Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules 1092 and 124, and Modify the Phlx Pricing Schedule, 44164-44166 [2015-18134]
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44164
Federal Register / Vol. 80, No. 142 / Friday, July 24, 2015 / Notices
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–CBOE–
2015–064 and should be submitted on
or before August 14, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–18131 Filed 7–23–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75488; File No. SR–Phlx–
2015–65]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Rules 1092 and 124, and Modify the
Phlx Pricing Schedule
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to (1) amend
Rule 1092 to assess a $500 Appeal Fee
against a member or member
organization which initiates and loses
an appeal of an Options Exchange
Official (‘‘Official’’) determination
regarding an Obvious Error or
Catastrophic Error, and to pass through
other market center charges associated
with obvious error determinations; (2)
amend Rule 124, to clarify that that the
$250 appeal fee provided for in Rule
124(d) will not apply to appeals of
Obvious Error or Catastrophic Error
determinations, and (3) to modify the
Phlx Pricing Schedule (‘‘Pricing
Schedule’’) to reflect the new $500
Appeal Fee and pass-through charges
from other market centers.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxphlx.cchwallstreet.com/, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
July 20, 2015.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 15,
2015, NASDAQ OMX PHLX LLC
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On May 8, 2015 the Exchange filed a
proposed rule change (the ‘‘1092
Replacement Filing’’) to delete Rule
1092, Obvious Errors and Catastrophic
Errors, and replace it with new Rule
1092 entitled ‘‘Nullification and
Adjustment of Options Transactions
including Obvious Errors’’ (‘‘New Rule
1092’’). New Rule 1092 also became
operative on May 8, 2015.3
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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3 See SR–Phlx–2015–43. New Rule 1092
harmonizes rules related to the adjustment and
nullification of erroneous options transactions with
those of other exchanges. The Exchange believes
that New Rule 1092, together with comparable rules
filed by the other options exchanges, will provide
PO 00000
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Fmt 4703
Sfmt 4703
The purpose of this proposed rule
change is to adopt a $500 Appeal Fee
that will apply in the event of
unsuccessful appeals of Official
determinations rendered pursuant to
Section (l) of New Rule 1092 and to
permit the Exchange to pass along
charges assessed by another market
center in connection with Obvious Error
and Catastrophic Error determination
requests presented to that market center
by the Exchange on a member or
member organization’s behalf. To
accommodate this proposed fee change,
the Exchange proposes to amend Rule
124, Disputes-Options, to add new
language to section (l) of New Rule
1092, and to make conforming changes
to the Exchange’s Pricing Schedule, as
described below.
(I) $500 Appeal Fee/Pass Through
Charges. The Exchange proposes to
amend section (l) of the New Rule 1092,
pursuant to which the Exchange will
assess a $500 fee against members or
member organizations who initiate a
request for an appeal of an Official’s
Obvious Error or Catastrophic Error
determination to the Exchange’s Market
Operations Review Committee
(‘MORC’’), where the appeal is
unsuccessful and the MORC votes to
uphold the Official’s determination.
Further, the new rule permits the
Exchange to pass any resulting charges
through to the relevant member or
member organization in instances where
the Exchange, on behalf of the member
or member organization, requests a
determination by another market center
that a transaction is an Obvious Error or
Catastrophic Error.
(II) Amendment to Rule 124.
Currently, Rule 124(d) provides for
assessment of a $250 fee to a member or
member organization seeking review by
the MORC of an Official ruling
regarding Obvious Errors or
Catastrophic Errors if the Official’s
ruling is sustained and not overturned
or modified by the MORC.4 The
Exchange proposes to amend Rule
124(a) to clarify that no provision of
transparency and finality with respect to the
adjustment and nullification of erroneous options
transactions, achieving consistent results for
participants across U.S. options exchanges while
maintaining a fair and orderly market, protecting
investors and protecting the public interest.
4 Exchange Rule 124(a) currently provides that
‘‘[t]his Rule 124(a) shall not apply to options
transactions that are the result of an Obvious Error
(as defined in Rule 1092).’’ However, the Exchange
currently applies Rule 124(d) to unsuccessful
appeals of Official determinations of Obvious Errors
to the MORC. The Exchange believes that fees
associated with MORC appeals of Obvious Errors or
Catastrophic Errors will be more logically set forth
in the rulebook in Rule 1092(l) which describes the
MORC appeals process for Obvious Errors and
Catastrophic Errors.
