[Federal Register Volume 77, Number 5 (Monday, January 9, 2012)]
[Notices]
[Pages 1099-1101]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-95]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66079; File No. SR-Phlx-2011-178]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing of Proposed Rule Change Relating to Stock Execution Clerks
January 3, 2012.
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 December 20, 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, II, and III, below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange, pursuant to Section 19(b)(1) of the Act \3\ and Rule
19b-4 thereunder,\4\ proposes to eliminate the stock execution clerk
category from its Rules.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(b)(1).
\4\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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, on the Commission's Web site
at http://www.sec.gov/, 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
[[Page 1100]]
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to eliminate the
category of stock execution clerk from the Exchange's Rules. This
registration capacity is outdated and no longer necessary.
A stock execution clerk is currently defined in Exchange Rule 1090
as any clerk other than a specialist clerk on the Exchange trading
floor who functions as an intermediary in a transaction (i) Consummated
on the Exchange; (ii) entered verbally for execution other than on the
Exchange; or (iii) entered into a third party system designed to
execute transactions other than on the Exchange.\5\ A stock execution
clerk is intended to provide a service to Exchange members on the
Options Floor by accepting orders for the purchase and sale of
securities underlying options transactions. Once such orders are
accepted, the stock execution clerk forwards such orders to the
appropriate marketplace for execution. The transactions executed are
typically hedging transactions in underlying stocks for Exchange
specialists and Registered Options Traders.\6\ Any member or member
organization engaged as a stock execution clerk is required to register
that person as such with the Exchange's Membership Department. A stock
execution clerk that performs any function other than a solely clerical
or ministerial function shall, prior to performing any function as a
stock execution clerk, (i) Comply with the registration requirement(s)
set forth in Exchange Rule 604, where applicable; (ii) disclose in
detail to the Exchange, on an annual basis, the specific nature of such
additional function(s); and (iii) in accordance with Exchange Rule 748,
submit to the Exchange written supervisory procedures relating to such
member or member organization's activities as a stock execution
clerk.\7\
---------------------------------------------------------------------------
\5\ See Exchange Rule 1090, Commentary .01(a). Further, no stock
execution clerk shall: (i) Act as an intermediary in any transaction
other than under the direct supervision of a member; (ii) enter into
any clearing transaction or participate in any clearing process;
(iii) have discretion or independent authority over any account or
transaction. See Exchange Rule 1090, Commentary .01(d).
\6\ A Registered Options Trader (``ROT'') includes a SQT, a RSQT
and a Non-SQT, which by definition is neither a SQT or a RSQT. A
Registered Option Trader is defined in Exchange Rule 1014(b) as a
regular member or a foreign currency options participant of the
Exchange located on the trading floor who has received permission
from the Exchange to trade in options for his own account. See
Exchange Rule 1014(b)(i) and (ii).
\7\ See Exchange Rule 1090, Commentary .01(b).
---------------------------------------------------------------------------
In 1999, the Exchange adopted Exchange Rule 620 entitled ``Trading
Floor Registration'' and required all trading floor personnel,
including clerks, interns, stock execution clerks and other associated
persons of a member to register with the Exchange in order to more
efficiently monitor individuals on the Exchange's trading floor and
their current status.\8\ In 2001, the Exchange adopted Rule 1090
entitled ``Clerk'' to specifically define a clerk as any registered on-
floor person employed by or associated with a member or member
organization who is not a member and is not eligible to effect
transactions on the Options Floor as a Specialist, Registered Options
Trader, or Floor Broker in order to identify a category of all persons
that are not members of the Exchange and who are not eligible to effect
transactions, but are located on the Exchange's Options Floor.\9\
Further, the Exchange specifically identified two types of clerks, a
stock execution clerk and a specialist clerk.\10\ In that rule change,
the Exchange noted that stock execution clerks must clear transactions
through a NASD (now the Financial Industry Regulatory Authority or
``FINRA'') member firm, and determine whether their activities as stock
execution clerks require them to be registered as NASD (now FINRA)
members.\11\ The Exchange intended that the activities of stock
execution clerks should be conducted consistently with the Act and the
rules and regulations thereunder.
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 42365 (January 28,
2000), 65 FR 5922 (February 7, 2000) (SR-Phlx-99-46).
\9\ See Securities Exchange Act Release No. 46505 (September 17,
2002), 67 FR 60273 (September 25, 2002) (SR-Phlx-2001-104). The
Exchange notes that only Exchange members may bid for and offer
securities in the open market on the Exchange Floor. See Exchange
Rule 104.
\10\ See Rule 1090 at Commentary .01 and 02.
\11\ See Securities Exchange Act Release No. 46505 (September
17, 2002), 67 FR 60273 (September 25, 2002) (SR-Phlx-2001-104). See
also Section 15(b)(8) of the Act.
---------------------------------------------------------------------------
The Exchange is proposing to eliminate this registration category
because there are no clerks registered as a stock execution clerks
today on the trading floor. There are still persons registered as
clerks and specialist clerks pursuant to Rule 1090, but there are not
individuals performing the duties of a stock execution clerk at the
Exchange, nor has there been for some time.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \12\ in general, and furthers the objectives of Section
6(b)(5) of the Act \13\ in particular, in that it is designed 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, by eliminating a registration category that is no longer
necessary. Today, the function of a stock execution clerk has become
largely automated. The transactions that were handled by stock
execution clerks take place off-floor today and mostly occur
electronically. This type of business is not conducted on the
Exchange's trading floor today. For these reasons and in the interest
of maintaining current and updated Rules, the Exchange believes that
eliminating the stock execution clerk category provides greater clarity
to members.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
[[Page 1101]]
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 No. SR-Phlx-2011-178 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 No. SR-Phlx-2011-178. 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 No. SR-Phlx-2011-178 and should be
submitted on or before January 30, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-95 Filed 1-6-12; 8:45 am]
BILLING CODE 8011-01-P