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Notice

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Clearing Arrangements

 

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August 9, 2012.

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 30, 2012, 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.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Back to Top

The Exchange proposes to adopt a new Rule 1046 entitled “Clearing Arrangements” to further clarify the text of Exchange Rule 911, entitled “Member and Member Organization Participation” with respect to the requirement to have a membership in or access arrangement with a clearing agency.

The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqtrader.com/micro.aspx?id=PHLXfilings, 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 Back to Top

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 purpose of the proposed rule change is to adopt a new Rule 1046 to provide clarity for members or member organizations that are conducting an options business on the Exchange. Exchange Rule 911 requires initial and continuing compliance with the provisions of Exchange Rule 911 to participate in the Exchange as a member or member organization. Specifically, Rule 911(a)(2) states that “membership in, or access arrangement with a member of, a clearing agency registered with the Commission which maintains facilities through which Exchange compared trades may be settled” is required initially upon membership with the Exchange and must be continually maintained during membership. The Rule applies broadly to all members and member organizations, whether they conduct equities or options business, but does not specifically define what qualifies as a clearing arrangement.

The Exchange is proposing to clarify this requirement by adopting Rule 1046, entitled “Clearing Arrangements,” specifically applicable to Exchange members and member organizations conducting an options business. Rule 1046 would require a member or member organization conducting an options business to either have a direct membership in The Options Clearing Corporation (“the OCC”), or an indirect relationship with an Exchange member organization that is a clearing member of the OCC.

The Exchange believes the proposed language further clarifies the existing requirement of Rule 911 by specifying that a clearing arrangement means a direct membership with the OCC or an indirect relationship with an Exchange member organization that has a membership in the OCC. The Exchange believes this is not a substantive change but rather a clarifying amendment.

2. Statutory Basis

The Exchange believes that its proposal is consistent with Section 6(b) of the Act [3] in general, and furthers the objectives of Section 6(b)(5) of the Act [4] 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.

The Exchange believes that clarifying its current text by adopting a new Rule 1046 to specify the types of clearing arrangements a member or member organization conducting an options business is required to obtain and maintain will assist prospective and current members in understanding the obligations of Rule 911 relating to clearing arrangements. The proposed rule serves to codify with specificity the obligations which today apply to current Exchange members and member organizations. [5] The proposed amendment is non-substantive.

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 Back to Top

Pursuant to Section 19(b)(3)(A) of the Act [6] and Rule 19b-4(f)(1) [7] thereunder, the Exchange has designated this proposal as one that constitutes a stated policy, practice or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the SRO, and therefore has become effective.

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 should be approved or disapproved.

IV. Solicitation of Comments Back to Top

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

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-2012-101. 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 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-Phlx-2012-101 and should be submitted on or before September 5, 2012.

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. [8]

Kevin M. O'Neill,

Deputy Secretary.

[FR Doc. 2012-19981 Filed 8-14-12; 8:45 am]

BILLING CODE 8011-01-P

Footnotes Back to Top

5. All current members and member organizations today comply with proposed Rule 1046.

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