Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing of Amendment No. 1 and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, Related to the Priority Afforded to In-Crowd Participants Respecting Crossing, Facilitation, and Solicited Orders in Open Outcry Trading, 46474-46477 [2014-18748]

Download as PDF 46474 Federal Register / Vol. 79, No. 153 / Friday, August 8, 2014 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES need to develop this information through supporting engineering calculation or analyses? b. If a current or projected cumulative effect poses a significant challenge, what should be done to address it? For example, if more time is required to develop and provide the information, what period of time is sufficient? Are there equally effective alternatives to providing the requested information to the NRC that reduce the cumulative effects? c. Do other (NRC or other regulatory agency) regulatory actions (e.g., Orders, rules, generic letter, bulletins, 50.54(f) requests) influence licensee responses to this draft generic letter? If so what are they and do you have a suggested approach to reduce the cumulative effects in light of these other regulatory actions? d. Are there other projects that licensees are undertaking, plan to undertake, or should be undertaking that provide greater safety benefit, that might be displaced or delayed as a result of the expenditure of effort and resources to respond to this generic letter? e. Are there unintended consequences associated with responding to this generic letter at this time? f. Please comment on the NRC’s supporting justification for this generic letter. IV. Public Meeting The NRC is requesting public comments on the draft generic letter. The NRC plans to hold a public meeting approximately 45 days into the comment period to discuss draft Generic Letter 2013 XX–XX: ‘‘Treatment of Natural Phenomena Hazards In Fuel Cycle Facilities’’ (ADAMS Accession No. ML13157A158), to engage industry stakeholders and members of the public in a discussion of this issue. This meeting is scheduled during the comment period to allow industry stakeholders and members of the public time to submit comments on the proposed generic communication before the comment period closes. All comments that are to receive consideration in the final generic letter must still be submitted electronically or in writing as indicated in the ADDRESSES section of this document. Additional details regarding the meeting will be posted at least 10 days prior to the public meeting on the NRC’s Public Meeting Schedule Web site at http://www.nrc.gov/public-involve/ public-meetings/index.cfm. Information regarding topics to be discussed, changes to the agenda, whether the meeting has been cancelled or VerDate Mar<15>2010 16:51 Aug 07, 2014 Jkt 232001 rescheduled, and the time allotted for public comments can be obtained from the Public Meeting Schedule Web site. Dated at North Bethesda, Maryland, this 1st day of August 2014. For the Nuclear Regulatory Commission. Marissa Bailey, Director, Division of Fuel Cycle Safety and Safeguards, Office of Nuclear Material Safety and Safeguards. [FR Doc. 2014–18818 Filed 8–7–14; 8:45 am] BILLING CODE 7590–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72751; File No. SR–Phlx– 2014–23] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing of Amendment No. 1 and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, Related to the Priority Afforded to In-Crowd Participants Respecting Crossing, Facilitation, and Solicited Orders in Open Outcry Trading August 4, 2014. I. Introduction On April 23, 2014, NASDAQ OMX PHLX LLC (‘‘Exchange’’ or ‘‘Phlx’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to revise the priority afforded to in-crowd participants respecting crossing, facilitation, and solicited orders in open outcry trading (‘‘Proposal’’). The proposed rule change was published for comment in the Federal Register on May 13, 2014.3 On June 23, 2014, the Commission extended the time period in which to either approve the Proposal, disapprove the Proposal, or institute proceedings to determine whether to approve or disapprove the Proposal to August 11, 2014.4 The Commission received two comment letters from one commenter regarding the Proposal 5 and one 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 72119 (May 7, 2014), 79 FR 27351 (‘‘Notice’’). 4 See Securities Exchange Act Release No. 72447 (June 23, 2014), 79 FR 36569 (June 27, 2014). 5 See Letter from Michael J. Simon, Secretary and General Counsel, International Securities Exchange, LLC, dated June 3, 2014 (‘‘ISE Letter I’’); Letter from Michael J. Simon, Secretary and General Counsel, International Securities Exchange, LLC, dated July 8, 2014 (‘‘ISE Letter II’’). 2 17 PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 response letter from Phlx.6 On July 30, 2014, the Exchange filed Amendment No. 1 to the Proposal.7 The Commission is publishing this notice and order to solicit comments on the Proposal, as modified by Amendment No. 1, from interested persons and to institute proceedings under Section 19(b)(2)(B) of the Act 8 to determine whether to approve or disapprove the Proposal, as modified by Amendment No. 1. II. Description of the Proposal The Exchange proposes to amend Phlx Rule 1014, Commentary .05(c)(ii), to afford priority in open outcry trading to in-crowd participants over out-ofcrowd Streaming Quote Traders (‘‘SQTs’’) 9, Remote Specialists 10, and Remote Streaming Quote Traders (‘‘RSQTs’’ )11 and over out-of-crowd 6 See Letter from Carla Behnfeldt, Associate General Counsel, The NASDAQ OMX Group, Inc., dated June 20, 2014 (‘‘Phlx Response Letter’’). 7 In Amendment No. 1, the Exchange clarifies a reference to a previous Phlx filing and an example. Amendment No. 1 has been placed in the public comment file for SR-Phlx-2014–23 at http://www. sec.gov/comments/sr-phlx-2014-23/ phlx201423.shtml (see letter from Carla Behnfeldt, Associate General Counsel, The NASDAQ OMX Group, Inc., to Secretary, Commission, dated July 30, 2014) and also is available on the Exchange’s Web site at http://nasdaqomxphlx.cchwallstreet. com/NASDAQOMXPHLX/pdf/phlx-filings/2014/ SR-Phlx-2014-23_Amendment_1.pdf. 8 15 U.S.C. 78s(b)(2)(B). 9 An SQT is defined in Exchange Rule 1014(b)(ii)(A) as a Registered Options Trader (‘‘ROT’’) who has received permission from the Exchange to generate and submit option quotations electronically in options to which such SQT is assigned. Types of ROTs include SQTs, RSQTs and non-SQTs, which by definition are neither SQTs nor RSQTs. A Registered Options Trader is defined in Exchange Rule 1014(b)(i) as a regular member of the Exchange located on the trading floor who has received permission from the Exchange to trade in options for his own account. See Phlx Rules 1014(b)(i) and (ii). 10 A Remote Specialist is a qualified RSQT approved by the Exchange to function as a specialist in one or more options if the Exchange determines that it cannot allocate such options to a floor based specialist. A Remote Specialist has all the rights and obligations of a specialist, unless Exchange rules provide otherwise. See Phlx Rules 501 and 1020. 