
[Federal Register Volume 81, Number 182 (Tuesday, September 20, 2016)]
[Notices]
[Pages 64552-64559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22534]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78835; File No. SR-Phlx-2016-92]


Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing 
of Proposed Rule Change To Describe Changes to System Functionality 
Necessary To Implement the Tick Size Pilot Program

September 14, 2016.
    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 7, 2016, NASDAQ 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.
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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 Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt paragraph (d) and Commentary .12 to 
Exchange Rule 3317 to describe changes to System\3\ functionality 
necessary to implement the Regulation NMS Plan to Implement a Tick Size 
Pilot Program (``Plan'').\4\ The Exchange is also proposing amendments 
to Rule 3317(a) and (c) to clarify how the Trade-at exception may be 
satisfied.
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    \3\ The term ``PSX,'' or ``System'' is defined as the automated 
system for order execution and trade reporting owned and operated by 
the Exchange. The Exchange will operate PSX as an automated trading 
center for purposes of Rule 600(b)(4) of Regulation NMS. PSX 
comprises: (1) A montage for Quotes and Orders, referred to herein 
as the ``PSX Book'', that collects and ranks all Quotes and Orders 
submitted by Participants; (2) an Order execution service that 
enables Participants to automatically execute transactions in System 
Securities; and provides Participants with sufficient monitoring and 
updating capability to participate in an automated execution 
environment; (3) a trade reporting service that submits ``locked-
in'' trades for clearing to a registered clearing agency for 
clearance and settlement; transmits last-sale reports of 
transactions automatically to the National Trade Reporting System, 
if required, for dissemination to the public and industry; and 
provides participants with monitoring and risk management 
capabilities to facilitate participation in a ``locked-in'' trading 
environment; and (4) data feeds that can be used to display with 
attribution to PSX Participants' MPIDs all Quotes and Displayed 
Orders on both the bid and offer side of the market for all price 
levels then within the PSX Market, and that disseminate such 
additional information about Quotes, Orders, and transactions within 
PSX as shall be reflected in the PSX Rules. See Rule 3301(a).
    \4\ See Securities Exchange Act Release No. 74892 (May 6, 2015), 
80 FR 27513 (May 13, 2015) (``Approval Order'').
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqphlx.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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
Background
    On August 25, 2014, NYSE Group, Inc., on behalf of Bats BZX 
Exchange, Inc. (f/k/a BATS Exchange, Inc.), Bats BYX Exchange, Inc. (f/
k/a BATS Y-Exchange, Inc.), Chicago Stock Exchange, Inc., EDGA 
Exchange, Inc., EDGX Exchange, Inc., the Exchange, Financial Industry 
Regulatory Authority, Inc. (``FINRA''), NASDAQ BX, Inc., The NASDAQ 
Stock Market LLC, New York Stock Exchange LLC, NYSE Arca, Inc., and the 
NYSE MKT LLC, (collectively ``Participants''), filed the Plan with the 
Commission pursuant to Section 11A of the Act \5\ and Rule 608 of 
Regulation NMS thereunder.\6\ The Participants filed the Plan to comply 
with an order issued by the Commission

[[Page 64553]]

