lot. The change will
thereby remove impediments to a free
and open market by promoting order
interaction and reducing the complexity
of PSX’s order processing.
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.
The change to eliminate the Midpoint
Peg Post-Only Order will provide a
means by which PSX may distinguish
itself from trading venues that offer
orders similar to the Midpoint Peg PostOnly Order. Accordingly, the change
has the potential to promote
competition by allowing PSX to
differentiate itself from other trading
venues. Similarly, the proposed change
to the Midpoint Peg Post-Only Order
and Minimum Quantity Orders has the
potential to promote competition by
enhancing the efficiency of PSX’s
processing of orders. In both instances,
the changes would not affect the ability
of market participants to avail
themselves of alternative order-type
E:\FR\FM\11JYN1.SGM
11JYN1
Federal Register / Vol. 79, No. 133 / Friday, July 11, 2014 / Notices
processing at other trading venues, and
therefore would not impose any burden
on competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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 6 and
subparagraph (f)(6) of Rule 19b–4
thereunder.7
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, as amended, 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–2014–40 on the subject line.
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
SECURITIES AND EXCHANGE
COMMISSION
All submissions should refer to File
Number SR–Phlx–2014–40. 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–Phlx–
2014–40, and should be submitted on or
before August 1, 2014.
[Release No. 34–72550; File No. SR–OCC–
2014–802]
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–16189 Filed 7–10–14; 8:45 am]
BILLING CODE 8011–01–P
tkelley on DSK3SPTVN1PROD with NOTICES
6 15
7 17
20:23 Jul 10, 2014
Jkt 232001
PO 00000
July 7, 2014.
On May 8, 2014, The Options Clearing
Corporation (‘‘OCC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) advance notice SR–
OCC–2014–802 (‘‘Advance Notice’’)
pursuant to Section 806(e)(1) of the
Payment, Clearing, and Settlement
Supervision Act of 2010 (‘‘Clearing
Supervision Act’’ or ‘‘Title VIII’’) 1 and
Rule 19b–4(n)(1)(i) under the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’).2 The Advance Notice was
published for comment in the Federal
Register on June 3, 2014.3 The
Commission did not receive any
comments on the Advance Notice
publication. This publication serves as a
notice of no objection to the Advance
Notice.
I. Description of the Advance Notice
OCC is proposing to: (i) amend its ByLaws and Governance Committee
Charter to combine the current
Nominating Committee (‘‘NC’’) and
Governance Committee (‘‘GC’’) to
establish a single Governance and
Nominating Committee (‘‘GNC’’), (ii)
make changes concerning OCC’s
nomination process for Directors, and
(iii) increase the number of Public
Directors on OCC’s Board of Directors
(‘‘Board’’) from three to five. The
proposed modifications are based on
recommendations from the GC in the
course of carrying out its mandate of
U.S.C. 5465(e)(1).
CFR 240.19b–4(n)(1)(i). OCC is a designated
financial market utility and is required to file
advance notices with the Commission. See 12
U.S.C. 5465(e). OCC also filed the proposal
contained in the Advance Notice as a proposed rule
change under Section 19(b)(1) of the Exchange Act
and Rule 19b–4 thereunder. See SR–OCC–2014–09.
The Commission published notice of the proposed
rule change in the Federal Register on May 30,
2014 and did not receive any comments on the
proposal. See Exchange Act Release No. 34–72242
(May 23, 2014), 79 FR 31166 (May 30, 2014) (SR–
OCC–2014–09).
3 Release No. 34–72268 (May 28, 2014), 79 FR
31998 (June 3, 2014) (SR–OCC–2014–802)
(‘‘Notice’’).
2 17
• Send paper comments in triplicate
to Secretary, Securities and Exchange
U.S.C. 78s(b)(3)(a)(ii) [sic].
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.
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of No Objection to Advance Notice
Filing Concerning the Consolidation of
the Governance Committee and
Nominating Committee Into a Single
Committee, Changes to the
Nominating Process for Directors, and
Increasing the Number of Public
Directors on The Options Clearing
Corporation’s Board of Directors
1 12
Paper Comments
VerDate Mar<15>2010
40177
8 17
CFR 200.30–3(a)(12).
Frm 00120
Fmt 4703
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E:\FR\FM\11JYN1.SGM
11JYN1
]]>Agencies
[Federal Register Volume 79, Number 133 (Friday, July 11, 2014)]
[Notices]
[Pages 40175-40177]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16189]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72546; File No. SR-Phlx-2014-40]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Eliminate
the Midpoint Peg Post-Only Order and Modify the Minimum Quantity Order
on NASDAQ OMX PSX
July 7, 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 June 23, 2014, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\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 eliminate the Midpoint Peg Post-Only Order
and to modify the functioning of the Minimum Quantity Order on NASDAQ
OMX PSX (``PSX''). The text of the proposed rule change is available at
https://nasdaqomxphlx.cchwallstreet.com/nasdaqomxphlx/phlx/, at the
Exchange's principal office, 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
[[Page 40176]]
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 two modifications to order types on PSX. First,
Phlx is proposing to eliminate the Midpoint Peg Post-Only Order. Like a
regular Midpoint Pegged Order, a Midpoint Peg Post-Only Order is a non-
displayed order that is priced at the midpoint between the national
best bid and best offer (``NBBO''). However, like a Post-Only Order,
the Midpoint Peg Post-Only Order does not remove liquidity from PSX
upon entry if it would lock a non-displayed order on PSX. Rather, the
Midpoint Peg Post-Only Order posts and locks the pre-existing order,
but remains undisplayed. If a Midpoint Peg Post-Only Order would cross
a pre-existing order, however, the crossing orders will execute. A
Midpoint Peg Post-Only Order that posts to the book and locks a pre-
existing non-displayed order executes against an incoming order only if
the price of the incoming buy (sell) order is higher (lower) than the
price of the pre-existing order. If a Midpoint Pegged Order and a
Midpoint Peg Post-Only Order are locked, and a Midpoint Pegged Order is
entered on the same side of the market as the Midpoint Peg Post-Only
Order, the new order executes against the original Midpoint Pegged
Order, because the market participant entering the Midpoint Peg Post-
Only Order has expressed its intention not to execute against posted
liquidity, and therefore cedes execution priority to the new order.