11 A RSQT is defined in Exchange Rule 1014(b)(ii)(B) as an ROT that is a member affiliated with a Remote Streaming Quote Trader Organization (‘‘RSQTO’’) with no physical trading floor presence who has received permission from the Exchange to generate and submit option quotations electronically in options to which such RSQT has been assigned. A qualified RSQT may function as a Remote Specialist upon Exchange approval. An RSQT may only submit such quotations electronically from off the floor of the Exchange. An RSQT may not submit option quotations in eligible options to which such RSQT is assigned to the extent that the RSQT is also approved as a Remote Specialist in the same options. An RSQT may only trade in a market making capacity in classes of options in which he is assigned or approved as a Remote Specialist. An RSQTO is a member organization in good standing that satisfies the RSQTO readiness requirements in Phlx Rule 507(a)(i). E:\FR\FM\08AUN1.SGM 08AUN1 Federal Register / Vol. 79, No. 153 / Friday, August 8, 2014 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES broker-dealer limit orders on the limit order book (but not over public customer orders) in crossing 12, facilitation 13, and solicited 14 orders, regardless of order size. Currently, Commentary .05(c)(i) to Phlx Rule 1014 provides that, in the event that a Floor Broker 15 or specialist 16 presents a non-electronic order in which an RSQT is assigned or which is allocated to a Remote Specialist, and/or in which an SQT assigned in such option is not a crowd participant (collectively, ‘‘Non-Crowd Participants’’), such Non-Crowd Participant may not participate in trades stemming from such a non-electronic order unless the non-electronic order is executed at the price quoted by the NonCrowd Participant at the time of execution. If the non-electronic order is executed at the price quoted by the NonCrowd Participant, the Non-Crowd Participant may participate in the trade unless the order was a crossing, facilitation, or solicited order with a size of at least 500 contracts on each side.17 If the order is a crossing, facilitation, or solicited order with a size of at least 500 contracts on each side, Commentary .05(c)(ii) gives priority to in-crowd participants (including, for purposes of Commentary .05(c)(ii) only, Floor Brokers) over Non-Crowd Participants and over out-of-crowd broker-dealer 12 A crossing order occurs when an options Floor Broker holds orders (except for floor qualified contingent cross orders, as defined in Exchange Rule 1064(e)) to buy and sell the same option series. Such a Floor Broker may cross such orders, provided that the trading crowd is given an opportunity to bid and offer for such option series in accordance with Exchange rules. See Phlx Rule 1064(a). 13 A facilitation order occurs when an options Floor Broker holds an options order (except for floor qualified contingent cross orders, as defined in Exchange Rule 1064(e)) for a public customer and a contra-side order. Such a Floor Broker may execute such orders as a facilitation order, provided that such Floor Broker proceeds in accordance with Exchange rules concerning facilitation orders. See Phlx Rule 1064(b). 14 A solicitation occurs whenever an order (except for floor qualified contingent cross orders, as defined in Exchange Rule 1064(e)), other than a cross, is presented for execution in the trading crowd resulting from an away-from-the-crowd expression of interests to trade by one broker dealer to another. See Phlx Rule 1064(c). 15 A ‘‘Floor Broker’’ is an individual who is registered with the Exchange for the purpose, while on the Exchange’s options floor, of accepting and handling options orders received from members and member organizations. See Phlx Rule 1060. 16 A ‘‘Specialist’’ is an Exchange member who is registered as an options specialist pursuant to Rule 1020(a). 17 This in-crowd priority applies only to crossing, facilitation, and solicited orders represented in open outcry, and does not apply to orders submitted electronically via the Exchange’s electronic options trading platform, to which other priority rules apply. See, e.g., Phlx Rules 1014(g)(vii) and (viii). VerDate Mar<15>2010 16:51 Aug 07, 2014 Jkt 232001 limit orders on the limit order book, but not over public customer orders.18 The Exchange proposes to eliminate the 500 contract minimum order size from Phlx Rule 1014, Commentary .05(c)(ii). As amended, the rule would afford priority to in-crowd participants over Non-Crowd Participants and outof-crowd broker-dealer limit orders in crossing, facilitation, and solicited orders regardless of the size of those orders. The Exchange states that it initially permitted Non-Crowd Participants to participate in Floor Broker crosses to foster electronic options trading.19 In 2006, the Exchange adopted the size requirement, which continued to permit Non-Crowd Participants to participate in smaller (under five hundred contracts) Floor Broker crosses.20 According to the Exchange, electronic options trading is well-established and there is no longer a need for such special rules and incentives to develop electronic trading further.21 The Exchange notes that another options exchange does not have the same differentiation of priority for orders of fewer than 500 contracts.22 The Exchange believes that its Proposal will encourage order flow providers to send additional crossing, facilitation, and solicited orders to the Exchange without concern that the order may not be completely executed by the trading crowd.23 The Exchange also believes that affording priority to in-crowd participants regardless of size will attract additional smaller cross orders to the Exchange and allow in-crowd market makers to compete for smaller orders.24 III. Comment Letters and Phlx’s Response As noted above, the Commission received two comment letters from one 18 According to the Exchange, public customer limit orders represented in the trading crowd and resting on the limit order book have, and will continue to have, priority over all other participants and accordingly must be executed up to the aggregate size of such orders before any in-crowd participant is entitled to priority. Public customer orders on the limit order book that are eligible for execution are required to be executed before a Floor Broker may execute its order in the crowd and/or with a contra-side order it holds. See Phlx Rule 1014, Commentary .05(c)(ii). 19 See Amendment No. 1, supra note 7. 20 See Notice, 79 FR at 27352. See also Amendment No. 1, supra note 7. 21 See Notice, 79 FR at 27352. See also Amendment No. 1, supra note 7. 22 See Notice, 79 FR at 27352–53. See also Chicago Board Options Exchange (‘‘CBOE’’) Rule 6.74, Crossing Orders. 23 See Notice, 79 FR at 27353. 