on June 24, 2014 (the ``June 2014 Order'').\7\ The Plan \8\ was 
published for comment in the Federal Register on November 7, 2014,\9\ 
and approved by the Commission, as modified, on May 6, 2015.\10\
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    \5\ 15 U.S.C. 78k-1.
    \6\ See Letter from Brendon J. Weiss, Vice President, 
Intercontinental Exchange, Inc., to Secretary, Commission, dated 
August 25, 2014.
    \7\ See Securities Exchange Act Release No. 72460 (June 24, 
2014), 79 FR 36840 (June 30, 2014).
    \8\ Unless otherwise specified, capitalized terms used in this 
rule filing are based on the defined terms of the Plan.
    \9\ See Securities and Exchange Act Release No. 73511 (November 
3, 2014), 79 FR 66423 (File No. 4-657) (Tick Plan Filing).
    \10\ See Tick Plan Approval Order, supra note 4. See also 
Securities Exchange Act Release No. 77277 (March 3, 2016), 81 FR 
12162 (March 8, 2016) (File No. 4-657), which amended the Plan to 
add National Stock Exchange, Inc. as a Participant.
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    The Plan is designed to allow the Commission, market participants, 
and the public to study and assess the impact of increment conventions 
on the liquidity and trading of the common stocks of small 
capitalization companies. The Commission plans to use the Tick Size 
Pilot Program to assess whether wider tick sizes enhance the market 
quality of Pilot Securities for the benefit of issuers and investors. 
Each Participant is required to comply with, and to enforce compliance 
by its members, as applicable, with the provisions of the Plan.
    On October 9, 2015, the Operating Committee approved the Exchange's 
proposed rules as model Participant rules that would require compliance 
by a Participant's members with the provisions of the Plan, as 
applicable, and would establish written policies and procedures 
reasonably designed to comply with applicable quoting and trading 
requirements specified in the Plan.\11\ As described more fully below, 
the proposed rules would require members to comply with the Plan and 
provide for the widening of quoting and trading increments for Pilot 
Securities, consistent with the Plan.
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    \11\ The Operating Committee is required under Section III(C)(2) 
of the Plan to ``monitor the procedures established pursuant to the 
Plan and advise Participants with respect to any deficiencies, 
problems, or recommendations as the Operating Committee may deem 
appropriate.'' The Operating Committee is also required to 
``establish specifications and procedures for the implementation and 
operation of the Plan that are consistent with the provisions of the 
Plan.''
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    The Plan will include stocks of companies with $3 billion or less 
in market capitalization, an average daily trading volume of one 
million shares or less, and a volume weighted average price of at least 
$2.00 for every trading day. The Plan will consist of a control group 
of approximately 1,400 Pilot Securities and three test groups with 400 
Pilot Securities in each selected by a stratified sampling.\12\ During 
the pilot, Pilot Securities in the control group will be quoted at the 
current tick size increment of $0.01 per share and will trade at the 
currently permitted increments. Pilot Securities in the first test 
group (``Test Group One'') will be quoted in $0.05 minimum increments 
but will continue to trade at any price increment that is currently 
permitted.\13\ Pilot Securities in the second test group (``Test Group 
Two'') will be quoted in $0.05 minimum increments and will trade at 
$0.05 minimum increments subject to a midpoint exception, a retail 
investor exception, and a negotiated trade exception.\14\ Pilot 
Securities in the third test group (``Test Group Three'') will be 
subject to the same terms as Test Group Two and also will be subject to 
the ``Trade-at'' requirement to prevent price matching by a person not 
displaying at a price of a Trading Center's ``Best Protected Bid'' or 
``Best Protected Offer,'' unless an enumerated exception applies.\15\ 
In addition to the exceptions provided under Test Group Two, an 
exception for Block Size orders and exceptions that closely resemble 
those under Rule 611 of Regulation NMS \16\ will apply to the Trade-at 
requirement.
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    \12\ See Section V of the Plan for identification of Pilot 
Securities, including criteria for selection and grouping.
    \13\ See Section VI(B) of the Plan. Pilot Securities in Test 
Group One will be subject to a midpoint exception and a retail 
investor exception.
    \14\ See Section VI(C) of the Plan.
    \15\ See Section VI(D) of the Plan.
    \16\ 17 CFR 242.611.
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    The Plan also contains requirements for the collection and 
transmission of data to the Commission and the public. A variety of 
data generated during the Plan will be released publicly on an 
aggregated basis to assist in analyzing the impact of wider tick sizes 
on smaller capitalization stocks.\17\
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    \17\ See Section VII of the Plan.
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    As noted above, the Plan requires the Exchange to establish, 
maintain, and enforce written policies and procedures that are 
reasonably designed to comply with the applicable quoting and trading 
requirements specified in the Plan. Accordingly, the Exchange adopted 
paragraph (c) of Rule 3317 to require members to comply with the 
quoting and trading provisions of the Plan. The Exchange also adopted 
paragraph (b) of Rule 3317 to require members to comply with the data 
collection provisions under Appendix B and C of the Plan.\18\ The 
Exchange is proposing to adopt paragraph (d) of Rule 3317 to describe 
the changes to System functionality necessary to implement the Plan and 
to amend certain rules under Rule 3317. As discussed below, certain of 
these proposed changes are intended to reduce risk in the System by 
eliminating unnecessary complexity or by eliminating functionality that 
would serve no purpose or meaningful benefit to the market. The 
Exchange believes that all of the proposed changes are designed to 
directly comply with the Plan and to assist the Exchange in meeting its 
regulatory obligations thereunder.
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    \18\ See Securities Exchange Act Release No. 72460 (June 24, 
2014), 79 FR 36840 (June 30, 2014).
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Proposed System Changes
    Proposed paragraph (d) of Rule 3317 would set forth the Exchange's 
specific procedures for handling, executing, repricing, and displaying 
of certain Order Types \19\ and Order Attributes \20\ applicable to 
Pilot Securities. Unless otherwise indicated, paragraph (d) of Rule 
3317 would apply to Order Types and Order Attributes in Pilot 
Securities in Test Groups One, Two, and Three and not to Pilot 
Securities included in the Control Group. The Exchange is proposing to 
adopt new Rule 3317(d)(1) to make it clear that it will not accept an 
Order in a Test Group Pilot Security that is not entered in the Pilot's 
minimum price increment of $0.05, applied to all Order Types that 
require a price and do not otherwise qualify for an exemption to the 
$0.05 minimum price increment required by the Plan. The Exchange is 
also clarifying under new Rule 3317(d)(1) that it will use the $0.05 
minimum price increment when the System reprices an Order, including 
when it rounds a derived price up or down. Although not required by the 
Plan nor prohibited, the Exchange has determined to apply the Trade-at 
restrictions during the Pre-Market Hours and Post-Market Hours trading 
sessions,\21\ in addition to the regular

[[Page 64554]]

