[Federal Register Volume 76, Number 225 (Tuesday, November 22, 2011)]
[Notices]
[Pages 72233-72235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-30058]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65764; File No. SR-Phlx-2011-153]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Add Good-
till-Cancelled and Discretionary Orders
November 16, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that on November 10, 2011, NASDAQ OMX PHLX LLC (``PHLX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II, below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposed rule change to adopt the
following two new Time in Force conditions in Rule 3301(h): System
Hours Good-till-Cancelled (``SGTC'') and Market Hours GTC (``MGTC'') on
NASDAQ OMX PSX (``PSX''), as described below. PHLX also proposes to
amend Rules 3301(f)(1), 3305, Order Entry Parameters, and 3306, Entry
and Display of Orders, to add Discretionary Orders.
The text of the proposed rule change is available on the Exchange's
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings,
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.
[[Page 72234]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to add some new features
to the PSX Market, as described below.
Time in Force
Currently, Rule 3301(h) provides that the term ``Time in Force''
means the period of time that the System will hold an order for
potential execution. Time in force conditions, which are listed in Rule
3305(a)(1)(A), include System Hours Expire Time (``SHEX''), System
Hours Day (``SDAY''), System Hours Immediate or Cancel (``SIOC''), or
Good-til-Market Close ``GTMC''). At this time, two new designations are
being added. First, PHLX proposes to adopt, in Rule 3301(h)(3), that
``System Hours Good-till-Cancelled'' or ``SGTC'' shall mean, for orders
so designated, that if after entry into the System, the order is not
fully executed, the order (or unexecuted portion thereof) shall remain
available for potential display and/or execution from 7 a.m. until 8
p.m. Eastern Time \3\ unless cancelled by the entering party, or until
1 year after entry, whichever comes first.
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\3\ The PSX Market operates until 8 p.m.
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Second, PHLX proposes to adopt, as Rule 3301(h)(7), ``Market Hours
GTC'' or ``MGTC,'' which shall mean for orders so designated, that if
after entry into System, the order is not fully executed, the order (or
unexecuted portion thereof) shall remain available for potential
display and/or execution unless cancelled by the entering party, or
until 1 year after entry, whichever comes first. MGTC Orders shall be
available for entry from 7 a.m. until 8 p.m. Eastern Time and for
potential execution from 9:30 a.m. until 4 p.m. Eastern Time.
Lastly, PHLX proposes to amend Rule 3305(a)(1)(A) to add SGTC and
MGTC designations to this rule, which lists the various Time in Force
designations available. PHLX proposes to delete the sentence in Rule
3305(a)(1)(B) that provides that, in addition to such other
designations as may be chosen by a participant, all System orders must
be entered with a Time in Force of System Hours Immediate or Cancel or
designated as a Pegged Order, an Intermarket Sweep Order, a Price to
Comply order, or a Post-Only Order. With the addition of two GTC
designations, this provision is obsolete.
PHLX believes that these two new Time in Force designations should
be useful to PHLX participants and may attract additional business to
PHLX.
Discretionary Orders
PHLX also proposes to adopt a new order type, Discretionary Orders,
which are orders that have a displayed price and size, as well as a
non-displayed discretionary price range, at which the entering party,
if necessary, is also willing to buy or sell. The non-displayed trading
interest is not entered into the System book but is, along with the
displayed size, converted to an IOC buy (sell) order priced at the
highest (lowest) price in the discretionary price range when displayed
shares become available or an execution takes place at any price within
the discretionary price range. The generation of this IOC order is
triggered by the cancellation of the open shares of the Discretionary
Order. If more than one Discretionary Order is available for conversion
to an IOC order, the system will convert all such orders at the same
time and priority will be given to the first IOC order(s) that reaches
the trading interest on the other side of the market. If an IOC order
is not executed in full, the unexecuted portion of the order is
automatically re-posted and displayed in the System book with a new
time stamp, at its original displayed price, and with its non-displayed
discretionary price range.
For example, the market on the PHLX is $10.00 x $10.05 and Order A
is entered as a bid for 1,000 shares at $10.00 with a discretionary
price of $10.03. It posts on the book at $10.00. Order B is an offer
for 500 shares at $10.03 which posts on the book. Order A is cancelled
by the system and a 500 share IOC (Order C) is sent into the system to
take out Order B at $10.03. Orders C and B trade at $10.03, after which
the remaining 500 shares of the original discretionary order (Order A)
post on the book at $10.00.
The Exchange proposes to adopt the definition of Discretionary
Orders as Rule 3301(f)(1) in the Definitions section where order types
are defined. In addition, the Exchange proposes to add Discretionary
Orders to Rule 3305(a)(1)(B), which lists various order types, and Rule
3306(c)(3)(B), which governs the display of orders. With respect to the
display of orders, Rule 3306 generally states that the System will
display the aggregate size of all quotes and orders at the best price
to buy and sell resident in the System. Discretionary Orders will be
added as an exception, similar to Reserve Size, because Discretionary
Orders, by definition, have a non-displayed discretionary price range.
PHLX believes that Discretionary Orders are useful to market
participants, because this order type enables participants to provide
price improvement beyond the price at which they are willing to submit
an order today; when the price of an order is displayed, the result may
be that the market has moved, reflecting that order. Some market
participants prefer not to advertise their order but are willing to
provide price improvement.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\4\ in general, and with
Sections 6(b)(5) of the Act,\5\ in particular, in that the proposal is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest, because it
offers PHLX participants an additional Time in Force to better manage
their orders and risk, which should, in turn, attract additional orders
to the Exchange and enhance the Exchange's competitive position.
Furthermore, Discretionary Orders should enable participants to provide
price improvement beyond the price at which they are willing to submit
an order today, consistent with just and equitable principles of trade,
removing impediments to and perfecting the mechanism of a free and open
market and a national market system, and, in general, protecting
investors and the public interest.
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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
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.
[[Page 72235]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act \6\ and Rule 19b-4(f)(6) \7\
thereunder.
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\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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The Exchange has requested that the Commission waive the 30-day
operative delay so that the proposed rule change may become effective
and operative upon filing with the Commission. The Commission believes
waiver of the 30-day operative delay is in the interest of investors
because it will expedite the introduction of new features to the PHLX
equities market. The features are currently available on other
exchanges, and the Commission sees no reason to delay their
introduction at the Exchange. Therefore, the Commission designates the
proposal to be operative upon filing.\8\
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\8\ For purposes only of waiving the 30-day operative delay, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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 (http://www.sec.gov/rules/sro.shtml;) or
Send an email to [email protected]. Please include
File Number SR-Phlx-2011-153 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2011-153. 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
a.m. and 3 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-2011-153 and should be
submitted on or before December 13, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-30058 Filed 11-21-11; 8:45 am]
BILLING CODE 8011-01-P