24 See Notice, 79 FR at 27353–54. PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 46475 commenter25 and one response letter from Phlx.26 In its first letter, the commenter opposes the Proposal and requests that the Commission institute proceedings to disapprove the Proposal. The commenter argues that the Proposal unfairly denies electronic participants the ability to participate in the execution of open outcry orders along with in-crowd participants at the same price.27 The commenter states its view that the Exchange has not provided sufficient justification for allocating smaller trades negotiated on its floor to counterparties in the trading crowd ahead of same-priced orders from electronic participants.28 The commenter believes that the Proposal will encourage Phlx participants to bring more orders to the floor, where they may receive a higher trade allocation and may be able to internalize a trade, instead of executing those orders through electronic auction systems.29 The commenter argues that, even with the current 500 contract minimum, Phlx’s priority rules disadvantage orders being internalized to the benefit of the internalizing brokers, as these orders receive relatively little price competition.30 The commenter suggests that giving priority to small orders on the floor will further skew participants’ incentives to bring orders to the floor to achieve a frictionless ‘‘clean cross’’ and deprive customers of vigorous competition for these orders.31 The commenter states that most electronic auctions require that orders be exposed to all other participants trading on the exchange, and orders that are not exposed, such as qualified contingent crosses, are required to be for a large size.32 The commenter also argues that, because no trade information is disseminated about orders executed on the floor to electronic participants, who may be willing to provide liquidity to orders executed on the Exchange floor, such orders will not benefit from potential price improvement built into electronic auctions.33 The commenter believes that the Proposal will largely limit price competition for small orders to participants physically present in the crowd at the time a floor cross is 25 See supra note 5. supra note 6. 27 See ISE Letter I. 28 See ISE Letter I. 29 See ISE Letter I. 30 See ISE Letter I at 1–2. 31 See ISE Letter I at 2. 32 See ISE Letter I at 2. 33 See ISE Letter I at 2. 26 See E:\FR\FM\08AUN1.SGM 08AUN1 46476 Federal Register / Vol. 79, No. 153 / Friday, August 8, 2014 / Notices announced and transacted.34 The commenter further argues that the Proposal would ignore electronic orders and quotes, especially for small orders, and cause more orders to be crossed at prices that have not been sufficiently vetted by the participants most likely to offer price improvement.35 In response to the commenter’s concerns regarding in-crowd liquidity, Phlx states that on-floor liquidity on Phlx in many issues exceeds the displayed wider electronic markets.36 Phlx argues that the Proposal merely removes the 500 contract minimum and that another options exchange does not have the same differentiation of priority for orders of fewer than 500 contracts.37 Phlx believes that attracting smaller orders to the trading floor fosters an environment for on-floor liquidity providers to continue to provide price improvement and size improvement.38 In response to the commenter’s suggestion that the Proposal will facilitate internalization, Phlx states that priority will be afforded to all in-crowd participants, including market makers, not just floor brokers.39 Phlx also believes that the Proposal should encourage small participants, such as floor-based market makers, to continue to make markets, which Phlx believes will improve the quality of execution for these smaller orders.40 In its second letter, the commenter replies to the Phlx Response Letter and reiterates its request that the Commission institute proceedings to disapprove the Proposal. In response to Phlx’s statement that, based on Phlx’s experience, on-floor liquidity on Phlx in many issues exceeds the displayed wider electronic markets,41 the commenter requests that the Commission require Phlx to provide data that would allow the Commission to gauge the level of participation of floor-based market makers against orders represented in open outcry, and price improvement provided by these participants.42 The commenter questions whether Phlx needs to afford priority to in-crowd liquidity providers if they are offering active price mstockstill on DSK4VPTVN1PROD with NOTICES 34 See ISE Letter I at 2. 35 See ISE Letter I at 2. The commenter expressed its view that it is inappropriate to ignore electronic quotes, especially for smaller orders where substantial capital commitment or efforts to find liquidity are not necessary. See id. 36 See Phlx Response Letter. 37 See Phlx Response Letter (citing CBOE Rule 6.74, Crossing Orders). 38 See Phlx Response Letter at 2. 39 See Phlx Response Letter at 2. 40 See Phlx Response Letter at 2. 41 See Phlx Response Letter. 42 See ISE Letter II. VerDate Mar<15>2010 16:51 Aug 07, 2014 Jkt 232001 improvement.43 The commenter states its view that to the extent that in-crowd participants provide price improvement to orders represented in open outcry, their orders are already entitled to priority over other orders at a worse price, including electronic quotes.44 The commenter asserts that the Proposal is intended to allow in-crowd participants to internalize orders without being subject to competition from active liquidity providers in the electronic markets.45 The commenter argues that Phlx’s reliance on the CBOE rule is irrelevant as the Phlx Proposal must stand on its own, and, in any event, believes that the in-crowd priority rules of Phlx and CBOE are not in the public interest.46 The commenter argues that the proposed expansion of these rules would only foster internalization and curtail price improvement.47 IV. Proceedings To Determine Whether To Disapprove SR–Phlx–2014–23 and Grounds for Disapproval Under Consideration The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act 48 to determine whether the proposed rule change should be approved or disapproved.49 Institution of such proceedings is appropriate at this time in view of the legal and policy issues that are raised by the Proposal and are discussed below. Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, as described in greater detail below, the Commission seeks and encourages interested persons to comment on the Proposal, as modified by Amendment No. 1, and to provide the Commission with additional comment to inform the Commission’s analysis whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1. Pursuant to Section 19(b)(2)(B) of the Act, the Commission is providing notice of the grounds for disapproval under consideration. In particular, Section 43 See ISE Letter II. ISE Letter II at 1–2. 45 See ISE Letter II at 2. 46 See ISE Letter II at 2. 47 See ISE Letter II at 2. 48 15 U.S.C. 78s(b)(2)(B). 49 Section 19(b)(2)(B) of the Act provides that proceedings to determine whether to disapprove a proposed rule change must be concluded within 180 days of the date of publication of notice of the filing of the proposed rule change. The time for conclusion of the proceedings may be extended for up to an additional 60 days if the Commission finds good cause for such extension and publishes its reasons for so finding or if the self-regulatory organization consents to the extension. 