Market Hours trading session.\22\ The Exchange believes that applying 
the same process and requirements in Test Group Three Pilot Securities 
will simplify processing of Orders by the Exchange, avoiding market 
participant confusion that may be caused by applying only some of the 
Plan requirements and not others during the different market sessions.
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    \19\ An ``Order Type'' is a standardized set of instructions 
associated with an Order that define how it will behave with respect 
to pricing, execution, and/or posting to the PSX Book when submitted 
to PSX. See Rule 3301(e).
    \20\ An ``Order Attribute'' is a further set of variable 
instructions that may be associated with an Order to further define 
how it will behave with respect to pricing, execution, and/or 
posting to the PSX Book when submitted to PSX. The available Order 
Types and Order Attributes, and the Order Attributes that may be 
associated with particular Order Types, are described in Rules 3301A 
and 3301B. One or more Order Attributes may be assigned to a single 
Order; provided, however, that if the use of multiple Order 
Attributes would provide contradictory instructions to an Order, the 
System will reject the Order or remove non-conforming Order 
Attributes. Id.
    \21\ As used in this proposal, the term ``Market Hours'' means 
the period of time beginning at 9:30 a.m. ET and ending at 4:00 p.m. 
ET (or such earlier time as may be designated by the Exchange on a 
day when PSX closes early). The term ``System Hours'' means the 
period of time beginning at 8:00 a.m. ET and ending at 5:00 p.m. ET 
(or such earlier time as may be designated by the Exchange on a day 
when PSX closes early). The term ``Pre-Market Hours'' means the 
period of time beginning at 8:00 a.m. ET and ending immediately 
prior to the commencement of Market Hours. The term ``Post-Market 
Hours'' means the period of time beginning immediately after the end 
of Market Hours and ending at 5:00 p.m. ET. See Rule 3301(g).
    \22\ Regular Trading Hours is defined by the Plan as having the 
same meaning as Rule 600(b)(64) of Regulation NMS.
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    In determining the scope of the proposed changes to implement the 
Plan, the Exchange carefully weighed the impact on the Plan, System 
complexity, and the usage of such Order Types and Order Attributes in 
Pilot Securities. The Exchange found that it can support nearly all 
Order Type and Order Attribute functionality; however, as described in 
detail below, it must amend such functionality in a handful of cases to 
address the requirements of the Plan. Thus, in addition to the changes 
of broad application discussed above, the Exchange is proposing the 
following select and discrete amendments to the operation of the 
following Order Types and Order Attributes, as discussed in detail 
below: (i) Price to Comply Orders \23\; (ii) Non-Displayed Orders \24\; 
(iii) Post-Only Orders \25\; (iv) Market Maker Peg Orders \26\; (v) 
Midpoint Peg Post-Only Order \27\; (vi) Midpoint Pegging \28\; (vii) 
Reserve Size \29\; and (viii) Good-till-Cancelled \30\.
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    \23\ See Rule 3301A(b)(1).
    \24\ See Rule 3301A(b)(3).
    \25\ See Rule 3301A(b)(4).
    \26\ See Rule 3301A(b)(5).
    \27\ See Rule 3301A(b)(6).
    \28\ See Rule 3302A(d).
    \29\ See Rule 3302A(h).
    \30\ See Rule 3302A(a)(3).
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    The Exchange is also proposing to amend existing rules under Rule 
3317 to clarify the operation of the Plan on the Exchange. 
Specifically, the Exchange is proposing to amend Rule 
3317(a)(1)(D)(ii), which defines the term ``Trade-at Intermarket Sweep 
Order,'' and Rule 3317(c)(3)(D)(iii)j, which describes an exception to 
the Trade-at prohibition of the Plan involving the use of Trade-at 
Intermarket Sweep Orders, as described in detail below.
    Lastly, the Exchange is proposing to adopt new Commentary .12 to 
Rule 3317 to describe what qualifies as a Block Order for purposes of 
the Trade-at exception under Rule 3317(c)(3)(D)(iii).
Price To Comply Orders
    The Price to Comply Order is an Order Type designed to comply with 
Rule 610(d) under Regulation NMS by having its price and display 
characteristics adjusted to avoid the display of quotations that lock 
or cross any Protected Quotation in a System Security during Market 
Hours. The Price to Comply Order is also designed to provide potential 
price improvement. The System does not have a ``plain vanilla'' limit 
order that attempts to execute at its limit price and is then posted at 
its price or rejected if it cannot be posted; rather, the Price to 
Comply Order, with its price and display adjustment features, is one of 
the primary Order Types used by Participants to access and display 
liquidity in the System. The price and display adjustment features of 
the Order Type enhance efficiency and investor protection by offering 
an Order Type that first attempts to access available liquidity and 
then to post the remainder of the Order at prices that are designed to 
maximize their opportunities for execution.
    When a Price to Comply Order is entered by a market participant, 
the Price to Comply Order will be executed against previously posted 
Orders on the Exchange Book that are priced equal to or better than the 
price of the Price to Comply Order, up to the full amount of such 
previously posted Orders, unless such executions would trade through a 
Protected Quotation. Any portion of the Order that cannot be executed 
in this manner will be posted on the Exchange Book (and/or routed if it 
has been designated as Routable).\31\
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    \31\ See Rules 3301B(f) and 3315.
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    During Market Hours, the price at which a Price to Comply Order is 
posted is determined in the following manner. If the entered limit 
price of the Price to Comply Order would lock or cross a Protected 
Quotation and the Price to Comply Order could not execute against an 
Order on the Exchange Book at a price equal to or better than the price 
of the Protected Quotation, the Price to Comply Order will be displayed 
on the Exchange Book at a price one minimum price increment below the 
current Best Offer (for a Price to Comply Order to buy) or above the 
current Best Bid (for a Price to Comply Order to sell) but will also be 
ranked on the Exchange Book with a non-displayed price equal to the 
current Best Offer (for a Price to Comply Order to buy) or to the 
current Best Bid (for a Price to Comply Order to sell). The posted 
Order will then be available for execution at its non-displayed price, 
thus providing opportunities for price improvement to incoming Orders.
    A Price to Comply Order in a Test Group Pilot Security will operate 
as described in Rule 3301A(b)(1) except the Exchange is proposing to 
change how it handles a Price to Comply Order in a Test Group Three 
Pilot Security to ensure that it conforms with the Trade-at prohibition 
of the Plan. First, the Exchange is proposing that if the Exchange 
received a Price to Comply Order for a Test Group Three Pilot Security 
that locks or crosses a Protected Quotation of another market center, 
is partially executed upon entry, and the remainder of the Order would 
lock a Protected Quotation of another market center, the unexecuted 
portion of the Order will be cancelled. Second, if the limit price of a 
buy (sell) Price to Comply Order in a Test Group Three Pilot Security 
would lock or cross a Protected Quotation of another market center, and 
is not executable against any previously posted Orders on the Exchange 
Book, the Order will display at one minimum price increment below 
(above) the Protected Quotation, and the order will be added to the 
Exchange Book at the midpoint of the order's displayed price and the 
National Best Offer (National Best Bid).\32\ Thus, the Order would 
avoid possible execution at a prohibited price, but potentially receive 
price improvement and be displayed at a permissible price away from the 
Protected Quotation. Due to the Trade-at requirement of Test Group 
Three Pilot Securities, the Exchange is also proposing to adjust such 
Orders repeatedly towards the limit price of the order in accordance 
with changes to the NBBO until such time as the Price to Comply Order 
is able to be ranked and displayed at its original entered limit 
price.\33\
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    \32\ When the market is locked, the price and display logic for 
Orders that would lock or cross an away market is slightly 
different. Displayed Orders at the locking price will post at the 
locking price if there are other orders already posted on PSX at 
that price (i.e., PSX is part of the locked market). Otherwise, the 
order will post at one minimum price increment away from the locking 
price. Non-displayed Orders received when the market is locked will 
always post one minimum price increment away from the locking price.
    \33\ The repricing of Price to Comply and Post-Only Orders in 
Test Group Three Pilot Securities described in this rule filing are 
not subject to the limitations on Order updates, as described in 
Rule 3306(a)(4).
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Non-Displayed Orders
    A Non-Displayed Order is an Order Type that is not displayed to 
other

