
[Federal Register Volume 76, Number 170 (Thursday, September 1, 2011)]
[Notices]
[Pages 54514-54516]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-22363]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65203; File No. SR-Phlx-2011-120]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC To Change 
the Name of the PSX Ouch BBO Feed to the PSX MatchView Feed and To 
Modify Its Contents

August 26, 2011.
    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 August 19, 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 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 the 
Substance of the Proposed Rule Change

    The Exchange is filing with the Commission a proposal to change the 
name of the PSX Ouch BBO Feed to the PSX MatchView Feed (the ``Feed'') 
and to modify the contents of the Feed in two ways. The Feed provides a 
view of how the Exchange views the Best Bid and Offer (``BBO'') 
available from all market centers for each individual security the 
Exchange trades.
    The Exchange has filed this proposal under Rule 19b-4(f)(6) \3\ 
under the Act and PSX has provided the Commission with the notice 
required by Rule 19b-4(f)(6)(iii) under the Act.\4\
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    \3\ 17 CFR 240.19b-4(f)(6).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/Filings/, 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
    This proposal regards the PSX MatchView Feed (formerly known as the 
PSX Ouch BBO Feed), a data feed that represents the Exchange's view of 
best bid and offer data received from all market centers. The Feed is 
available to all Exchange members and market participants equally at no 
charge,

[[Page 54515]]

offering all participants transparent, real-time data concerning the 
Exchange's view of the BBO data. The Exchange makes the Feed available 
on a subscription basis to market participants that are connected to 
the Exchange whether through extranets, direct connection, or Internet-
based virtual private networks.
    Currently, the Feed reflects the Exchange's view of the BBO data, 
at any given time, based on orders executed on the Exchange and updated 
quote information from the network processors.\5\ The Feed contains the 
following data elements: symbol, bid price, and ask price.\6\ Unlike 
the PSX TotalView feed, the MatchView feed does not contain information 
about individual orders, either those residing within the Exchange 
system or those executed or routed by the Exchange. Unlike the network 
processor feeds containing the National Best Bid and Offer (``NBBO''), 
the MatchView Feed does not identify either the market center quoting 
the BBO or the size of the BBO quotes. It merely contains the symbol 
and bid and offer prices.
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    \5\ The Feed will not reflect all information available to the 
Exchange. Specifically, the Feed will exclude information about the 
routing of orders to away exchanges. Thus, although the Exchange 
execution system and routing engine will know when a bid or offer 
from an away market is no longer available because the Exchange has 
routed an order to the bid or offer, the Feed will not reflect such 
routing activity.
    \6\ The Feed also contains a time stamp and message type field 
for reference.
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    The Exchange is modifying the inputs used for calculating the 
prices reflected on the Feed. Currently, the Feed reflects bids and 
offers contained on data feeds from the network processors, as well as 
certain PSX orders referenced below. In the future, the Feed will 
continue to reflect these orders entered on the Exchange but rather 
than reflect only individual exchange bids and offers received from the 
network processors, the Feed will reflect individual exchange bids and 
offers received either from the network processor or directly from an 
exchange that disseminates bids and offers to vendors via a proprietary 
data feed. The Exchange will reflect bids and offers from another 
exchange's proprietary data feed only when the Exchange deems the 
proprietary data feed to be sufficiently reliable and also faster than 
the network processor.\7\
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    \7\ The Exchange is also changing its policies and procedures 
under Regulation NMS governing the data feeds used by its execution 
system and routing engine. Current policies state that those systems 
use data provided by the network processors. In the future, those 
systems will use data provided either by the network processors or 
by proprietary feeds offered by certain exchanges directly to 
vendors. The determination of which data feed to utilize will be the 
same as the determination made with respect to the Feed. In other 
words, the Exchange execution system, routing engine and Feed will 
each utilize the same data for a given exchange although, as set 
forth in footnote 5, the Feed does not contain all information 
available to the execution system and routing engine.
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    This determination--whether to utilize bids and offers from the 
network processor feed or from a direct proprietary data feed--will be 
made by the Exchange on a market-by-market basis based upon objective 
criteria about reliability and speed. The determination, once made, 
will apply to all bids and offers from an exchange; it will not be made 
on a stock-by-stock basis. Additionally, the determination, once made, 
will be valid until such time as the away exchange stops disseminating 
the proprietary data feed in a manner that meets PSX's objective 
criteria (for example, when that exchange experiences operational 
difficulties that reduce the reliability and speed of its proprietary 
data feed). For exchanges that do not disseminate proprietary data 
feeds or whose proprietary data feeds lack sufficient reliability and 
speed, the Feed will continue to reflect bids and offers disseminated 
via the network processor feeds.
    Additionally, in a previous filing, the Exchange noted that the 
Feed depicts the Exchange's view of the BBO for all markets other than 
the Exchange.\8\ In one narrow set of circumstances, the Feed will show 
the BBO for all markets including the Exchange. Specifically, an order 
received by the Exchange that improves the BBO will be reflected in the 
Feed when three circumstances are met: (1) The Exchange receives an 
order marked by the entering member as any visible bookable order that 
is not an IOC and is an ``Inter-market Sweep'' (an order known as a 
``Day ISO''); (2) the Day ISO order is priced higher than the current 
Best Bid or lower than the current Best Offer disseminated by the 
network processor or applicable exchange proprietary data feed; and (3) 
the Day ISO represents the new best bid or offer on the Exchange. In 
those circumstances, the new best bid or offer on the Exchange will be 
transmitted to the network processor and then reflected on the Feed 
(and the Exchange's other proprietary data feeds, such as PSX 
TotalView). As stated above, the Feed does not show the market center 
responsible (whether the Exchange or an away market) for either the 
Best Bid or Best Offer reflected on the Feed.
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    \8\ See Securities Exchange Act Release No. 62876 (Sept. 9, 
2010), 75 FR 56624 (Sept. 16, 2010) (filing SR-Phlx-2010-120).
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    These modifications to the Feed will enhance market transparency 
and foster competition among orders and markets. Member firms may use 
the Feed to more accurately price their orders based on the Exchange's 
view of what the BBO is at any point in time, including bids and offers 
received via proprietary data feeds which may not be reflected in the 
official NBBO due to latencies inherent in the NBBO's dissemination. As 
a consequence, member firms may more accurately price their orders on 
the Exchange, thereby avoiding price adjustments by the Exchange based 
on a quote that is no longer available. Additionally, members can use 
the Feed to price orders more aggressively to narrow the NBBO and 
provide better reference prices for investors.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\9\ in general and with 
Sections 6(b)(5) of the Act,\10\ in particular in that it is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, 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 
this proposal is in keeping with those principles by enhancing 
transparency through the dissemination of the most accurate quotations 
data and by clarifying its contents.
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    \9\ 15 U.S.C. 78f.
    \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.

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

[[Page 54516]]

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) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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) \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 requests 
that the Commission waive the 30-day operative delay because it would 
permit the Exchange to immediately provide the new content of the PSX 
MatchView Feed to market participants. The Commission believes that 
waiving the 30-day operative delay \15\ is consistent with the 
protection of investors and the public interest and designates the 
proposal operative upon filing.
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2011-120 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 Number SR-Phlx-2011-120. 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 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 Number SR-Phlx-2011-120 and 
should be submitted on or before September 22, 2011.

    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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-22363 Filed 8-31-11; 8:45 am]
BILLING CODE 8011-01-P