44 See PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 6(b)(5) of the Act 50 requires that the rules of an exchange be designed, among other things, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, 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; and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. In addition, Section 6(b)(8) of the Act 51 requires that rules of an exchange do not impose any burden on competition not necessary or appropriate in furtherance of the Act. As discussed above, the Proposal, as modified by Amendment No. 1, would afford priority to in-crowd participants over Non-Crowd Participants and outof-crowd broker-dealer limit orders on the limit order book in crossing, facilitation, and solicited orders regardless of order size. The Exchange’s current rule affords priority to in-crowd participants over Non-Crowd Participants and out-of-crowd brokerdealer limit orders on the limit order book in crossing, facilitation, and solicited orders with a size of at least 500 contracts on each side. As noted above, the commenter opposing the Proposal raises concerns, among other things, as to whether the Proposal unfairly denies electronic participants the ability to participate in the execution of open outcry orders along with in-crowd participants at the same price. The commenter further believes that the Proposal will encourage Phlx participants to send orders to the floor where the Phlx participant may receive a higher trade allocation and be able to internalize the trade—rather than executing the order in the electronic market where the customer order may be subject to more intense price competition. The commenter further stated its belief that insulating small order customers brought to the floor from competition by electronic participants may cause more orders to be crossed at prices that have not been sufficiently vetted by the participants most likely to offer price improvement.52 This commenter believes that Phlx has provided insufficient justification for allocating smaller trades negotiated on its floor to counterparties in the trading crowd ahead of same-priced orders from electronic participants.53 50 15 U.S.C. 78f(b)(5). U.S.C. 78f(b)(8). 52 See ISE Letter I. See also ISE Letter II. 53 See ISE Letter I. 51 15 E:\FR\FM\08AUN1.SGM 08AUN1 Federal Register / Vol. 79, No. 153 / Friday, August 8, 2014 / Notices The Commission believes that questions are raised as to whether the Proposal, as modified by Amendment No. 1, is consistent with: (1) The requirements of Section 6(b)(5) of the Act, including whether the Exchange’s proposed revisions to its rules regarding the order of priority in open outcry are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, 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; and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers; and (2) the requirements of Section 6(b)(8) of the Act, including whether the Exchange’s proposed revisions to its rules regarding the order or priority in open outcry impose any unnecessary or inappropriate burden on competition. The Commission believes that the issues raised by the Proposal can benefit from additional consideration and evaluation. mstockstill on DSK4VPTVN1PROD with NOTICES V. Request for Written Comments The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the concerns identified above, as well as any others they may have with the Proposal, as modified by Amendment No. 1. In particular, the Commission invites the written views of interested persons concerning whether the proposed rule change, as modified by Amendment No. 1, is inconsistent with Sections 6(b)(5) and 6(b)(8) or any other provision of the Act, or the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4, any request for an opportunity to make an oral presentation.54 Interested persons are invited to submit written views, data, and arguments concerning Amendment No. 1 and regarding whether the proposed rule change, as modified by Amendment No. 1, should be approved or disapproved by August 29, 2014. Any person who wishes to file a rebuttal to 54 Section 19(b)(2) of the Act, as amended by the Securities Act Amendments of 1975, Pub. L. 94–29 (June 4, 1975), grants the Commission flexibility to determine what type of proceeding—either oral or notice and opportunity for written comments—is appropriate for consideration of a particular proposal by a self-regulatory organization. See Securities Act Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). VerDate Mar<15>2010 19:38 Aug 07, 2014 Jkt 232001 any other person’s submission must file that rebuttal by September 12, 2014. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– Phlx–2014–23 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–2014–23. 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 (http://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 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 publicly available. All submissions should refer to File Number SR–Phlx– 2014–23 and should be submitted on or before August 29, 2014. If comments are received, any rebuttal comments should be submitted by September 12, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.55 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–18748 Filed 8–7–14; 8:45 am] BILLING CODE 8011–01–P 55 17 CFR 200.30–3(a)(12); 17 CFR 200.30– 3(a)(57). PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 46477 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72754; File No. SR–ICEEU– 2014–11] Self-Regulatory Organizations; ICE Clear Europe Limited; Order Granting Accelerated Approval of Proposed Rule Change Relating to EMIR Requirements August 4, 2014. I. Introduction On July 7, 2014, ICE Clear Europe Limited (‘‘ICE Clear Europe’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change SR–ICEEU–2014– 11 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 July 15, 2014.3 The Commission did not receive comments on the proposed rule change. For the reasons discussed below, the Commission is granting approval of the proposed rule change on an accelerated basis. II. Description of the Proposed Rule Change ICE Clear Europe has stated that the principal purpose of the proposed rule change is to amend certain ICE Clear Europe procedural rules (‘‘Procedures’’) in order to comply with requirements under the European Market Infrastructure Regulation (including regulations and implementing technical standards thereunder, ‘‘EMIR’’) 4 that will apply to ICE Clear Europe as an authorized central counterparty and to further implement proposed changes to its Clearing Rules (the ‘‘Clearing Rules’’) relating to EMIR implementation and certain other matters as proposed in rule filing SR–ICEEU–2014–09 (the ‘‘Rule Submission’’).5 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Securities Exchange Act Release No. 34–72582 (July 10, 2014), 79 FR 41320 (July 15, 2014) (SR– ICEEU–2014–11) (This rule filing is hereinafter referred to as the ‘‘Procedures Submission’’). 4 Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories, as well as various implementing regulations and technical standards. 5 Securities Exchange Act Release No. 34–72540 (July 3, 2014), 79 FR 39429 (July 10, 2014) (SR– ICEEU–2014–09). 2 17 E:\FR\FM\08AUN1.SGM 08AUN1

