
[Federal Register Volume 88, Number 161 (Tuesday, August 22, 2023)]
[Notices]
[Pages 57140-57142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17976]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98142; File No. SR-Phlx-2023-34]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Phlx's 
All-or-None Order

August 16, 2023.
    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 August 3, 2023, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``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 amend its Rules at Options 3, Options 
Trading Rules, at: Section 7, Types of Orders and Order and Quote 
Protocols; Section 8, Options Opening Process; Section 10, Electronic 
Execution Priority and Processing in the System; Section 12, Electronic 
Qualified Contingent Cross Order; Section 13, Price Improvement XL 
(``PIXL''); Section 14, Complex Orders; Section 23, Data Feeds and 
Trade Information; Options 5, Section 4, Order Routing; and Options 7, 
Section 3, Rebates and Fees for Adding and Removing Liquidity in SPY. 
The Exchange also proposes to amend its Rules at Options 8, Floor 
Trading, at: Section 30, Crossing, Facilitation and Solicited Orders; 
and Section 32, Types of Floor-Based (Non-System) Orders.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/phlx/rules, 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
    Phlx proposes to amend Options 3, Options Trading Rules, at: 
Section 7, Types of Orders and Order and Quote Protocols; Section 8, 
Options Opening Process; Section 10, Electronic Execution Priority and 
Processing in the System; Section 12, Electronic Qualified Contingent 
Cross Order; Section 13, Price Improvement XL (``PIXL''); Section 14, 
Complex Orders; Section 23, Data Feeds and Trade Information; Option5, 
Section 4, Order Routing; and Options 7, Section 3, Rebates and Fees 
for Adding and Removing Liquidity in SPY. The Exchange also proposes to 
amend its Rules at Options 8, Floor Trading, at: Section 30, Crossing, 
Facilitation and Solicited Orders; and Section 32, Types of Floor-Based 
(Non-System) Orders.
Background
    Today, Phlx's All-or-None Orders are described in Options 7, 
Section 7(b)(5) as Limit Orders or Market Orders that are executed in 
their entirety or not at all. All-or None Orders may only be submitted 
by a Public Customer.\3\ Phlx's All-or-None Orders rest on the order 
book as non-displayed orders. The Exchange does not disseminate bids or 
offers of All-or-None Orders to the Options Price Reporting Authority 
or ``OPRA'' and Top of PHLX Options \4\ feed, however All-or-None 
Orders are displayed in the PHLX Orders \5\ and PHLX Depth of Book \6\ 
feed. Further, All-or-None Orders are executed in price-time priority 
among all Public Customer orders if the size contingency can be met. If 
an All-or-None Order contingency cannot be met, the All-or-None Order 
would be by-passed until such time as the contingency could be met.\7\
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    \3\ The term ``Public Customer'' means a person or entity that 
is not a broker or dealer in securities and is not a Professional as 
defined within Options 1, Section (b)(45). See Options 1, Section 
1(b)(46).
    \4\ Top of PHLX Options (``TOPO'') is a direct data feed product 
that includes the Exchange's best bid and offer price, with 
aggregate size, based on displayable order and quoting interest on 
Phlx and last sale information for trades executed on Phlx. The data 
contained in the TOPO data feed is identical to the data 
simultaneously sent to the processor for the OPRA and subscribers of 
the data feed. The data provided for each options series includes 
the symbols (series and underlying security), put or call indicator, 
expiration date, the strike price of the series, and whether the 
option series is available for trading on Phlx and identifies if the 
series is available for closing transactions only. See Options 3, 
Section 23(a)(1).
    \5\ PHLX Orders is a real-time full Limit Order book data feed 
that provides pricing information for orders on the PHLX Order book 
for displayed order types and All-or-None Orders, as well as market 
participant capacity. PHLX Orders is currently provided as part of 
the TOPO Plus Orders data product. PHLX Orders provides real-time 
information to enable users to keep track of the single and complex 
order book(s). The data provided for each options series includes 
the symbols (series and underlying security), put or call indicator, 
expiration date, the strike price of the series, leg information on 
complex strategies and whether the option series is available for 
trading on Phlx and identifies if the series is available for 
closing transactions only. The feed also provides auction and 
exposure notifications and order imbalances on opening/reopening 
(size of matched contracts and size of the imbalance). See Options 
3, Section 23(a)(2).
    \6\ PHLX Depth of Market is a data product that provides: (i) 
order and quotation information for individual quotes and orders on 
the order book; (ii) last sale information for trades executed on 
Phlx; (iii) auction; and (iv) an Imbalance Message which includes 
the symbol, side of the market, size of matched contracts, size of 
the imbalance, and price of the affected series. The data provided 
for each options series includes the symbols (series and underlying 
security), put or call indicator, expiration date, the strike price 
of the series, and whether the option series is available for 
trading on Phlx and identifies if the series is available for 
closing transactions only. The feed also provides order imbalances 
on opening/reopening (size of matched contracts and size of the 
imbalance) and exposure notifications, with market participant 
capacity. See Options 3, Section 23(a)(2).
    \7\ Also of note, All-or-None Orders are non-routable and the 
Acceptable Trade Range protection in Options 3, Section 15(a) is not 
applied to All-Or-None Orders. See Options 7, Section 7(b)(5).
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Proposal
    At this time, the Exchange proposes to amend All-or-None Orders so 
that they may only be submitted by a Public Customer as an Immediate-
or-Cancel Order. With this proposed change, All-or-None Orders would no 
longer rest on the order book. Upon entry, an All-or-None Order would 
be executed in its

