
[Federal Register Volume 80, Number 133 (Monday, July 13, 2015)]
[Notices]
[Pages 40107-40111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16973]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75372; File No. SR-Phlx-2015-52]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
the Volume-Based and Multi-Trigger Threshold

July 7, 2015.
    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 June 22, 2015, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to adopt a new Rule 1095 entitled ``Automated 
Removal of Market Maker Quotes'' of the rules governing Phlx. The 
Exchange proposes to adopt two new Phlx Market Maker \3\ risk 
protections, a volume-based threshold and a multi-trigger threshold.\4\
---------------------------------------------------------------------------

    \3\ A ``Market Maker'' includes Registered Options Traders 
(``ROTs'') (Rule 1014(b)(i) and (ii)), which includes Streaming 
Quote Traders (``SQTs'') (see Rule 1014(b)(ii)(A)) and Remote 
Streaming Quote Traders (``RSQTs'') (see Rule 1014(b)(ii)(B)). An 
SQT is defined in Exchange Rule 1014(b)(ii)(A) as an ROT who has 
received permission from the Exchange to generate and submit option 
quotations electronically in options to which such SQT is assigned. 
An RSQT is defined in Exchange Rule 1014(b)(ii)(B) as an ROT that is 
a member or member organization with no physical trading floor 
presence who has received permission from the Exchange to generate 
and submit option quotations electronically in options to which such 
RSQT has been assigned. An RSQT may only submit such quotations 
electronically from off the floor of the Exchange. A Market Maker 
also includes a specialist, an Exchange member who is registered as 
an options specialist pursuant to Rule 1020(a).
    \4\ Market Makers will be required to continue to utilize the 
Risk Monitor Mechanism in Rule 1093, as is the case today.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxphlx.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 purpose of the filing is to adopt two new risk protections for 
Phlx specialists, SQTs and RSQTs (collectively ``Market Makers'') to 
monitor marketplace risk. These protections are intended to assist 
Market Makers to control their trading risks.\5\ Quoting across many 
series in an option creates the possibility of ``rapid fire'' 
executions that can create large, unintended principal positions that 
expose Market Makers, who are required to continuously quote in 
assigned options, to potentially significant

[[Page 40108]]

market risk. Today, the Exchange's rules permit Market Makers to 
monitor risk arising from multiple executions across multiple options 
series of a single underlying security.\6\
---------------------------------------------------------------------------

    \5\ See Rule 1014 entitled ``Obligations and Restrictions 
Applicable to Specialists and Registered Options Traders.''
    \6\ See Phlx Rule 1093, entitled ``Phlx XL Risk Monitor 
Mechanism.'' The Percentage Based Threshold compares each Market 
Maker's executed volume to the total volume disseminated in that 
series or underlying, and then triggers a protective response when 
that percentage exceeds the percentage the Market Maker has 
determined to be acceptable.
---------------------------------------------------------------------------

    The Exchange is proposing to offer a new volume-based and multi-
trigger threshold protection to Market Makers. The Exchange proposes to 
adopt a new Rule 1095, entitled, ``Automated Removal of Market Maker 
Quotes,'' to establish: (1) a threshold used to calculates each Market 
Maker's total volume executed in all series of an underlying security 
within a specified time period and compares that to a pre-determined 
threshold (``Volume-Based Threshold''), and (2) a threshold used to 
measure the number of times the Phlx XL system (``System'') has 
triggered\7\ based on the Risk Monitor Mechanism (``Percentage-Based 
Threshold'') pursuant to Rule 1093 and Volume-Based Thresholds within a 
specified time period and compares that total to a pre-determined 
threshold (``Multi-Trigger Threshold'').
---------------------------------------------------------------------------

    \7\ A trigger is defined as the event which causes the System to 
automatically remove all quotes in all options series in an 
underlying issue.
---------------------------------------------------------------------------