E:\FR\FM\24JYN1.SGM
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Federal Register / Vol. 80, No. 142 / Friday, July 24, 2015 / Notices
Rule 124, including the Rule 124(d)
$250 appeal fee, shall apply to Obvious
Errors or Catastrophic Errors, both of
which instead are to be subject to the
new $500 Appeal Fee provision and
procedures of Rule 1092. The Exchange
does not propose to move or make any
further changes to any provision of Rule
124, which will continue to apply to
disputes occurring on and relating to the
trading floor (but not to Obvious Errors
or Catastrophic Errors).
(III) Amendment to Pricing Schedule.
Currently, chapter VII, part D of the
Exchange’s Pricing Schedule reflects the
$5,000 Catastrophic Error Fee provided
for in prior Exchange Rule 1092(f)(ii),
which was eliminated in favor of New
Rule 1092 which does not contain such
a fee.5 The Pricing Schedule is being
revised to reflect the elimination of the
$5000 Catastrophic Error Fee and the
addition instead, pursuant to the
proposed new language in section (l) of
New Rule 1092, of the $500 Appeal Fee
and pass through charges described in
(I) above.6
2. Statutory Basis
The Exchange believes that its
proposal to amend Rule 124 and New
Rule 1092 as well as the Pricing
Schedule as proposed herein is
consistent with section 6(b) of the Act 7
in general, and furthers the objectives of
section 6(b)(4) and (b)(5) of the Act 8 in
particular, in that it provides for the
equitable allocation of reasonable dues,
fees and other charges among members
asabaliauskas on DSK5VPTVN1PROD with NOTICES
5 Pursuant
to section (f) of prior Exchange Rule
1092 titled ‘‘Obvious Error and Catastrophic
Errors,’’ if an Exchange member believed that it had
participated in a transaction that qualified as a
Catastrophic Error, it could request a determination
that a Catastrophic Error occurred. If an Options
Exchange Official determined that a Catastrophic
Error had occurred, the Options Exchange Official
would adjust the execution price of the transaction
according to Rule 1092. If it were determined that
a Catastrophic Error had not occurred, the member
requesting the determination would be assessed a
charge of $5,000 pursuant to Exchange Rule
1092(f)(ii). See Securities Exchange Act Release No.
58002 (June 23, 2008), 73 FR 36581 (June 27, 2008).
6 The purpose of removing the $5,000
Catastrophic Error Fee, as part of replacing prior
Rule 1092 with New Rule 1092 in the 1092
Replacement Filing, was to remove a potential
disincentive from requesting a review of what a
market participant may believe to be a Catastrophic
Error. Currently, the mere possibility—even if
slight—that the Official could determine not to
adjust or nullify the transaction in question and
thus trigger the assessment of the $5,000 fee may
unnecessarily deter members from requesting
reviews which they believe to be justified. By
eliminating the fee, the significant financial
consequence of an adverse decision on a review
will be lessened, and market participants should
feel more comfortable with the fairness of the
markets and the process adopted by the Exchange
for requesting Officials to conduct reviews for
determinations of Catastrophic Errors.
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(4), (5).
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and issuers and other persons using any
facility or system which Phlx operates
or controls, and is not designed to
permit unfair discrimination between
market participants to whom the
Exchange’s fees and rebates are
applicable. The $500 Appeal Fee and
the provision of pass through charges
from other market centers are proposed
herein are equitable, in that they apply
equally to all member and member
organizations lodging appeals to the
MORC pursuant to New Rule 1092(l) or
requesting Obvious Error or
Catastrophic Error determinations from
other market centers through the
Exchange. The new fee and pass
through charges are reasonable, in that
they allow the Exchange to recoup
administrative costs associated with
such MORC appeals and with seeking
Obvious Error or Catastrophic Error
determinations of other market centers,
while discouraging frivolous appeals or
determination requests. The Exchange
believes the new $500 Appeal Fee,
which would reflect a $250 increase
from the current appeal fee under Rule
124(d), is reasonable in that it will
provide the Exchange additional
resources with which to administer its
regulatory functions, including the
appeal of decisions made under New
Rule 1092.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe the proposal
will have any impact on competition.
