March 26, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
and Rule 19b-4 thereunder,
notice is hereby given that on March 26, 2013, NASDAQ OMX 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.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to address the manner in which options contracts overlying 10 shares of a security (“Mini Options”) will trade in a PIXL 
auction Start Printed Page 19557or as a Qualified Contingent Cross (“QCC”) Order.
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.
A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
The purpose of the proposed rule change is to further clarify the manner in which Mini Options will trade in a PIXL auction or as a QCC Order pursuant to Exchange Rule 1080. The Exchange previously filed to list and trade Mini Options.
Exchange Rule 1080 entitled “Phlx XL and Phlx XL II” describes the manner in which PIXL orders 
and QCC Orders 
trade on the Exchange. The Exchange will describe below the manner in which it seeks to clarify Rules 1064 and 1080 with respect to Mini Options.
With respect to PIXL, Rule 1080(n) specifies that a member may electronically submit for execution an order it represents as agent on behalf of a public customer, broker dealer, or any other entity (“PIXL Order”) against principal interest or against any other order (except as provided in Rule 1080(n)(i)(E)) it represents as agent (an “Initiating Order”) provided it submits the PIXL Order for electronic execution into the PIXL Auction (“Auction”) pursuant to this Rule. The Exchange is proposing to clarify that with respect to Mini Options, the same contract size shall apply consistent with standard options. The Exchange proposes to add a sentence to Rule 1080(n) to note that a Mini Options PIXL Order will trade consistent with standard options.
Today the Exchange provides the Commission certain PIXL pilot reports, including, but not limited to orders of fewer than 50 contracts into the PIXL Auction.
The Exchange will also submit to the Commission these same reports with respect to Mini Options for PIXL Orders fewer than 500 contracts as well as the pilot reports for Mini Options in the other categories.
The Start Printed Page 19558Exchange will provide this information for a particular month not later than the last business day of the subsequent month, as is the case with other PIXL pilot reports.
With respect to QCC Orders, Exchange Rule 1080(o) provides that a QCC Order is comprised of an order to buy or sell at least 1000 contracts that is identified as being part of a qualified contingent trade, as that term is defined in subsection [sic] Rule 1080(o)(3), coupled with a contra-side order to buy or sell an equal number of contracts. The Exchange proposes to permit Mini Option QCC Orders to be defined as an order to buy or sell at least 10,000 contracts, instead of 1,000 contracts. The Exchange proposes to add text to Rule 1080(o) and Rule 1064(e) to note the different quantity required to transact QCC Orders in Mini Options.
The Exchange proposes to commence trading Mini Options on March 28, 2013.
The Exchange will not commence trading of Mini Options contracts until specific fees for Mini Options contracts trading have been filed with the Commission.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Securities and [sic] Exchange Act of 1934 (“Exchange Act”),
in general, and with Section 6(b)(5) of the Exchange Act,
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 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.
Specifically, the Exchange believes that investors and other market participants would benefit from the current rule proposal because it would allow market participants to take advantage of legitimate investment strategies and execute PIXL Orders and QCC Orders in Mini Options. Additionally, the Exchange believes the proposed rule change will avoid investor confusion by clarifying how Mini Options will trade the same or different as compared to standard options with respect to PIXL Orders and QCC Orders.
The Exchange believes that trading PIXL Orders in Mini Options and standard options in the same manner will avoid investor confusion. Also, the Exchange believes that the current PIXL rules in Rule 1080(n) as applied to Mini Options will promote just and equitable principles of trade and continue to permit fair competition. The Exchange does not believe treating Mini Option and standard option PIXL Orders in a like manner creates any unfair disadvantage to investors.
The Exchange believes that adjusting the quantity of a QCC Orders [sic] in Rule 1080(o) (applicable to electronic orders) and Rule 1064(e) (applicable to floor orders) from 1,000 to 10,000 contracts with respect to QCC Orders will protect investors by maintaining the same number of underlying securities for Mini Options as with standard options. The Exchange believes that maintaining the same number of underlying securities will prevent unfair discrimination among market participants. All members are eligible to transact PIXL Orders and QCC Orders on Phlx.
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. All members may transact PIXL Orders and QCC Orders on Phlx. The rule change does not permit unfair discrimination and does not impose a burden on Members with respect to trading Mini Options.
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: (1) Does not significantly affect the protection of investors or the public interest; (2) does not impose any significant burden on competition; and (3) by its terms does not become operative for 30 days after the date of this 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 
and Rule 19b-4(f)(6) thereunder.
A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requests that the Commission Start Printed Page 19559waive the 30-day operative delay so that the proposed rule change may coincide with the anticipated launch of trading in Mini Options on the Exchange. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest.
Waiver of the operative delay will allow the Exchange to implement its proposal consistent with the anticipated commencement of trading in Mini Options on the Exchange on March 28, 2013. For these reasons, the Commission designates the proposed rule change as operative upon filing.
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:
- 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-2013-36. 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 10:00 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; 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-2013-36 and should be submitted on or before April 22, 2013.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Elizabeth M. Murphy,
[FR Doc. 2013-07477 Filed 3-29-13; 8:45 am]
BILLING CODE 8011-01-P