Volume-Based Threshold
    In connection with offering these two new threshold protections, a 
Market Maker would provide a specified time period and volume threshold 
by which the Exchange's System would automatically remove the Market 
Maker's quotes in all series of an underlying security, depending on 
the threshold utilized, submitted through designated Phlx protocols, as 
specified by the Exchange. The Exchange counts Specialized Quote Feed 
(``SQF'')\8\ quotes only in determining the number of contracts traded 
and removed by the System.
---------------------------------------------------------------------------

    \8\ SQF permits the receipt of quotes.
---------------------------------------------------------------------------

    The Volume-Based Threshold will determine, during a specified time 
period established by the Market Maker not to exceeds 15 seconds 
(``Volume-Based Specified Time Period''), whether a Marker Maker 
executed a number of contracts which equals or exceeds the designated 
number of contracts specified by the Market Maker in all series of an 
underlying security to determine whether to remove the Market Maker's 
quotes in all series of the underlying security.\9\ The Volume-Based 
Threshold will be based on the total number of contracts executed in 
the market in the same options series in in an underlying security and 
will not offset the number of contracts executed on the opposite side 
of the market.. Once the System determines that the number of contracts 
executed equals or exceeds a number established by the Market Maker 
during the Volume-Based Specified Time Period, the System will remove 
Market Maker's quotes. The Volume-Based Specified Time Period 
designated by the Market Maker must be the same length of time as 
designated for purposes of the Percentage-Based Threshold in Rule 1093.
---------------------------------------------------------------------------

    \9\ The System's count of the number of contracts executed is 
based on trading interest resting on the Exchange book.
---------------------------------------------------------------------------

    A Volume-Based Specified Time Period will commence for an option 
every time an execution occurs in any series in such option and will 
continue until the System automatically removes quotes as described in 
newly proposed sections (iv) or (v) or the Volume-Based Specified Time 
Period expires. The Volume-Based Specified Time Period operates on a 
rolling basis among all series in an option in that there may be 
multiple Volume-Based Specified Time Periods occurring simultaneously 
and such Volume-Based Specified Time Periods may overlap.\10\
---------------------------------------------------------------------------

    \10\ Id.
---------------------------------------------------------------------------

Multi-Trigger Threshold
    A Market Maker or Market Maker Group, which is defined as multiple 
affiliated Market Makers,\11\ may provide the specified time period and 
number of allowable triggers by which the Exchange will automatically 
remove quotes in all options series in all underlying issues submitted 
through designated Phlx protocols, as specified by the Exchange 
(``Multi-Trigger Threshold''). During a specified time period 
established by the Market Maker not to exceed 15 seconds (``Multi-
Trigger Specified Time Period''), the number of times the System 
automatically removes the Market Maker's or Group's quotes in all 
options series will be based on the number of triggers of the 
Percentage-Based Threshold, described in proposed section (ii) [sic], 
as well as the Volume-Based Threshold described in proposed (ii).\12\ 
For purposes of this rule, a trigger shall be defined as the event 
which causes the System to automatically remove quotes in all options 
series in all underlying issues. Once the System determines that the 
number of triggers equals or exceeds a number established by either the 
Market Maker or Group, during a Multi-Trigger Specified Time Period, 
the System will automatically remove all quotes in all options series 
in all underlying issues for that Market Maker or Group. A Multi-
Trigger Specified Time Period will commence after every trigger of 
either the Percentage-Based Threshold or the Volume-Based Threshold and 
will continue until the System removes quotes as described in section 
(iv) of the proposed rule or the Multi-Trigger Specified Time Period 
expires. Members may configure the Multi-Trigger Threshold at the badge 
level (by Market Maker) or by Group (multiple affiliated Market 
Makers), but not both. This is different as compared to the Percentage-
Based Threshold in Rule 1093 or the newly proposed Volume-Based 
Thresholds that are configured only on the badge level (by Market 
Maker).\13\ The System counts triggers within a Multi-Trigger Specified 
Time Period across all options for the Market Maker or Group. A Multi-
Trigger Specified Time Period operates on a rolling basis in that there 
may be multiple Multi-Trigger Specified Time Periods occurring 
simultaneously and such Multi-Trigger Specified Time Periods may 
overlap.
---------------------------------------------------------------------------