Agencies

[Federal Register Volume 79, Number 153 (Friday, August 8, 2014)]
[Notices]
[Pages 46474-46477]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-18748]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72751; File No. SR-Phlx-2014-23]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing of Amendment No. 1 and Order Instituting Proceedings To 
Determine Whether To Approve or Disapprove a Proposed Rule Change, as 
Modified by Amendment No. 1, Related to the Priority Afforded to In-
Crowd Participants Respecting Crossing, Facilitation, and Solicited 
Orders in Open Outcry Trading

August 4, 2014.

I. Introduction

    On April 23, 2014, NASDAQ OMX PHLX LLC (``Exchange'' or ``Phlx'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
revise the priority afforded to in-crowd participants respecting 
crossing, facilitation, and solicited orders in open outcry trading 
(``Proposal''). The proposed rule change was published for comment in 
the Federal Register on May 13, 2014.\3\ On June 23, 2014, the 
Commission extended the time period in which to either approve the 
Proposal, disapprove the Proposal, or institute proceedings to 
determine whether to approve or disapprove the Proposal to August 11, 
2014.\4\ The Commission received two comment letters from one commenter 
regarding the Proposal \5\ and one response letter from Phlx.\6\ On 
July 30, 2014, the Exchange filed Amendment No. 1 to the Proposal.\7\ 
The Commission is publishing this notice and order to solicit comments 
on the Proposal, as modified by Amendment No. 1, from interested 
persons and to institute proceedings under Section 19(b)(2)(B) of the 
Act \8\ to determine whether to approve or disapprove the Proposal, as 
modified by Amendment No. 1.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 72119 (May 7, 2014), 
79 FR 27351 (``Notice'').
    \4\ See Securities Exchange Act Release No. 72447 (June 23, 
2014), 79 FR 36569 (June 27, 2014).
    \5\ See Letter from Michael J. Simon, Secretary and General 
Counsel, International Securities Exchange, LLC, dated June 3, 2014 
(``ISE Letter I''); Letter from Michael J. Simon, Secretary and 
General Counsel, International Securities Exchange, LLC, dated July 
8, 2014 (``ISE Letter II'').
    \6\ See Letter from Carla Behnfeldt, Associate General Counsel, 
The NASDAQ OMX Group, Inc., dated June 20, 2014 (``Phlx Response 
Letter'').
    \7\ In Amendment No. 1, the Exchange clarifies a reference to a 
previous Phlx filing and an example. Amendment No. 1 has been placed 
in the public comment file for SR-Phlx-2014-23 at http://www.sec.gov/comments/sr-phlx-2014-23/phlx201423.shtml (see letter 
from Carla Behnfeldt, Associate General Counsel, The NASDAQ OMX 
Group, Inc., to Secretary, Commission, dated July 30, 2014) and also 
is available on the Exchange's Web site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/pdf/phlx-filings/2014/SR-Phlx-2014-23_Amendment_1.pdf.
    \8\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposal

    The Exchange proposes to amend Phlx Rule 1014, Commentary 
.05(c)(ii), to afford priority in open outcry trading to in-crowd 
participants over out-of-crowd Streaming Quote Traders (``SQTs'') \9\, 
Remote Specialists \10\, and Remote Streaming Quote Traders (``RSQTs'' 
)\11\ and over out-of-crowd

[[Page 46475]]