The $500 Appeal Fee and the provision
of pass through charges from other
market centers proposed herein will
apply equally to all member and
member organizations lodging appeals
to the MORC pursuant to New Rule
1092(l) or requesting Obvious Error or
Catastrophic Error determinations from
other market centers through the
Exchange.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
PO 00000
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to section
19(b)(3)(A)(ii) of the Act.9
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
Phlx–2015–65 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–Phlx–2015–65. 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.,
9 15
Frm 00147
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44165
E:\FR\FM\24JYN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
24JYN1
44166
Federal Register / Vol. 80, No. 142 / Friday, July 24, 2015 / Notices
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
available publicly. All submissions
should refer to File Number SR–Phlx–
2015–65, and should be submitted on or
before August 14, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–18134 Filed 7–23–15; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–75490; File No. SR–BX–
2015–041]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Amend the
BX Routing Order Rule
July 20, 2015.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 10,
2015, NASDAQ OMX BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend BX
Rules at chapter VI (Trading Systems) at
section 11 (Order Routing) to clarify the
manner in which a SEEK Order will
route again after an initial routing
attempt to another market center.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxbx.cchwallstreet.com/, at the
principal office of the Exchange, and at
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
10 17
the Commission’s Public Reference
Room.
The Exchange’s rules at chapter VI,
section 11 provide for the manner in
which orders submitted to the System 3
will route to other market centers.4 The
System provides two routing options
pursuant to which orders are sent to
other available market centers for
potential execution, per the entering
firm’s instructions. The routing options
are SEEK and SRCH. Routing options
may be combined with all available
order types and times-in-force, with the
exception of order types and times-inforce whose terms are inconsistent with
the terms of a particular routing option.
The Exchange is seeking to clarify the
manner in which a SEEK order will
route again, after it is initially routed
(‘‘re-route’’).5
SEEK is a routing option pursuant to
which an order will first check the
System for available contracts for
execution. After checking the System for
available contracts, orders are sent to
other available market centers for
potential execution, per the entering
firm’s instructions. When checking the
book, the System will seek to execute at
the price at which it would send the
order to a destination market center.
SRCH is a routing option pursuant to
which an order will first check the
System for available contracts for
execution. After checking the System for
available contracts, orders are sent to
other available market centers for
term ‘‘System’’ is defined in BX Rules at
chapter VI, section 1(a).
4 Participants can designate orders as either
available for routing or not available for routing. See
chapter VI, sec. 11(a).
5 If an order is only partially routed the portion
that was not routed will be posted to the book.
PO 00000
3 The
Frm 00148
Fmt 4703
Sfmt 4703
potential execution, per the entering
firm’s instructions. When checking the
book, the System will seek to execute at
the price at which it would send the
order to a destination market center.
Both SEEK and SRCH eligible
unexecuted orders will continue to be
routed utilizing a route timer. The SEEK
or SRCH order will post to the book and
will be routed after a time period
(‘‘Route Timer’’) not to exceed one
second as specified by the Exchange on
its Web site provided that the order’s
limit price would lock or cross other
market center(s).6 If, during the Route
Timer, any new interest arrives opposite
the order that is equal to or better than
the ABBO 7 price, the order will trade
against such new interest at the ABBO
price. Eligible unexecuted orders will be
routed at the end of the Route Timer
provided the order was not filled and
the order’s limit price would continue
to lock or cross the ABBO. If an order
was routed with either the SEEK or
SRCH routing option, and has size after
such routing, it will execute against
contra side interest in the book, post in
the book, and route again pursuant to
the process described above, if
applicable, if the order’s limit price
would lock or cross another market
center(s).
With respect to SRCH Orders, if
contracts remain un-executed after
routing, they are posted on the book.
Once on the book, should the order
subsequently be locked or crossed by
another market center, it will re-route.
With SEEK orders, the rule currently
states, if contracts remain un-executed
after routing, they are posted on the
book. Once on the book at the limit
price, should the order subsequently be
locked or crossed by another market
center, the System will not route the
order to the locking or crossing market
center.
The Exchange seeks to amend the rule
text in chapter VI, section 11(a)(1)(A) to
state, while, on the book at the limit
price, should the order subsequently be
locked or crossed by another market
center, the System will not route the
order to the locking or crossing market
center. The purpose of this change is to
make clear that the SEEK order will not
re-route as long as that order is at the
limit price. The SEEK order may re6 Pursuant to section 11(c) of chapter VI, orders
sent by the System pursuant to the SEEK and SRCH
routing options to other markets would not retain
time priority with respect to other orders in the
System. If an order routed pursuant to SEEK or
SRCH is subsequently returned, in whole or in part,
that order, or its remainder, will receive a new time
stamp reflecting the time of its return to the System.