    \11\ This would be more than one Market Maker, but does not 
require the aggregation of all the member's Market Makers. A Group 
would be comprised of Market Makers affiliated with one member or 
member organization. The member or member organization would be 
required to define a Group by providing a list of such affiliated 
Market Makers to the Exchange.
    \12\ Today, ISE's functionality permits market maker quotes to 
be removed from the ISE trading system if a specified number of 
curtailment events occur across both ISE and ISE Gemini, LLC (``ISE 
Gemini''). ISE and ISE Gemini's trading systems will count the 
number of times a market maker's pre-set curtailment events occur on 
each exchange and aggregate them. Once a market maker's specified 
number of curtailment events across both markets is reached, the 
trading systems will remove the market maker's quotes in all classes 
on both ISE and ISE Gemini. ISE will then reject any quotes sent by 
the market maker after the parameters across both exchanges have 
been triggered until the market maker notifies the market operations 
staff of ISE that it is ready to come out of its curtailment. See 
Securities Exchange Release No. 73147 (September 19, 2014), 79 FR 
57639 (September 25, 2014) (SR-ISE-2014-09) (Order approving 
proposed rule change related to market maker risk parameters).
    \13\ See proposed new Rule 1095(iii).
---------------------------------------------------------------------------

    The System will automatically remove quotes in all options in an 
underlying security when the Volume-Based Threshold has been reached. 
The System will automatically remove quotes in all options in all 
underlying securities when the Multi-Trigger Threshold has been 
reached.\14\ The

[[Page 40109]]

System will send a Purge Notification Message \15\ to the Market Maker 
for all affected options when the above thresholds have been reached.
---------------------------------------------------------------------------

    \14\ The specified time period for the Volume-Based Threshold 
and the Multi-Trigger Threshold may differ. The specified time 
period for the Volume-Based Threshold must be the same as the 
Percentage-Based Threshold in Rule 1093.
    \15\ A message entitled ``Purge Notification Message'' is 
systemically sent to the Marker Maker upon the removal of quotes due 
to Volume-Based Threshold or Multi-Trigger Threshold.
---------------------------------------------------------------------------

    The two thresholds, Volume-Based Threshold and Multi-Trigger 
Threshold operate independently of each other. The triggering of the 
Volume-Based Threshold would occur independently of that of the Multi-
Trigger Threshold. The Multi-Trigger Threshold is somewhat dependent on 
the Volume-Based Threshold to the extent that the Volume-Based 
Threshold serves as a trigger for the Multi-Trigger Threshold. Quotes 
will be automatically executed up to the Market Maker's size regardless 
of whether the quote exceeds the Volume-Based Threshold.\16\
---------------------------------------------------------------------------

    \16\ See proposed new Rule 1095(iii).
---------------------------------------------------------------------------

    If a Market Maker requests the System to remove quotes in all 
options series in all underlying issues, the System will automatically 
reset the Volume-Based Specified Time Period(s). The Multi-Trigger 
Specified Time Period(s) will not automatically reset for the Multi-
Trigger Threshold.\17\
---------------------------------------------------------------------------

    \17\ See proposed new Rule 1095(iv).
---------------------------------------------------------------------------

    When the System removes quotes as a result of the Volume-Based 
Threshold, the Market Maker must send a re-entry indicator to re-enter 
the System. When the System removes quotes as a result of the Multi-
Trigger Threshold, the System will not accept quotes through designated 
protocols until the Market Maker manually requests re-entry.\18\ After 
quotes are removed as a result of the Multi-Trigger Threshold, Exchange 
staff must set a re-entry indicator in this case to enable re-entry, 
which will cause the System to send a Reentry Notification Message to 
the Market Maker for all options series in all underlying issues.\19\ 
The Market Maker's Clearing Firm will be notified regarding the trigger 
and re-entry into the System after quotes are removed as a result of 
the Multi-Trigger Threshold, provided the Market Maker's Clearing Firm 
has requested to receive such notification.\20\ The System will then 
reset all counters to zero and re-entry and continued trading will be 
permitted. A Market Maker is subject to continuous quoting 
obligations\21\ despite the removal of quotes from the System and 
approval process for re-entry.
---------------------------------------------------------------------------