[[Page 64555]]

Participants, but nevertheless remains available for potential 
execution against incoming Orders until executed in full or cancelled. 
In addition to the Non-Displayed Order Type, there are other Order 
Types that are not displayed on the Exchange Book. Thus, ``Non- 
Display'' is both a specific Order Type and an Order Attribute of 
certain other Order Types.
    When a Non-Displayed Order is entered, the Non-Displayed Order will 
be executed against previously posted Orders on the Exchange Book that 
are priced equal to or better than the price of the Non-Displayed 
Order, up to the full amount of such previously posted Orders, unless 
such executions would trade through a Protected Quotation. Any portion 
of the Non-Displayed Order that cannot be executed in this manner will 
be posted to the Exchange Book (unless the Non-Displayed Order has a 
Time-in-Force of IOC) and/or routed if it has been designated as 
Routable. During Market Hours, if the entered limit price of the Non-
Displayed Order would lock a Protected Quotation, the Non-Displayed 
Order will be placed on the Exchange Book at the locking price. If the 
Non-Displayed Order would cross a Protected Quotation, the Non-
Displayed Order will be repriced to a price that would lock the 
Protected Quotation and will be placed on the Exchange Book at that 
price.
    To avoid possible execution of a Non-Displayed Order at the 
Protected Quote on the Exchange in a Test Group Three Pilot Security, 
the Exchange is proposing to not allow execution of a Non-Displayed 
Order in a Test Group Three Pilot Security at the price of a Protected 
Quotation unless the incoming Order otherwise qualifies for an 
exception to the Trade-at prohibition. If the limit price of a buy 
(sell) Non-Displayed Order in a Test Group Three security would lock or 
cross a Protected Quotation of another Market Center, the Order will be 
added to the Exchange Book at either one minimum price increment 
($0.05) below (above) the National Best Offer (National Best Bid) or at 
the midpoint of the NBBO, whichever is higher (lower). Thus the Order 
would avoid possible execution at a prohibited price, but potentially 
receive price improvement or post at a permissible price away from the 
Protected Quotation. After posting and if conditions allow, such an 
Order will be adjusted repeatedly in accordance with changes to the 
NBBO up (down) to the Order's limit price.\34\
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    \34\ The repricing of Non-Displayed Orders in Test Group Three 
Pilot Securities in accordance with changes to the NBBO up (down) to 
the Order's limit price are not subject to the limitations on Order 
updates, as described in Rule 3306(a)(4).
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    The Exchange is proposing a change to how a Non-Displayed Order in 
a Test Group Three Pilot Security would be treated to comply with the 
Trade-at requirement. Currently, for a Non-Displayed Order that is 
entered through a RASH or FIX port, if, after being posted to the 
Exchange Book, the NBBO changes so that the Non-Displayed Order would 
cross a Protected Quotation, the Non-Displayed Order will be repriced 
at a price that would lock the new NBBO and receive a new timestamp. 
For a Non-Displayed Order entered through OUCH or FLITE, if, after the 
Non-Displayed Order is posted to the Exchange Book, the NBBO changes so 
that the Non-Displayed Order would cross a Protected Quotation, the 
Non-Displayed Order will be cancelled back to the Participant. The 
Exchange is proposing to trigger repricing of a Non-Displayed Order in 
a Test Group Three Pilot Security if the Order would lock or cross a 
Protected Quotation by posting the Order to the Exchange Book at either 
one minimum price increment below (above) the National Best Offer 
(National Best Bid) or at the midpoint of the NBBO, whichever is higher 
(lower). Thus, the Order is repriced to avoid execution at the 
Protected Quotation, but may also receive price improvement. If market 
conditions allow, a Non-Displayed Order in a Test Group Three Pilot 
Security will be adjusted repeatedly in accordance with changes to the 
NBBO up (down) to the Order's limit price. For a Non-Displayed Order in 
a Test Group Three Pilot Security entered through RASH or FIX, if after 
being posted to the Exchange Book, the NBBO changes so that the Non-
Displayed Order would no longer be executable at its posted price due 
to the requirements of Regulation NMS or the Plan, the Non-Displayed 
Order will be repriced to a price that is at either one minimum 
increment below (above) the National Best Offer (National Best Bid) or 
at the midpoint of the NBBO, whichever is higher (lower) and will 
receive a new timestamp. For a Non-Displayed Order in a Test Group 
Three Pilot Security entered through OUCH or FLITE, if after such a 
Non-Displayed Order is posted to the Exchange Book, if the NBBO changes 
so that the Non-Displayed Order would no longer be executable at its 
posted price due to the requirements of Regulation NMS or the Plan, the 
Non-Displayed Order will be cancelled back to the Participant. A posted 
order is no longer eligible to execute at its posted price under three 
distinct scenarios. First, in Test Group Pilot Securities, if the NBBO 
moves such that the posted Order's price crosses a protected quotation, 
it is no longer executable due to the trade through prohibition under 
Regulation NMS (this is current functionality). Second, in Test Group 
Three Pilot Securities, if a Non-Displayed Order is posted at the 
midpoint and the NBBO moves such that its posted price is no longer a 
valid increment, the Order will be adjusted as described above. For 
example, if the NBB is $10.00 and the NBO is $10.05 in a Test Group 
Three Pilot Security, and a Non-Displayed Order to buy 100 shares of 
the security with a limit price of $10.05 is received by the System, 
the Order would be repriced and posted at $10.025 (the midpoint of the 
NBBO) to avoid locking the market. If subsequently the NBB changes to 
$9.95 and the NBO to $10.05, then the Order would no longer be eligible 
for the midpoint exception to the Plan's minimum price increment 
requirement and therefore would be adjusted and/or cancelled as 
described above. Third, in Test Group Three Pilot Securities, if the 
NBBO moves such that the Order's posted price locks a protected 
quotation, it is no longer executable due to the Trade-at prohibition 
under the Plan and would be adjusted and/or cancelled as described 
above.
Post-Only Orders
    A Post-Only Order is an Order Type designed to have its price 
adjusted as needed to post to the Exchange Book in compliance with Rule 
610(d) under Regulation NMS \35\ by avoiding the display of quotations 
that lock or cross any Protected Quotation in a System Security during 
Market Hours, or to execute against locking or crossing quotations in 
circumstances where economically beneficial to the Participant entering 
the Post-Only Order.
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    \35\ 17 CFR 242.610(d).
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    Post-Only Orders in Test Group Pilot Securities will operate as 
described under Rule 3301A(b)(4), however, the Exchange is proposing 
changes to the handling of a Post-Only Order in Test Group Three Pilot 
Securities to ensure that the Trade-at prohibition is enforced. 
Specifically, the Exchange is proposing to modify how a Post-Only Order 
in a Test Group Three Pilot Security is handled if it locks or crosses 
the Protected Quotation of another market center. If the limit price of 
a buy (sell) Post-Only Order in a Test Group Three Pilot Security would 
lock or cross a Protected Quotation of another market