7 ABBO is the away market’s best bid or offer.
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]]>Agencies
[Federal Register Volume 80, Number 142 (Friday, July 24, 2015)]
[Notices]
[Pages 44164-44166]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18134]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75488; File No. SR-Phlx-2015-65]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Rules 1092 and 124, and Modify the Phlx Pricing Schedule
July 20, 2015.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 15, 2015, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to (1) amend Rule 1092 to assess a $500
Appeal Fee against a member or member organization which initiates and
loses an appeal of an Options Exchange Official (``Official'')
determination regarding an Obvious Error or Catastrophic Error, and to
pass through other market center charges associated with obvious error
determinations; (2) amend Rule 124, to clarify that that the $250
appeal fee provided for in Rule 124(d) will not apply to appeals of
Obvious Error or Catastrophic Error determinations, and (3) to modify
the Phlx Pricing Schedule (``Pricing Schedule'') to reflect the new
$500 Appeal Fee and pass-through charges from other market centers.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqomxphlx.cchwallstreet.com/, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On May 8, 2015 the Exchange filed a proposed rule change (the
``1092 Replacement Filing'') to delete Rule 1092, Obvious Errors and
Catastrophic Errors, and replace it with new Rule 1092 entitled
``Nullification and Adjustment of Options Transactions including
Obvious Errors'' (``New Rule 1092''). New Rule 1092 also became
operative on May 8, 2015.\3\
---------------------------------------------------------------------------
\3\ See SR-Phlx-2015-43. New Rule 1092 harmonizes rules related
to the adjustment and nullification of erroneous options
transactions with those of other exchanges. The Exchange believes
that New Rule 1092, together with comparable rules filed by the
other options exchanges, will provide transparency and finality with
respect to the adjustment and nullification of erroneous options
transactions, achieving consistent results for participants across
U.S. options exchanges while maintaining a fair and orderly market,
protecting investors and protecting the public interest.
---------------------------------------------------------------------------
The purpose of this proposed rule change is to adopt a $500 Appeal
Fee that will apply in the event of unsuccessful appeals of Official
determinations rendered pursuant to Section (l) of New Rule 1092 and to
permit the Exchange to pass along charges assessed by another market
center in connection with Obvious Error and Catastrophic Error
determination requests presented to that market center by the Exchange
on a member or member organization's behalf. To accommodate this
proposed fee change, the Exchange proposes to amend Rule 124, Disputes-
Options, to add new language to section (l) of New Rule 1092, and to
make conforming changes to the Exchange's Pricing Schedule, as
described below.
(I) $500 Appeal Fee/Pass Through Charges. The Exchange proposes to
amend section (l) of the New Rule 1092, pursuant to which the Exchange
will assess a $500 fee against members or member organizations who
initiate a request for an appeal of an Official's Obvious Error or
Catastrophic Error determination to the Exchange's Market Operations
Review Committee (`MORC''), where the appeal is unsuccessful and the
MORC votes to uphold the Official's determination. Further, the new
rule permits the Exchange to pass any resulting charges through to the
relevant member or member organization in instances where the Exchange,
on behalf of the member or member organization, requests a
determination by another market center that a transaction is an Obvious
Error or Catastrophic Error.
(II) Amendment to Rule 124. Currently, Rule 124(d) provides for
assessment of a $250 fee to a member or member organization seeking
review by the MORC of an Official ruling regarding Obvious Errors or
Catastrophic Errors if the Official's ruling is sustained and not
overturned or modified by the MORC.\4\ The Exchange proposes to amend
Rule 124(a) to clarify that no provision of
[[Page 44165]]
Rule 124, including the Rule 124(d) $250 appeal fee, shall apply to
Obvious Errors or Catastrophic Errors, both of which instead are to be
subject to the new $500 Appeal Fee provision and procedures of Rule
1092. The Exchange does not propose to move or make any further changes
to any provision of Rule 124, which will continue to apply to disputes
occurring on and relating to the trading floor (but not to Obvious
Errors or Catastrophic Errors).
---------------------------------------------------------------------------
\4\ Exchange Rule 124(a) currently provides that ``[t]his Rule
124(a) shall not apply to options transactions that are the result
of an Obvious Error (as defined in Rule 1092).'' However, the
Exchange currently applies Rule 124(d) to unsuccessful appeals of
Official determinations of Obvious Errors to the MORC. The Exchange
believes that fees associated with MORC appeals of Obvious Errors or
Catastrophic Errors will be more logically set forth in the rulebook
in Rule 1092(l) which describes the MORC appeals process for Obvious
Errors and Catastrophic Errors.