    \18\ In the interest of maintaining fair and orderly markets, 
the Exchange believes it is important that Market Makers communicate 
their readiness to Exchange staff in a non-automated manner, such as 
by email or telephone.
    \19\ See proposed new Rule 1095(v).
    \20\ Phlx Rule 1016 permits the Exchange to share Marker Maker 
designated risk settings in the System with the Clearing Firm.
    \21\ See note 3.
---------------------------------------------------------------------------

    Today, the Exchange provides Market Makers with the Percentage-
Based Threshold in Rule 1093 to monitor risk.\22\ The Exchange will 
continue to require Market Makers to utilize the Percentage-Based 
Threshold. The Volume-Based Threshold and the Multi-Trigger Threshold 
will be optional.
---------------------------------------------------------------------------

    \22\ An initial default value is set for each Market Maker.
---------------------------------------------------------------------------

    The Exchange reserved subsection (i) for future modifications to 
this rule.
    The Exchange proposes to implement this rule within thirty (30) 
days of the operative date.
    Example #1 of the Volume-Based Threshold is displayed below. 
Presume the following order book:

------------------------------------------------------------------------
         Series of underlying XYZ            Size on bid x offer for MM1
------------------------------------------------------------------------
100 Strike Call...........................  300x300
100 Strike Put............................  50x50
110 Strike Call...........................  200x200
110 Strike Put............................  150x150
------------------------------------------------------------------------

    In this example, assume the Specified Time Period designated by the 
Market Maker # 1 is 10 seconds and the designated number of contracts 
permitted for the Volume-Based Threshold is 250 contracts. Assume at 
12:00:00, the Market Maker # 1 executes all of his offer size, 200 
contracts, in the 110 Strike Calls. The System will initiate the 
Specified Time Period and for 10 seconds the System will count all 
volume executed in series of underlying XYZ. If at any point during 
that 10 second period, the Market Maker # 1 executes additional 
contracts in any series of underlying XYZ, those contracts will be 
added to the initial execution of 200 contracts. To illustrate, assume 
at 12:00:05 the Market Maker # 1 executes 60 contracts of his offer in 
the 100 Strike Calls. The total volume executed is now 260 contracts. 
Since that volume exceeds the Market Maker #1's designated number of 
contracts for the Volume-Based Threshold (250 contracts), all of his 
quotes in all series of underlying XYZ over the designated protocols 
will be removed from the System; no quotes will be executed in series 
XYZ until the Market Maker enters new quotes in series XYZ. The Volume-
Based Specified Time Period will be reset for Market Maker #1 in 
underlying XYZ and Market Maker #1 will need to send a re-entry 
indicator in order to re-enter quotes in options series for underlying 
XYZ into the System.
    Example #2 of the Volume-Based Threshold: Similar to the example 
above, assume the Specified Time Period is 10 seconds and the 
designated number of contracts permitted for the Volume-Based Threshold 
is 250 contracts. Assume at 12:00:00, Market Maker #1 executes all of 
his offer size, 200 contracts, in the 110 Strike Calls. The System will 
initiate the Specified Time Period and for 10 seconds the System will 
count all volume executed in series of underlying XYZ. If at any point 
during that 10 second period, Market Maker #1 executes additional 
contracts in any series of underlying XYZ, those contracts will be 
added to the initial execution of 200 contracts. Then assume at 
12:00:05 Market Maker #1 executes 20 contracts of his offer in the 100 
Strike Calls. The total volume executed is 220 contracts which does not 
exceed the Volume-Based Threshold. This second execution initiates 
another Specified Time Period so there are two open time periods, the 
first with 5 seconds remaining and a new 10 second time period. At 
12:00:10, the first timer period expires and the initial execution of 
200 contracts is no longer counted toward the designated number of 
contracts permitted for the Volume-Based Threshold. Further assume at 
12:00:12, which is outside of the initial time period but still within 
10 seconds of the second execution of 20 contracts, another execution 
occurs with Market Maker #1 executing 230 contracts of his bid in the 
100 Strike Calls. This total volume executed toward the Volume-Based 
Threshold within the Specified Time Period is now 250 contracts which 
equals the designated number of contracts permitted causing the System 
to remove all quotes in all series of underlying XYZ over the 
designated protocols for Market Maker #1 to be removed from the System; 
no quotes will be executed in series XYZ until the Market Maker enters 
new quotes in series XYZ. The Volume-Based Specified Time Period will 
be reset for Market Maker #1 in underlying XYZ and Market Maker #1 will 
need to send a re-entry indicator in order to re-enter quotes in 
options series for underlying XYZ into the System. This example 
displays the rolling basis in which the Specified Time Period operates.
    Example #3: In order to illustrate the Multi-Trigger Threshold, 
assume Example #1 and Example #2 provided above occurred in options 
series of two different underlyings rather than all in options series 
of underlying XYZ and for two separate Market Makers (MM#1