[[Page 64556]]

center, the Order will display at one minimum price increment below 
(above) the Protected Quotation, and the Order will be added to the 
Exchange Book at the midpoint of the Order's displayed price and the 
National Best Offer (National Best Bid). Thus the Order would avoid 
possible execution at a prohibited price, but potentially receive price 
improvement or post at a permissible price away from the Protected 
Quotation. Thereafter and if market conditions allow, the Post-Only 
Order will be adjusted repeatedly towards its limit price in accordance 
with changes to the NBBO or the best price on the Exchange Book, as 
applicable, until such time as the Post-Only Order is able to be ranked 
and displayed at its original entered limit price.\36\
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    \36\ As discussed above, repricing of Price to Comply and Post-
Only Orders in Test Group Three Pilot Securities described in this 
rule filing are not subject to the limitations on Order updates, as 
described in Rule 3306(a)(4). Supra note 33.
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Market Maker Peg Orders
    A ``Market Maker Peg Order'' is an Order Type designed to allow a 
Market Maker to maintain a continuous two-sided quotation at a price 
that is compliant with the quotation requirements for Market Makers set 
forth in Rule 3213(a)(2).\37\ The price of the Market Maker Peg Order 
is set with reference to a ``Reference Price'' in order to keep the 
price of the Market Maker Peg Order within a bounded price range. A 
Market Maker Peg Order may be entered through RASH or FIX only. A 
Market Maker Peg Order must be entered with a limit price beyond which 
the Order may not be priced. The Reference Price for a Market Maker Peg 
Order to buy (sell) is the then-current Best Bid (Best Offer) 
(including PSX), or if no such Best Bid or Best Offer, the most recent 
reported last-sale eligible trade from the responsible single plan 
processor for that day, or if none, the previous closing price of the 
security as adjusted to reflect any corporate actions (e.g., dividends 
or stock splits) in the security.
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    \37\ As with other Order Types, the Market Maker Peg Order must 
be an Order either to buy or to sell; thus, at least two Orders 
would be required to maintain a two-sided quotation.
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    Upon entry, the price of a Market Maker Peg Order to buy (sell) is 
automatically set by the System at the Designated Percentage (as 
defined in Rule 3213) away from the Reference Price in order to comply 
with the quotation requirements for Market Makers set forth in Rule 
3213(a)(2). For example, if the Best Bid is $10 and the Designated 
Percentage for the security is 8%, the price of a Market Marker Peg 
Order to buy would be $9.20. If the limit price of the Order is not 
within the Designated Percentage, the Order will be sent back to the 
Participant.
    Once a Market Maker Peg Order has posted to the Exchange Book, its 
price is adjusted if needed as the Reference Price changes. 
Specifically, if as a result of a change to the Reference Price, the 
difference between the price of the Market Maker Peg Order and the 
Reference Price reaches the Defined Limit (as defined in Rule 3213), 
the price of a Market Maker Peg Order to buy (sell) will be adjusted to 
the Designated Percentage away from the Reference Price. In the 
foregoing example, if the Defined Limit is 9.5% and the Best Bid 
increased to $10.17, such that the price of the Market Maker Peg Order 
would be more than 9.5% away, the Order will be repriced to $9.35, or 
8% away from the Best Bid. Note that calculated prices of less than the 
minimum increment will be rounded in a manner that ensures that the 
posted price will be set at a level that complies with the percentages 
stipulated by this rule. If the limit price of the Order is outside the 
Defined Limit, the Order will be sent back to the Participant.
    Similarly, if as a result of a change to the Reference Price, the 
price of a Market Maker Peg Order to buy (sell) is within one minimum 
price variation more than (less than) a price that is 4% less than 
(more than) the Reference Price, rounded up (down), then the price of 
the Market Maker Peg Order to buy (sell) will be adjusted to the 
Designated Percentage away from the Reference Price. For example, if 
the Best Bid is $10 and the Designated Percentage for the security is 
8%, the price of a Market Marker Peg Order to buy would initially be 
$9.20. If the Best Bid then moved to $9.57, such that the price of the 
Market Maker Peg Order would be a minimum of $0.01 more than a price 
that is 4% less than the Best Bid, rounded up (i.e. $9.57--($9.57 x 
0.04) = $9.1872, rounding up to $9.19), the Order will be repriced to 
$8.81, or 8% away from the Best Bid.
    A Market Maker may enter a Market Maker Peg Order with a more 
aggressive offset than the Designated Percentage, but such an offset 
will be expressed as a price difference from the Reference Price. Such 
a Market Maker Peg Order will be repriced in the same manner as a Price 
to Display Order with Attribution and Primary Pegging. As a result, the 
price of the Order will be adjusted whenever the price to which the 
Order is pegged is changed. x
    A new timestamp is created for a Market Maker Peg Order each time 
that its price is adjusted. In the absence of a Reference Price, a 
Market Maker Peg Order will be cancelled or rejected. If, after entry, 
a Market Maker Peg Order is priced based on a Reference Price other 
than the NBBO and such Market Maker Peg Order is established as the 
Best Bid or Best Offer, the Market Maker Peg Order will not be 
subsequently adjusted in accordance with this rule until a new 
Reference Price is established.
    In light of the minimum price increment requirement of the Plan, 
the Exchange is proposing to require the displayed price of a Market 
Maker Peg Order in a Test Group One, Two or Three Pilot Security to be 
rounded up (down) to the nearest minimum price increment for bids 
(offers), if it would otherwise display at an increment smaller than 
minimum price increment. For example, if the NBB is $10.05 and the NBO 
is $10.15, and the Designated Percentage is 28%, the displayed price of 
a Market Maker Peg Order to buy 100 shares of a Test Group Pilot 
Security would be $7.25 (i.e. $10.05-($10.05 x 0.28) = $7.236, rounded 
up to $7.25). Using the same market, but with a Market Maker Peg Order 
to sell 100 shares, the Order would be displayed at $12.95 (i.e. $10.15 
+ ($10.15 x 0.28) = $12.992, rounded down to $12.95). Thus, the 
rounding done to derive the price of the Market Maker Peg Order in a 
Test Group Pilot Security will conform to the minimum price increment 
requirement of the Plan.
    As a consequence of conforming the Market Maker Peg Order to the 
minimum price increment of the Plan, a Market Maker Peg Order may have 
a higher likelihood of execution, particularly in lower priced 
securities. For example, if a member entered a Market Maker Peg Order 
to buy 100 shares of a Test Group Pilot Security with a limit price of 
$1.70 when the NBB is $1.60 and the NBO is $1.65, if the security is a 
Tier 2 security, the Order would be pegged at 28% from the NBB, which 
is $1.20 ($1.60 x .72 = $1.152 which rounds up to $1.20). If the market 
subsequently moves downward to a NBB of $1.20 and NBO of $1.30, the buy 
Market Maker Peg Order would not reprice because it had not reached one 
minimum price increment more than a price that is 4% less than the NBB 
(i.e., $1.20 x .96 = $1.152, which rounds up to $1.20 and which is not 
greater than the NBB + $0.05). Thus, the Market Maker Peg Order may 
receive an execution prior to reaching a point at which it would 
reprice. This increased likelihood of execution of Market Maker Peg 
Orders would occur in any Order in