---------------------------------------------------------------------------
(III) Amendment to Pricing Schedule.
Currently, chapter VII, part D of the Exchange's Pricing Schedule
reflects the $5,000 Catastrophic Error Fee provided for in prior
Exchange Rule 1092(f)(ii), which was eliminated in favor of New Rule
1092 which does not contain such a fee.\5\ The Pricing Schedule is
being revised to reflect the elimination of the $5000 Catastrophic
Error Fee and the addition instead, pursuant to the proposed new
language in section (l) of New Rule 1092, of the $500 Appeal Fee and
pass through charges described in (I) above.\6\
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\5\ Pursuant to section (f) of prior Exchange Rule 1092 titled
``Obvious Error and Catastrophic Errors,'' if an Exchange member
believed that it had participated in a transaction that qualified as
a Catastrophic Error, it could request a determination that a
Catastrophic Error occurred. If an Options Exchange Official
determined that a Catastrophic Error had occurred, the Options
Exchange Official would adjust the execution price of the
transaction according to Rule 1092. If it were determined that a
Catastrophic Error had not occurred, the member requesting the
determination would be assessed a charge of $5,000 pursuant to
Exchange Rule 1092(f)(ii). See Securities Exchange Act Release No.
58002 (June 23, 2008), 73 FR 36581 (June 27, 2008).
\6\ The purpose of removing the $5,000 Catastrophic Error Fee,
as part of replacing prior Rule 1092 with New Rule 1092 in the 1092
Replacement Filing, was to remove a potential disincentive from
requesting a review of what a market participant may believe to be a
Catastrophic Error. Currently, the mere possibility--even if
slight--that the Official could determine not to adjust or nullify
the transaction in question and thus trigger the assessment of the
$5,000 fee may unnecessarily deter members from requesting reviews
which they believe to be justified. By eliminating the fee, the
significant financial consequence of an adverse decision on a review
will be lessened, and market participants should feel more
comfortable with the fairness of the markets and the process adopted
by the Exchange for requesting Officials to conduct reviews for
determinations of Catastrophic Errors.
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2. Statutory Basis
The Exchange believes that its proposal to amend Rule 124 and New
Rule 1092 as well as the Pricing Schedule as proposed herein is
consistent with section 6(b) of the Act \7\ in general, and furthers
the objectives of section 6(b)(4) and (b)(5) of the Act \8\ in
particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among members and issuers and
other persons using any facility or system which Phlx operates or
controls, and is not designed to permit unfair discrimination between
market participants to whom the Exchange's fees and rebates are
applicable. The $500 Appeal Fee and the provision of pass through
charges from other market centers are proposed herein are equitable, in
that they apply equally to all member and member organizations lodging
appeals to the MORC pursuant to New Rule 1092(l) or requesting Obvious
Error or Catastrophic Error determinations from other market centers
through the Exchange. The new fee and pass through charges are
reasonable, in that they allow the Exchange to recoup administrative
costs associated with such MORC appeals and with seeking Obvious Error
or Catastrophic Error determinations of other market centers, while
discouraging frivolous appeals or determination requests. The Exchange
believes the new $500 Appeal Fee, which would reflect a $250 increase
from the current appeal fee under Rule 124(d), is reasonable in that it
will provide the Exchange additional resources with which to administer
its regulatory functions, including the appeal of decisions made under
New Rule 1092.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4), (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange does not believe
the proposal will have any impact on competition. The $500 Appeal Fee
and the provision of pass through charges from other market centers
proposed herein will apply equally to all member and member
organizations lodging appeals to the MORC pursuant to New Rule 1092(l)
or requesting Obvious Error or Catastrophic Error determinations from
other market centers through the Exchange.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to section
19(b)(3)(A)(ii) of the Act.\9\
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\9\ 15 U.S.C. 78s(b)(3)(A)(ii).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-Phlx-2015-65 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2015-65. 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.,
[[Page 44166]]
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 available publicly. All
submissions should refer to File Number SR-Phlx-2015-65, and should be
submitted on or before August 14, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
Robert W. Errett,
Deputy Secretary.
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\10\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-18134 Filed 7-23-15; 8:45 am]
BILLING CODE 8011-01-P