[[Page 40110]]

for Example #1 and MM#2 for Example #2) of the same member 
organization. Assume a Group is defined by the member organization and 
is comprised of the MM #1 and MM #2. Further assume the member 
organization has defined the Multi-Trigger Specified Time Period as 10 
seconds and the number of allowable triggers as two. Based on the 
aforementioned examples, a Multi-Trigger Specified Time Period 
commences at 12:00:05 when MM#1 triggers the Volume-Based Threshold. 
This Volume-Based Threshold triggers counts as the first trigger toward 
the Multi-Trigger Threshold for the Group. Another Multi-Trigger 
Specified Time Period is initiated at 12:00:12 when MM#2 triggers the 
Volume-Based Threshold (per Example #2). This Volume-Based Threshold 
trigger counts as the second trigger toward the Multi-Trigger Threshold 
for the Group since it is within the Multi-Trigger Specified Time 
Period of the first trigger. Since the member organization designated 
two triggers for the number of allowable triggers, the Group, both MM#1 
and MM#2, quotes in all option series in all underlying issues for the 
Group are automatically removed from the System and Purge Notification 
Messages are sent to the Group; no quotes will be executed in series 
XYZ until the Market Maker enters new quotes in series XYZ. The member 
organization will need to contact the Exchange to request Exchange 
staff to enable re-entry into the System. The Exchange proposes to 
implement this rule within thirty (30) days of the operative date. The 
Exchange will issue an Options Trader Alert in advance to inform market 
participants of such date.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \23\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \24\ 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 enhancing the risk protections available to Exchange 
members. The proposal promotes policy goals of the Commission which has 
encouraged execution venues, exchange and non-exchange alike, to 
enhance risk protection tools and other mechanisms to decrease risk and 
increase stability.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78f(b).
    \24\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The individual firm benefits of enhanced risk protections flow 
downstream to counter-parties both within and without the Exchange, 
thereby increasing systemic protections as well. Additionally, because 
the Exchange offers the these risk tools to Market Makers, in order to 
encourage them to provide as much liquidity as possible and encourage 
market making generally, the proposal removes impediments to and 
perfects the mechanism of a free and open market and a national market 
system and protect investors and the public interest.
    With respect to permitting the Multi-Trigger Threshold to be set 
either to one Market Maker or to a number of specified Market Makers 
affiliated with a member, it is important to note that the risk to 
Market Makers is not limited to a single series in an option but to all 
series in an option. Market Makers that quote in multiple series of 
multiple options have significant exposure, requiring them to offset or 
hedge their overall positions. The proposed functionality will be 
useful for Market Makers, who are required to continuously quote in 
assigned options classes on the Exchange. Quoting across many series in 
an option or multiple options creates the possibility of executions 
that can create large, unintended principal positions that could expose 
market makers to unnecessary risk. The Multi-Trigger Threshold 
functionality is intended to assist Market Makers manage that risk at 
the Group level so that Market Makers may provide deep and liquid 
markets to the benefit of all investors.
    The Exchange further represents that its proposal will operate 
consistently with the firm quote obligations of a broker-dealer 
pursuant to Rule 602 of Regulation NMS and that the functionality is 
not mandatory. Specifically, any interest that is executable against a 
Market Maker's quotes that are received \25\ by the Exchange prior to 
the time either of these functionalities are engaged will be 
automatically executed at the price up to the Market Maker's size, 
regardless of whether such execution results in executions in excess of 
the Market Maker's pre-set parameters.
---------------------------------------------------------------------------