[[Page 64557]]

a Test Group Pilot Security with a price less than $1.25.
Midpoint Peg Post-Only Orders
    A ``Midpoint Peg Post-Only Order'' is an Order Type with a Non-
Display Order Attribute that is priced at the midpoint between the NBBO 
and that will execute upon entry against locking or crossing quotes 
only in circumstances where economically beneficial to the party 
entering the Order. Because the Order is priced at the midpoint, it can 
provide price improvement to incoming Orders when it is executed after 
posting to the Exchange Book. The Midpoint Peg Post-Only Order is 
available during Market Hours only.
    The Plan allows Orders in Test Group Pilot Securities priced to 
execute at the midpoint of the NBBO to be ranked and accepted in 
increments less than the Plan's minimum price increment of $0.05. Thus, 
the Exchange is proposing to make it clear that Midpoint Peg Post-Only 
Orders in any of the Test Group Pilot Securities may execute in an 
increment other than the minimum price increment of the Plan.
Midpoint Pegging
    Pegging is an Order Attribute that allows an Order to have its 
price automatically set with reference to the NBBO. An Order with a 
Pegging Order Attribute may be referred to as a ``Pegged Order.'' 
Midpoint Pegging means Pegging with reference to the midpoint between 
the Inside Bid and the Inside Offer (the ``Midpoint''). Thus, if the 
Inside Bid was $11 and the Inside Offer was $11.06, an Order with 
Midpoint Pegging would be priced at $11.03. An Order with Midpoint 
Pegging is not displayed. An Order with Midpoint Pegging may be 
executed in sub-pennies if necessary to obtain a midpoint price.
    As discussed above, the Plan allows Orders in Test Group Pilot 
Securities priced to execute at the midpoint of the NBBO to be ranked 
and accepted in increments less than the Plan's minimum price increment 
of $0.05. Thus, the Exchange is proposing to make it clear that an 
Order in a Test Group Pilot Security with Midpoint Pegging may execute 
in an increment other than the minimum price increment of the Plan.
Reserve Size
    Reserve Size is an Order Attribute that permits a Participant to 
stipulate that an Order Type that is displayed may have its displayed 
size replenished from additional non-displayed size. An Order with 
Reserve Size may be referred to as a ``Reserve Order.'' At the time of 
entry, the displayed size of such an Order selected by the Participant 
must be one or more normal units of trading; an Order with a displayed 
size of a mixed lot will be rounded down to the nearest round lot. A 
Reserve Order with displayed size of an odd lot will be accepted but 
with the full size of the Order displayed. Reserve Size is not 
available for Orders that are not displayed; provided, however, that if 
a Participant enters Reserve Size for a Non-Displayed Order with a 
Time-in-Force of IOC, the full size of the Order, including Reserve 
Size, will be processed as a Non-Displayed Order.
    Whenever a Participant enters an Order with Reserve Size, PSX will 
process the Order as two Orders: A Displayed Order (with the 
characteristics of its selected Order Type) and a Non-Displayed Order. 
Upon entry, the full size of each such Order will be processed for 
potential execution in accordance with the parameters applicable to the 
Order Type. For example, a Participant might enter a Price to Display 
Order with 200 shares displayed and an additional 3,000 shares non-
displayed. Upon entry, the Order would attempt to execute against 
available liquidity on the Exchange Book, up to 3,200 shares. 
Thereafter, unexecuted portions of the Order would post to the Exchange 
Book as a Price to Display Order and a Non-Displayed Order; provided, 
however, that if the remaining total size is less than the display size 
stipulated by the Participant, the Displayed Order will post without 
Reserve Size. Thus, if 3,050 shares executed upon entry, the Price to 
Display Order would post with a size of 150 shares and no Reserve Size.
    When an Order with Reserve Size is posted, if there is an execution 
against the Displayed Order that causes its size to decrease below a 
normal unit of trading, another Displayed Order will be entered at the 
level stipulated by the Participant while the size of the Non-Displayed 
Order will be reduced by the same amount. Any remaining size of the 
original Displayed Order will remain on the Exchange Book. The new 
Displayed Order will receive a new timestamp, but the Non-Displayed 
Order (and the original Displayed Order, if any) will not; although the 
new Displayed Order will be processed by the System as a new Order in 
most respects at that time, if it was designated as Routable, the 
System will not automatically route it upon reentry. For example, if a 
Price to Comply Order with Reserve Size posted with a Displayed Size of 
200 shares, along with a Non-Displayed Order of 3,000 and the 150 
shares of the Displayed Order was executed, the remaining 50 shares of 
the original Price to Comply Order would remain, a new Price to Comply 
Order would post with a size of 200 shares and a new timestamp, and the 
Non-Displayed Order would be decremented to 2,800 shares. Because a new 
Displayed Order is entered and the Non-Displayed Order is not 
reentered, there are circumstances in which the Displayed Order may 
receive a different price than the Non-Displayed Order. For example, 
if, upon reentry, a Price to Display Order would lock or cross a newly 
posted Protected Quotation, the price of the Order will be adjusted but 
its associated Non- Displayed Order would not be adjusted. In that 
circumstance, it would be possible for the better priced Non-Displayed 
Order to execute prior to the Price to Display Order.
    When the Displayed Order with Reserve Size is executed and 
replenished, applicable market data disseminated by the Exchange will 
show the execution and decrementation of the Displayed Order, followed 
by replenishment of the Displayed Order.
    In all cases, if the remaining size of the Non-Displayed Order is 
less than the fixed or random amount stipulated by the Participant, the 
full remaining size of the Non-Displayed Order will be displayed and 
the Non-Displayed Order will be removed.
    The Exchange is proposing to not allow a resting order in a Test 
Group Three Pilot Security with a Reserve Size to execute the non-
displayed Reserve Size at the price of a Protected Quotation of another 
market center unless the incoming order otherwise qualifies for an 
exception to the Trade-at prohibition provided under Rule 
3317(c)(3)(D). If the Exchange received a Reserve Order for a Test 
Group Three Pilot Security that locks or crosses a Protected Quotation 
of another market center, is partially executed upon entry, and the 
remainder of the Order would lock a Protected Quotation of another 
market center, the unexecuted portion of the Order will be cancelled. 
If the limit price of a buy (sell) Reserve Order in a Test Group Three 
Pilot Security that is not attributable would lock or cross a Protected 
Quotation of another market center, and is not executable against any 
previously posted Orders on the Exchange Book, the displayed portion of 
the Order will display at one minimum price increment below (above) the 
Protected Quotation, and the Order will be added to the Exchange Book 
at the midpoint of the Order's displayed price and the National Best 
Offer (National Best Bid). Thus, the Order would avoid possible 
execution at a prohibited price, but potentially receive price