broker-dealer limit orders on the limit order book (but not over public 
customer orders) in crossing \12\, facilitation \13\, and solicited 
\14\ orders, regardless of order size.
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    \9\ An SQT is defined in Exchange Rule 1014(b)(ii)(A) as a 
Registered Options Trader (``ROT'') who has received permission from 
the Exchange to generate and submit option quotations electronically 
in options to which such SQT is assigned. Types of ROTs include 
SQTs, RSQTs and non-SQTs, which by definition are neither SQTs nor 
RSQTs. A Registered Options Trader is defined in Exchange Rule 
1014(b)(i) as a regular member of the Exchange located on the 
trading floor who has received permission from the Exchange to trade 
in options for his own account. See Phlx Rules 1014(b)(i) and (ii).
    \10\ A Remote Specialist is a qualified RSQT approved by the 
Exchange to function as a specialist in one or more options if the 
Exchange determines that it cannot allocate such options to a floor 
based specialist. A Remote Specialist has all the rights and 
obligations of a specialist, unless Exchange rules provide 
otherwise. See Phlx Rules 501 and 1020.
    \11\ A RSQT is defined in Exchange Rule 1014(b)(ii)(B) as an ROT 
that is a member affiliated with a Remote Streaming Quote Trader 
Organization (``RSQTO'') with no physical trading floor presence who 
has received permission from the Exchange to generate and submit 
option quotations electronically in options to which such RSQT has 
been assigned. A qualified RSQT may function as a Remote Specialist 
upon Exchange approval. An RSQT may only submit such quotations 
electronically from off the floor of the Exchange. An RSQT may not 
submit option quotations in eligible options to which such RSQT is 
assigned to the extent that the RSQT is also approved as a Remote 
Specialist in the same options. An RSQT may only trade in a market 
making capacity in classes of options in which he is assigned or 
approved as a Remote Specialist. An RSQTO is a member organization 
in good standing that satisfies the RSQTO readiness requirements in 
Phlx Rule 507(a)(i).
    \12\ A crossing order occurs when an options Floor Broker holds 
orders (except for floor qualified contingent cross orders, as 
defined in Exchange Rule 1064(e)) to buy and sell the same option 
series. Such a Floor Broker may cross such orders, provided that the 
trading crowd is given an opportunity to bid and offer for such 
option series in accordance with Exchange rules. See Phlx Rule 
1064(a).
    \13\ A facilitation order occurs when an options Floor Broker 
holds an options order (except for floor qualified contingent cross 
orders, as defined in Exchange Rule 1064(e)) for a public customer 
and a contra-side order. Such a Floor Broker may execute such orders 
as a facilitation order, provided that such Floor Broker proceeds in 
accordance with Exchange rules concerning facilitation orders. See 
Phlx Rule 1064(b).
    \14\ A solicitation occurs whenever an order (except for floor 
qualified contingent cross orders, as defined in Exchange Rule 
1064(e)), other than a cross, is presented for execution in the 
trading crowd resulting from an away-from-the-crowd expression of 
interests to trade by one broker dealer to another. See Phlx Rule 
1064(c).
---------------------------------------------------------------------------

    Currently, Commentary .05(c)(i) to Phlx Rule 1014 provides that, in 
the event that a Floor Broker \15\ or specialist \16\ presents a non-
electronic order in which an RSQT is assigned or which is allocated to 
a Remote Specialist, and/or in which an SQT assigned in such option is 
not a crowd participant (collectively, ``Non-Crowd Participants''), 
such Non-Crowd Participant may not participate in trades stemming from 
such a non-electronic order unless the non-electronic order is executed 
at the price quoted by the Non-Crowd Participant at the time of 
execution. If the non-electronic order is executed at the price quoted 
by the Non-Crowd Participant, the Non-Crowd Participant may participate 
in the trade unless the order was a crossing, facilitation, or 
solicited order with a size of at least 500 contracts on each side.\17\ 
If the order is a crossing, facilitation, or solicited order with a 
size of at least 500 contracts on each side, Commentary .05(c)(ii) 
gives priority to in-crowd participants (including, for purposes of 
Commentary .05(c)(ii) only, Floor Brokers) over Non-Crowd Participants 
and over out-of-crowd broker-dealer limit orders on the limit order 
book, but not over public customer orders.\18\
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    \15\ A ``Floor Broker'' is an individual who is registered with 
the Exchange for the purpose, while on the Exchange's options floor, 
of accepting and handling options orders received from members and 
member organizations. See Phlx Rule 1060.
    \16\ A ``Specialist'' is an Exchange member who is registered as 
an options specialist pursuant to Rule 1020(a).
    \17\ This in-crowd priority applies only to crossing, 
facilitation, and solicited orders represented in open outcry, and 
does not apply to orders submitted electronically via the Exchange's 
electronic options trading platform, to which other priority rules 
apply. See, e.g., Phlx Rules 1014(g)(vii) and (viii).
    \18\ According to the Exchange, public customer limit orders 
represented in the trading crowd and resting on the limit order book 
have, and will continue to have, priority over all other 
participants and accordingly must be executed up to the aggregate 
size of such orders before any in-crowd participant is entitled to 
priority. Public customer orders on the limit order book that are 
eligible for execution are required to be executed before a Floor 
Broker may execute its order in the crowd and/or with a contra-side 
order it holds. See Phlx Rule 1014, Commentary .05(c)(ii).
---------------------------------------------------------------------------

    The Exchange proposes to eliminate the 500 contract minimum order 
size from Phlx Rule 1014, Commentary .05(c)(ii). As amended, the rule 
would afford priority to in-crowd participants over Non-Crowd 
Participants and out-of-crowd broker-dealer limit orders in crossing, 
facilitation, and solicited orders regardless of the size of those 
orders. The Exchange states that it initially permitted Non-Crowd 
Participants to participate in Floor Broker crosses to foster 
electronic options trading.\19\ In 2006, the Exchange adopted the size 
requirement, which continued to permit Non-Crowd Participants to 
participate in smaller (under five hundred contracts) Floor Broker 
crosses.\20\ According to the Exchange, electronic options trading is 
well-established and there is no longer a need for such special rules 
and incentives to develop electronic trading further.\21\ The Exchange 
notes that another options exchange does not have the same 
differentiation of priority for orders of fewer than 500 contracts.\22\ 
The Exchange believes that its Proposal will encourage order flow 
providers to send additional crossing, facilitation, and solicited 
orders to the Exchange without concern that the order may not be 
completely executed by the trading crowd.\23\ The Exchange also 
believes that affording priority to in-crowd participants regardless of 
size will attract additional smaller cross orders to the Exchange and 
allow in-crowd market makers to compete for smaller orders.\24\
---------------------------------------------------------------------------

    \19\ See Amendment No. 1, supra note 7.
    \20\ See Notice, 79 FR at 27352. See also Amendment No. 1, supra 
note 7.
    \21\ See Notice, 79 FR at 27352. See also Amendment No. 1, supra 
note 7.
    \22\ See Notice, 79 FR at 27352-53. See also Chicago Board 
Options Exchange (``CBOE'') Rule 6.74, Crossing Orders.
    \23\ See Notice, 79 FR at 27353.
    \24\ See Notice, 79 FR at 27353-54.
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III. Comment Letters and Phlx's Response