    \25\ The time of receipt for an order or quote is the time such 
message is processed by the Exchange book.
---------------------------------------------------------------------------

    With respect to providing risk settings to the Market Maker's 
Clearing Member, each Member that transacts through a Clearing Member 
on the Exchange executes a Letter of Guarantee wherein the Clearing 
Member accepts financial responsibility for all Exchange transactions 
made by the Member on whose behalf the Clearing Member submits the 
letter of guarantee. The Exchange believes that because Clearing 
Members guarantee all transactions on behalf of a Member, and 
therefore, bear the risk associated with those transactions, it is 
appropriate for Clearing Members to have knowledge of what risk 
settings a Market Maker may utilize within the System and should be 
provided and receive notice of re-entry into the System after 
triggering the Multi-Trigger Threshold.

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. Specifically, the proposal will 
not impose a burden on intra-market or inter-market competition, rather 
it provides Market Makers with the opportunity to avail themselves of 
similar risk tools which are currently available on other 
exchanges.\26\ The proposal does not impose a burden on inter-market 
competition, because members may choose to become market makers on a 
number of other options exchanges, which may have similar but not 
identical features.\27\ The proposed rule change is meant to protect 
Market Makers from inadvertent exposure to excessive risk. Accordingly, 
the proposed rule change will have no impact on competition.
---------------------------------------------------------------------------

    \26\ See Section 8 of the 19b4.
    \27\ See BATS Rule 21.16, BOX Rules 8100 and 8110, C2 Rule 8.12, 
CBOE Rule 8.18, ISE Rule 804(g), MIAX Rule 612, NYSE MKT Rule 928NY 
and NYSE Arca Rule 6.40.
---------------------------------------------------------------------------

    Further, the Exchange is proposing this rule change at the request 
of its Market Makers to further reduce their risk in the event the 
Market Maker is suffering from a systems issue or due to the occurrence 
of unusual or unexpected market activity. The proposed Group parameter 
for the Multi-Trigger threshold will protect Market Makers from 
inadvertent exposure to excessive risk at the Group level. Reducing 
such risk will enable Market Makers to enter quotations without any 
fear of inadvertent exposure to excessive risk, which in turn will 
benefit investors through increased liquidity for the execution of 
their orders. Such increased liquidity benefits investors because they 
receive better prices and because it lowers volatility in the options 
market.
    The Exchange believes that requiring Market Makers to enter values 
for the Percentage-Based Threshold is not

[[Page 40111]]

unreasonably burdensome because Market Makers can enter an out-of-range 
value so that the Exchange-provided risk protections will not be 
triggered. Reducing risk by utilizing the proposed risk protections 
will enable Market Makers to enter quotations with larger size, which 
in turn will benefit investors through increased liquidity for the 
execution of their orders. Such increased liquidity benefits investors 
because they receive better prices and because it lowers volatility in 
the options market.

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)(ii) of the Act \28\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\29\ The Exchange has 
requested that the Commission waive the thirty-day operative delay so 
that the proposal may become operative immediately. The Exchange states 
that waiving the thirty-day operative delay will enable Market Makers 
to enhance their risk controls and risk management processes without 
additional delay. The Commission believes that waiving the thirty day 
delay is consistent with the protection of investors and the public 
interest. Therefore, the Commission hereby waives the thirty-day 
operative delay and designates the proposal effective upon filing.\30\
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \29\ 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.
    \30\ For purposes 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).
---------------------------------------------------------------------------

    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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2015-52 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-2015-52. 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-2015-52 and 
should be submitted on or before August 3, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
---------------------------------------------------------------------------

    \31\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-16973 Filed 7-10-15; 8:45 am]
 BILLING CODE 8011-01-P