In a pricing environment characterized by fees on one side of a
trade being used to fund rebates on the other side, the Midpoint Peg
Post-Only Order and similar orders were introduced on PSX and various
other markets to allow market participants to structure their trading
activity in a manner that is more likely to avoid a fee and earn a
rebate. In exchange, the party entering the order also generally
provides price improvement to its counterparty. In order to simplify
order processing and evaluate the effect of the order type on overall
market quality, however, PSX is proposing to eliminate the Midpoint Peg
Post-Only Order, while retaining the Midpoint Pegged Order as a means
by which market participants may offer hidden liquidity with price
improvement at the midpoint between the NBBO.\3\
---------------------------------------------------------------------------
\3\ In addition to eliminating the order description from Rule
3301, Phlx is also making conforming changes to Rule 3305 and the
NASDAQ OMX PHLX LLC Pricing Schedule.
---------------------------------------------------------------------------
Phlx is also proposing to modify the functioning of PSX's Minimum
Quantity Order. A Minimum Quantity Order is an order that will not
execute unless a specified minimum quantity of shares can be obtained.
Minimum Quantity Orders are not displayed, and upon entry must have a
size and a minimum quantity condition of at least one round lot. In the
event that the shares remaining in the size of the order following a
partial execution thereof are less than the minimum quantity specified
by the market participant entering the order, the minimum quantity
value of the order is reduced to the number of shares remaining. Phlx
is proposing to modify this final condition, so that if the shares
remaining in the size of the order are less than one round lot, the
minimum quantity condition will be removed from the order. The change
will simplify processing of Minimum Quantity Orders by ensuring that
once a partially executed order is reduced in size to less than one
round lot (generally 100 shares), no restrictions prevent execution of
the remainder of the order. The change is also consistent with the
existing requirement that a Minimum Quantity Order must be entered with
a size and a minimum quantity restriction of at least one round lot.
Phlx believes that the change will improve the efficiency of order
processing on PSX by limiting the extent to which small Minimum
Quantity Orders remain on the PSX book.
Phlx proposes to implement the rule change on or shortly after a
date that is thirty days after the date of this proposed rule change,
and will notify members of the date of implementation through a widely
disseminated notice.
2. Statutory Basis
Phlx believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\4\ in general, and with Section
6(b)(5) of the Act,\5\ 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.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Although the availability of the Midpoint Peg Post-Only Order is
consistent with the Act because the order type was designed to provide
market participants with better control over their execution costs and
to provide a means to offer price improvement opportunities, Phlx
believes that the elimination of the order type, together with the
continued availability of the Midpoint Pegged Order are likewise
consistent with the Act. Specifically, the proposal would allow market
participants that seek to provide liquidity at the midpoint between the
NBBO to use the Midpoint Pegged Order to do so. Accordingly, the change
is designed to facilitate 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, by reducing the complexity of order-type interaction
on PSX while still allowing for liquidity provision with price
improvement at the midpoint.
The proposed change to Minimum Quantity Orders is consistent with
the Act because it will promote the complete execution of partially
executed Minimum Quantity Orders once the order is reduced in size to
less than one round lot. The change will thereby remove impediments to
a free and open market by promoting order interaction and reducing the
complexity of PSX's order processing.
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. The change to
eliminate the Midpoint Peg Post-Only Order will provide a means by
which PSX may distinguish itself from trading venues that offer orders
similar to the Midpoint Peg Post-Only Order. Accordingly, the change
has the potential to promote competition by allowing PSX to
differentiate itself from other trading venues. Similarly, the proposed
change to the Midpoint Peg Post-Only Order and Minimum Quantity Orders
has the potential to promote competition by enhancing the efficiency of
PSX's processing of orders. In both instances, the changes would not
affect the ability of market participants to avail themselves of
alternative order-type
[[Page 40177]]
processing at other trading venues, and therefore would not impose any
burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 \6\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\7\
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\6\ 15 U.S.C. 78s(b)(3)(a)(ii) [sic].
\7\ 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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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, as amended, 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-2014-40 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2014-40. 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-
Phlx-2014-40, and should be submitted on or before August 1, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16189 Filed 7-10-14; 8:45 am]
BILLING CODE 8011-01-P
