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Notice

Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Update Rule 1014

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Start Preamble October 4, 2010.

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 September 27, 2010, NASDAQ OMX PHLX, Inc. (“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

The Exchange proposes to revise Rule 1014, Obligations and Restrictions Applicable to Specialists and Registered Options Traders, to delete provisions related to: (i) The obsolete terms AUTOM, Streaming Quote Option, electronic interface, AUTO-X, Book Sweep and Book Match; (ii) “trading on Phlx XL”; (iii) the use of trading floor tickets; and (iii) [sic] subparagraphs (g)(iii) and (iv), the New Unit/New Option Enhanced Specialist Participation and New Product Enhanced Specialist Participation, respectively. The Exchange also proposes to make corollary changes to Floor Procedure Advice B-6, Priority of Options Orders for Equity Options, Index Options and U.S. Dollar-Settled Foreign Currency Options by Account Type, as explained further below.

The text of the proposed rule change is available on the Exchange's Web site at http://www.nasdaqtrader.com/​micro.aspx?​id=​PHLXfilings, at the principal office of the Exchange, at the Commission's Public Reference Room, and on the Commission's Web site at http://www.sec.gov. Start Printed Page 62622

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 purpose of the proposed rule change is to clarify various provisions in Rule 1014. Specifically, certain terms are obsolete, given the Exchange's current use of the Phlx XL II System; these include: Streaming Quote Options, electronic interface, AUTO-X, Book Sweep and Book Match. Once the Exchange began enhancing its electronic trading systems, these provisions became outdated. For the same reason, references to “trading on Phlx XL” are both incorrect and unnecessary; all trading occurs through Phlx XL II.[3] The same changes are proposed to Advice B-6 as well, which is part of the Exchange's minor rule plan.[4]

The reference to trading floor tickets in Rule 1014(g)(i)(A)(1) and Advice B-6, Section B is being deleted, because Floor Brokers have long been required to record certain information into the Floor Broker Management System (“FBMS”), pursuant to Rule 1063.

In addition, the Exchange proposes to delete subparagraphs (g)(iii), New Unit/New Option Enhanced Specialist Participation, and (g)(iv), New Product Enhanced Specialist Participation, because these are no longer applied. All options are subject to the Specialist Enhanced Participation in Rule 1014(g)(ii), which then applies to manual trades on the trading floor by virtue of Rule 1014(g)(v) and to automatically executed trades through Phlx XL II by virtue of Rule 1014(g)(v)(ii). Accordingly, references to these now-deleted sub-paragraphs (g)(iii) and (g)(iv) are also being deleted in several places in Rule 1014. In addition, in Rule 1014(g)(ii), subparagraph (A) is proposed to be deleted, because it covers how it is determined what options are subject to the enhanced specialist participation, which is no longer relevant. The same changes are proposed to Advice B-6, Sections (C), (D) and (E).

2. Statutory Basis

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

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

Because the foregoing proposed rule change does not: (1) Significantly affect the protection of investors or the public interest; (2) impose any significant burden on competition; and (3) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act [7] and Rule 19b-4(f)(6) thereunder.[8]

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

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-2010-131. This file number should be included on the subject line if e-mail 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 Start Printed Page 62623copying 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-2010-131 and should be submitted on or before November 2, 2010.

Start Signature

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9

Florence E. Harmon,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  The Exchange intends to separately update the use of the terms “Phlx XL” and “Phlx XL II” in various other rules in a separate proposed rule change.

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4.  The Exchange's minor rule plan consists of options floor procedure advices (“OFPAs” or “Advices”) with preset fines, pursuant to Rule 19d-1(c) under the Act. 17 CFR 240.19d-1(c). Most OFPAs have corresponding options rules.

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8.  17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires the 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. Phlx has satisfied this requirement.

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[FR Doc. 2010-25495 Filed 10-8-10; 8:45 am]

BILLING CODE 8011-01-P