[[Page 64558]]

improvement and be displayed at a permissible price away from the 
Protected Quotation. If the limit price of a buy (sell) Reserve Order 
in a Test Group Three Pilot Security that is attributable would lock or 
cross a Protected Quotation of another market center, and is not 
executable against any previously posted Orders on the Exchange Book, 
the displayed portion of the Order will be adjusted and displayed at 
one minimum price increment below (above) the Protected Quotation, and 
the non-displayed Reserve Size will be added to the Exchange Book at 
the midpoint of the Order's displayed price and the National Best Offer 
(National Best Bid). If after being posted to the Exchange Book, the 
NBBO changes so that the Reserve Order, if it is not attributable, 
would lock or cross a Protected Quotation, the displayed portion of the 
Reserve Order will display one minimum price increment below (above) 
the Protected Quotation, and the Order will be repriced to the midpoint 
of the Order's displayed price and the National Best Offer (National 
Best Bid).\38\ If after being posted to the Exchange Book, the NBBO 
changes so that the Reserve Order in a Test Group Three Pilot Security, 
if it is attributable, would no longer be executable at its posted 
price due to the requirements of Regulation NMS or the Plan, the 
displayed portion of the Reserve Order will be adjusted and display one 
minimum price increment below (above) the Protected Quotation, and the 
non-displayed Reserve Size will be repriced to the midpoint of the 
Order's displayed price and the National Best Offer (National Best 
Bid). Thus, the Order would continue to comply with the Trade-at 
requirement by avoiding potential execution at a prohibited price.
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    \38\ Both a Price to Comply Order and a Price to Display Order 
with a Reserve Attribute would be repriced pursuant to Reserve Order 
process described in proposed Rule 3317(d)(9). A Price to Display 
Order is an Order Type designed to comply with Rule 610(d) under 
Regulation NMS by avoiding the display of quotations that lock or 
cross any Protected Quotation in a System Security during Market 
Hours, and are available solely to Participants that are Market 
Makers. See Rule 3301A(b)(2).
---------------------------------------------------------------------------

