[Federal Register Volume 84, Number 72 (Monday, April 15, 2019)]
[Notices]
[Pages 15260-15262]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07363]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85577; File No. SR-Phlx-2019-09]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Delay the
Implementation of the FBMS FIX Interface To Submit Orders to a
Particular Floor Broker on the Options Floor
April 9, 2019.
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 March 29, 2019, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``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 proposes to delay the implementation of the FBMS FIX
Interface to submit orders to a particular Floor Broker on the options
floor.
The text of the proposed rule change is available on the Exchange's
website at http://nasdaqphlx.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
The Exchange filed a rule change to offer a new FBMS FIX interface
which connects to FBMS (``FBMS FIX Interface'') \3\ to allow members
and non-members to submit orders directly \4\ to a Floor Broker on the
Exchange's trading floor.\5\ With this new protocol, a market
participant desiring to submit an order
[[Page 15261]]
to the trading floor, who would today contact a Floor Broker
telephonically, would be able to electronically utilize an external
order management system or via instant message.\6\
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\3\ This new FBMS FIX Interface is a separate and distinct
connection from the existing FIX interface, which allows members to
send orders to the electronic match engine.
\4\ The FBMS FIX Interface would allow the market participant to
designate a particular Floor Broker through the use of a FIX tag.
\5\ See Securities Exchange Act Release No. 84180 (September 18,
2018), 83 FR 48353 (September 24, 2018) (SR-Phlx-2018-58).
\6\ An audit trail is maintained today for all orders received
by a Floor Broker.
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FBMS FIX Interface Background
An order submitted via the FBMS FIX Interface will be created by
the sender and routed to a Floor Broker. This order would be
systematized so that the Floor Broker \7\ automatically receives the
order and may then represent the order for execution. A member or non-
member would not be able to send the order directly to the System for
execution. Orders entered via the FBMS FIX Interface will require the
interaction of a Floor Broker. Orders will continue to be represented
in the trading crowd, regardless of the method in which the order was
received. Orders would be executed in the matching engine using FBMS,
after all requirements for exposure have been met.\8\
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\7\ A Floor Broker's employee may also send an order into FBMS
or the System on behalf of the Floor Broker.
\8\ The FBMS FIX Interface will allow the following types of
orders to be submitted directly to a Floor Broker: Simple Orders,
Multi-leg Orders, Cross and Non-Cross Orders, Simple Cancels, Cancel
and Replacement Orders and Floor Qualified Contingent Cross Orders.
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Proposal
The Exchange proposed to implement this functionality in Q1 of 2019
and notify market participants of the deployment date by way of an
Options Trader Alert, which will be posted on the Exchange's website.
At this time, the Exchange proposes to delay the implementation until
Q2 of 2019. The Exchange would still notify market participants via an
Options Trader Alert.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\9\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\10\ 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 proposing delaying the implementation of the FBMS FIX
Interface to allow for additional testing. The Exchange believes that
additional testing will ensure a successful launch of the FBMS FIX
Interface.
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\9\ 15 U.S.C. 78f(b).
\10\ 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. The Exchange's proposal to
delay the adoption of the FBMS FIX Interface does not impose an undue
burden on competition. Delaying the FBMS FIX Interface will allow the
Exchange additional time to test the functionality.
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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of 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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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \13\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \14\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay so
that the proposed rule change may become operative upon filing. Waiver
of the operative delay would allow the Exchange to immediately delay
the implementation of the FBMS Fix Interface to allow the Exchange
additional time to successfully implement this functionality.
Therefore, the Commission believes that waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest. Accordingly, the Commission hereby waives the operative delay
and designates the proposed rule change operative upon filing.\15\
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ For purposes only of waiving the 30-day operative delay,
the Commission also 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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change 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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-Phlx-2019-09 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-2019-09. 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 website (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
[[Page 15262]]
provisions of 5 U.S.C. 552, will be available for website 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. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-Phlx-2019-09 and should be
submitted on or before May 6, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-07363 Filed 4-12-19; 8:45 am]
BILLING CODE 8011-01-P