    As noted above, the Commission received two comment letters from 
one commenter\25\ and one response letter from Phlx.\26\
---------------------------------------------------------------------------

    \25\ See supra note 5.
    \26\ See supra note 6.
---------------------------------------------------------------------------

    In its first letter, the commenter opposes the Proposal and 
requests that the Commission institute proceedings to disapprove the 
Proposal. The commenter argues that the Proposal unfairly denies 
electronic participants the ability to participate in the execution of 
open outcry orders along with in-crowd participants at the same 
price.\27\ The commenter states its view that the Exchange has not 
provided sufficient justification for allocating smaller trades 
negotiated on its floor to counterparties in the trading crowd ahead of 
same-priced orders from electronic participants.\28\ The commenter 
believes that the Proposal will encourage Phlx participants to bring 
more orders to the floor, where they may receive a higher trade 
allocation and may be able to internalize a trade, instead of executing 
those orders through electronic auction systems.\29\ The commenter 
argues that, even with the current 500 contract minimum, Phlx's 
priority rules disadvantage orders being internalized to the benefit of 
the internalizing brokers, as these orders receive relatively little 
price competition.\30\ The commenter suggests that giving priority to 
small orders on the floor will further skew participants' incentives to 
bring orders to the floor to achieve a frictionless ``clean cross'' and 
deprive customers of vigorous competition for these orders.\31\ The 
commenter states that most electronic auctions require that orders be 
exposed to all other participants trading on the exchange, and orders 
that are not exposed, such as qualified contingent crosses, are 
required to be for a large size.\32\
---------------------------------------------------------------------------

    \27\ See ISE Letter I.
    \28\ See ISE Letter I.
    \29\ See ISE Letter I.
    \30\ See ISE Letter I at 1-2.
    \31\ See ISE Letter I at 2.
    \32\ See ISE Letter I at 2.
---------------------------------------------------------------------------

    The commenter also argues that, because no trade information is 
disseminated about orders executed on the floor to electronic 
participants, who may be willing to provide liquidity to orders 
executed on the Exchange floor, such orders will not benefit from 
potential price improvement built into electronic auctions.\33\ The 
commenter believes that the Proposal will largely limit price 
competition for small orders to participants physically present in the 
crowd at the time a floor cross is

[[Page 46476]]

announced and transacted.\34\ The commenter further argues that the 
Proposal would ignore electronic orders and quotes, especially for 
small orders, and cause more orders to be crossed at prices that have 
not been sufficiently vetted by the participants most likely to offer 
price improvement.\35\
---------------------------------------------------------------------------

    \33\ See ISE Letter I at 2.
    \34\ See ISE Letter I at 2.
    \35\ See ISE Letter I at 2. The commenter expressed its view 
that it is inappropriate to ignore electronic quotes, especially for 
smaller orders where substantial capital commitment or efforts to 
find liquidity are not necessary. See id.
---------------------------------------------------------------------------

    In response to the commenter's concerns regarding in-crowd 
liquidity, Phlx states that on-floor liquidity on Phlx in many issues 
exceeds the displayed wider electronic markets.\36\ Phlx argues that 
the Proposal merely removes the 500 contract minimum and that another 
options exchange does not have the same differentiation of priority for 
orders of fewer than 500 contracts.\37\ Phlx believes that attracting 
smaller orders to the trading floor fosters an environment for on-floor 
liquidity providers to continue to provide price improvement and size 
improvement.\38\ In response to the commenter's suggestion that the 
Proposal will facilitate internalization, Phlx states that priority 
will be afforded to all in-crowd participants, including market makers, 
not just floor brokers.\39\ Phlx also believes that the Proposal should 
encourage small participants, such as floor-based market makers, to 
continue to make markets, which Phlx believes will improve the quality 
of execution for these smaller orders.\40\
---------------------------------------------------------------------------

    \36\ See Phlx Response Letter.
    \37\ See Phlx Response Letter (citing CBOE Rule 6.74, Crossing 
Orders).
    \38\ See Phlx Response Letter at 2.
    \39\ See Phlx Response Letter at 2.
    \40\ See Phlx Response Letter at 2.
---------------------------------------------------------------------------

    In its second letter, the commenter replies to the Phlx Response 
Letter and reiterates its request that the Commission institute 
proceedings to disapprove the Proposal. In response to Phlx's statement 
that, based on Phlx's experience, on-floor liquidity on Phlx in many 
issues exceeds the displayed wider electronic markets,\41\ the 
commenter requests that the Commission require Phlx to provide data 
that would allow the Commission to gauge the level of participation of 
floor-based market makers against orders represented in open outcry, 
and price improvement provided by these participants.\42\ The commenter 
questions whether Phlx needs to afford priority to in-crowd liquidity 
providers if they are offering active price improvement.\43\ The 
commenter states its view that to the extent that in-crowd participants 
provide price improvement to orders represented in open outcry, their 
orders are already entitled to priority over other orders at a worse 
price, including electronic quotes.\44\ The commenter asserts that the 
Proposal is intended to allow in-crowd participants to internalize 
orders without being subject to competition from active liquidity 
providers in the electronic markets.\45\ The commenter argues that 
Phlx's reliance on the CBOE rule is irrelevant as the Phlx Proposal 
must stand on its own, and, in any event, believes that the in-crowd 
priority rules of Phlx and CBOE are not in the public interest.\46\ The 
commenter argues that the proposed expansion of these rules would only 
foster internalization and curtail price improvement.\47\
---------------------------------------------------------------------------