Good-till-Cancelled
    Good-till-Cancelled is a Time-in-Force Order Attribute that is 
designated to deactivate one year after entry. Under certain 
circumstances at the election of the member, an Order designated as 
Good-till-Cancelled must be adjusted to account for corporate actions 
related to a dividend, payment or distribution. Rule 3311(b) sets forth 
the circumstances and method by which an Order designated as Good-till-
Cancelled is adjusted. The Exchange is making it clear that an order in 
a Test Group Pilot Security with a Good-till-Cancelled Time-in-Force 
that is adjusted pursuant to Rule 3311(b) will be adjusted based on a 
$0.05 increment.
Rule 3317(a) and (c) Changes
    Rule 3317(a) provides definitions of terms used under the Rule. 
Rule 3317(a) defines the term ``Trade-at Intermarket Sweep Order'' as 
``a limit order for a Pilot Security that meets the following 
requirements: (i) When routed to a Trading Center, the limit order is 
identified as a Trade-at Intermarket Sweep Order; and (ii) 
Simultaneously with the routing of the limit order identified as a 
Trade-at Intermarket Sweep Order, one or more additional limit orders, 
as necessary, are routed to execute against the full size of any 
protected bid, in the case of a limit order to sell, or the full 
displayed size of any protected offer, in the case of a limit order to 
buy, for the Pilot Security with a price that is better than or equal 
to the limit price of the limit order identified as a Trade-at 
Intermarket Sweep Order. These additional routed orders also must be 
marked as Trade-at Intermarket Sweep Orders.'' Rule 
3317(c)(3)(D)(iii)j. provides an exception to the Trade-at prohibition, 
requiring that, to satisfy the exception, the order is executed by a 
Trading Center that simultaneously routed Trade-at Intermarket Sweep 
Orders or Intermarket Sweep Orders to execute against the full 
displayed size of the Protected Quotation that was traded at.
    The Exchange is proposing to amend paragraph (ii) of Rule 3317(a) 
and Rule 3317(c)(3)(D)(iii)j. to allow the Exchange to use Intermarket 
Sweep Orders in lieu of Trade-at Intermarket Sweep Orders, when it is 
in receipt of an Order from a member that would trade through a 
protected price on another market. An Intermarket Sweep Order or 
``ISO'' is an Order Attribute that allows the Order to be executed 
within PSX by Participants at multiple price levels without respect to 
Protected Quotations of other market centers within the meaning of Rule 
600(b) under Regulation NMS. ISOs are immediately executable within PSX 
against Orders against which they are marketable.
    For purposes of the Exchange's satisfaction of the Trade-at 
Intermarket Sweep Order exception to the Trade-at prohibition of Test 
Group Three Pilot Securities, the ISO Order will operate functionally 
identically to the use of a Trade-at Intermarket Sweep Order. 
Intermarket Sweep Orders are sent by the exchange to execute against 
displayed size represented in away market centers' Protected Quotation 
and thus provide the same function as a Trade-at Intermarket Sweep 
Order because either order type would execute against the displayed 
portion of the away market centers' liquidity. The Exchange's routing 
broker is currently programmed to accept and route ISO Orders and 
adding an additional functionality to support routing of Trade-at 
Intermarket Sweep Orders would add complexity to the process with no 
functional benefit. Accordingly, the Exchange is proposing to use ISOs 
when routing Orders to satisfy the exception to the Trade-at 
prohibition.
New Commentary .12
    The Exchange is proposing to adopt a new Commentary .12 to Rule 
3317 to clarify what qualifies as a Block Order for purposes of the 
Block Size exception to the Trade-at prohibition. Rule 
3317(c)(3)(D)(iii)c. provides an exception to the Trade-at prohibition 
for an Order that is of Block Size at the time of origin and is not an 
aggregation of non-block Orders, broken into Orders smaller than Block 
Size prior to submitting the Order to a Trading Center for execution, 
or is executed on multiple Trading Centers. The Plan defines Block Size 
as an Order of at least 5,000 shares or for a quantity of stock having 
a market value of at least $100,000. The Exchange has assessed the 
technological complexity and effort required to change the System to 
identify the market value of a quantity of stock and found that it 
would be exceedingly burdensome and complex without any clear benefit 
to the Exchange, its members, and the marketplace as a whole. As a 
consequence, the Exchange is proposing to only allow Orders that have a 
minimum size of 5,000 shares to qualify as Block Size for purposes of 
the exception provided by Rule 3317(c)(3)(D)(iii)c. and will only 
execute if the execution in aggregate is at least 5,000 shares.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\39\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\40\ in particular, in that it 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

[[Page 64559]]

and a national market system, and, in general, to protect investors and 
the public interest. The Exchange believes that the proposed rule 
change is consistent with the Act because it allows the Exchange to 
make changes to its handling of Order Types and Order Attributes 
necessary to implement the requirements of the Plan on its System. The 
Plan, which was approved by the Commission pursuant to an order issued 
by the Commission in reliance on Section 11A of the Act,\41\ provides 
the Exchange authority to establish, maintain, and enforce written 
policies and procedures that are reasonably designed to comply with 
applicable quoting and trading requirements specified in the Plan. The 
Exchange believes that the proposed rule change is consistent with the 
authority granted to it by the Plan to establish specifications and 
procedures for the implementation and operation of the Plan that are 
consistent with the provisions of the Plan. Likewise, the Exchange 
believes that the proposed rule change provides interpretations of the 
Plan that are consistent with the Act, in general, and furthers the 
objectives of the Act, in particular.
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 78f(b).
    \40\ 15 U.S.C. 78f(b)(5).
    \41\ 15 U.S.C. 78k-1.
---------------------------------------------------------------------------

    The Exchange is a Participant under the Plan and is subject to the 
Plan's provisions. The proposed rule change ensures that the Exchange's 
systems would not display or execute trading interests outside the 
requirements specified in such Plan, which otherwise may occur given 
existing System functionality. The proposal would also help allow 
market participants to continue to trade NMS Stocks, within quoting and 
trading requirements that are in compliance with the Plan, with 
certainty on how certain orders and trading interests would be treated. 
This, in turn, will help encourage market participants to continue to 
provide liquidity in the marketplace.
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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed changes are 
being made to establish, maintain, and enforce written policies and 
procedures that are reasonably designed to comply with the trading and 
quoting requirements specified in the Plan, of which other equities 
exchanges are also Participants. Other competing national securities 
exchanges are subject to the same trading and quoting requirements 
specified in the Plan, and must take the same steps that the Exchange 
has to conform its existing rules to the requirements of the Plan. 
Therefore, the proposed changes would not impose any burden on 
competition, while providing certainty of treatment and execution of 
trading interests on the Exchange to market participants in NMS Stocks 
that are acting in compliance with the requirements specified in the 
Plan.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be 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-2016-92 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-2016-92. 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-2016-92, and should be 
submitted on or before October 4, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\42\
---------------------------------------------------------------------------

    \42\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-22534 Filed 9-19-16; 8:45 am]
 BILLING CODE 8011-01-P