    \41\ See Phlx Response Letter.
    \42\ See ISE Letter II.
    \43\ See ISE Letter II.
    \44\ See ISE Letter II at 1-2.
    \45\ See ISE Letter II at 2.
    \46\ See ISE Letter II at 2.
    \47\ See ISE Letter II at 2.
---------------------------------------------------------------------------

IV. Proceedings To Determine Whether To Disapprove SR-Phlx-2014-23 and 
Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \48\ to determine whether the proposed rule 
change should be approved or disapproved.\49\ Institution of such 
proceedings is appropriate at this time in view of the legal and policy 
issues that are raised by the Proposal and are discussed below. 
Institution of proceedings does not indicate that the Commission has 
reached any conclusions with respect to any of the issues involved. 
Rather, as described in greater detail below, the Commission seeks and 
encourages interested persons to comment on the Proposal, as modified 
by Amendment No. 1, and to provide the Commission with additional 
comment to inform the Commission's analysis whether to approve or 
disapprove the proposed rule change, as modified by Amendment No. 1.
---------------------------------------------------------------------------

    \48\ 15 U.S.C. 78s(b)(2)(B).
    \49\ Section 19(b)(2)(B) of the Act provides that proceedings to 
determine whether to disapprove a proposed rule change must be 
concluded within 180 days of the date of publication of notice of 
the filing of the proposed rule change. The time for conclusion of 
the proceedings may be extended for up to an additional 60 days if 
the Commission finds good cause for such extension and publishes its 
reasons for so finding or if the self-regulatory organization 
consents to the extension.
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B) of the Act, the Commission is 
providing notice of the grounds for disapproval under consideration. In 
particular, Section 6(b)(5) of the Act \50\ requires that the rules of 
an exchange be designed, among other things, to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, 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; and are not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers. In addition, Section 6(b)(8) of the Act \51\ requires that 
rules of an exchange do not impose any burden on competition not 
necessary or appropriate in furtherance of the Act.
---------------------------------------------------------------------------

    \50\ 15 U.S.C. 78f(b)(5).
    \51\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    As discussed above, the Proposal, as modified by Amendment No. 1, 
would afford priority to in-crowd participants over Non-Crowd 
Participants and out-of-crowd broker-dealer limit orders on the limit 
order book in crossing, facilitation, and solicited orders regardless 
of order size. The Exchange's current rule affords priority to in-crowd 
participants over Non-Crowd Participants and out-of-crowd broker-dealer 
limit orders on the limit order book in crossing, facilitation, and 
solicited orders with a size of at least 500 contracts on each side. As 
noted above, the commenter opposing the Proposal raises concerns, among 
other things, as to whether the Proposal unfairly denies electronic 
participants the ability to participate in the execution of open outcry 
orders along with in-crowd participants at the same price. The 
commenter further believes that the Proposal will encourage Phlx 
participants to send orders to the floor where the Phlx participant may 
receive a higher trade allocation and be able to internalize the 
trade--rather than executing the order in the electronic market where 
the customer order may be subject to more intense price competition. 
The commenter further stated its belief that insulating small order 
customers brought to the floor from competition by electronic 
participants may cause more orders to be crossed at prices that have 
not been sufficiently vetted by the participants most likely to offer 
price improvement.\52\ This commenter believes that Phlx has provided 
insufficient justification for allocating smaller trades negotiated on 
its floor to counterparties in the trading crowd ahead of same-priced 
orders from electronic participants.\53\
---------------------------------------------------------------------------

    \52\ See ISE Letter I. See also ISE Letter II.
    \53\ See ISE Letter I.

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

[[Page 46477]]

    The Commission believes that questions are raised as to whether the 
Proposal, as modified by Amendment No. 1, is consistent with: (1) The 
requirements of Section 6(b)(5) of the Act, including whether the 
Exchange's proposed revisions to its rules regarding the order of 
priority in open outcry are designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, 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; and are not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers; and (2) the requirements of Section 6(b)(8) of the Act, 
including whether the Exchange's proposed revisions to its rules 
regarding the order or priority in open outcry impose any unnecessary 
or inappropriate burden on competition. The Commission believes that 
the issues raised by the Proposal can benefit from additional 
consideration and evaluation.

V. Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
concerns identified above, as well as any others they may have with the 
Proposal, as modified by Amendment No. 1. In particular, the Commission 
invites the written views of interested persons concerning whether the 
proposed rule change, as modified by Amendment No. 1, is inconsistent 
with Sections 6(b)(5) and 6(b)(8) or any other provision of the Act, or 
the rules and regulations thereunder. Although there do not appear to 
be any issues relevant to approval or disapproval that would be 
facilitated by an oral presentation of views, data, and arguments, the 
Commission will consider, pursuant to Rule 19b-4, any request for an 
opportunity to make an oral presentation.\54\
---------------------------------------------------------------------------

    \54\ Section 19(b)(2) of the Act, as amended by the Securities 
Act Amendments of 1975, Pub. L. 94-29 (June 4, 1975), grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by a self-regulatory 
organization. See Securities Act Amendments of 1975, Senate Comm. on 
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st 
Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written views, data, and 
arguments concerning Amendment No. 1 and regarding whether the proposed 
rule change, as modified by Amendment No. 1, should be approved or 
disapproved by August 29, 2014. Any person who wishes to file a 
rebuttal to any other person's submission must file that rebuttal by 
September 12, 2014. Comments may be submitted by any of the following 
methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2014-23 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-2014-23. 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 (http://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 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 publicly available. All 
submissions should refer to File Number SR-Phlx-2014-23 and should be 
submitted on or before August 29, 2014. If comments are received, any 
rebuttal comments should be submitted by September 12, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\55\
---------------------------------------------------------------------------

    \55\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(57).

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-18748 Filed 8-7-14; 8:45 am]
BILLING CODE 8011-01-P