[[Page 57141]]

entirety or it will cancel if it cannot execute. Other options markets 
require All-or-None Orders to be Immediate-or-Cancel such as Nasdaq 
GEMX, LLC.\8\
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    \8\ See Nasdaq GEMX, LLC (``GEMX'') Options 3, Section 7(c). See 
Securities Exchange Act Release No. 80102 (February 24, 2017), 82 FR 
12381 (March 2, 2017) (Notice of Filing and Immediate Effectiveness 
of Proposed Rule Change Related to All-or-None Orders). See also 
GEMX, Nasdaq MRX, LLC (``MRX''), and Nasdaq ISE, LLC (``ISE'') 
Options 3, Section 7(c), The Nasdaq Options Market LLC (``NOM'') 
Options 3, Section 7(a)(8) and Nasdaq BX, Inc. (``BX'') Options 3, 
Section 7(a)(7). GEMX, MRX, ISE, NOM and BX have All-or-None Orders 
that are Immediate-or-Cancel.
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    The Exchange proposes to amend the order type description in 
Options 3, Section 7(b)(5) to state, ``An All-or-None Order is a Limit 
Order or Market Order that is to be executed in its entirety or not at 
all. An All-or None Order may only be submitted by a Public Customer as 
an Immediate-or-Cancel Order.'' As is the case today, the Acceptable 
Trade Range protection in Options 3, Section 15(a) is not applied to 
All-Or-None Orders. Further, the All-or-None Order type in Options 8, 
Section 32(b)(3) may only be submitted by a Public Customer. The 
Exchange proposes to add a new sentence in Options 8, Section 32(b)(3) 
that would state, ``Further, pursuant to Options 8, Section 39, A-3, an 
All-or-None Order has no standing respecting executions in the trading 
crowd except with respect to other All-or-None Orders. When represented 
in the trading crowd, All-or-None Orders are not included as part of 
the bid or offer.'' The Exchange believes the new sentence, which 
references existing language in Options 8, Section 39, A-3, will bring 
greater clarity to the All-or-None Order type description.
    The Exchange proposes to also remove rule text about All-or-None 
Orders as a Non-Displayed Contingency Order in Options 3, Section 
7(b)(5)(i). The Exchange proposes to add a new Options 3, Section 
7(b)(4)(C) that states, ``A Stop Order is a non-displayed, contingency 
order until elected,'' in order to preserve the current rule text 
related to Stop Orders at Options 3, Section 7(b)(5)(i).
    As a result of the proposed amendment to the All-or-None Order 
type, Phlx proposes to remove rule text regarding All-or-None Orders in 
various other rules. Since All-or-None Orders will not rest on the 
order book, it is not considered for purposes of Legging Orders and 
therefore the rule text within Options 3, Section 7(b)(10)(2) and (4) 
related to All-or-None Orders is being removed. Additionally, the 
Exchange proposes a technical amendment to re-letter Options 3, Section 
7(b)(1) (1)-(4) as (A)-(D).
    Since All-or-None Orders will not rest on the order book as 
proposed, those orders would be treated the same as all other 
Immediate-or-Cancel Orders in the Opening Process and, therefore, do 
not need to be separately described in Options 3, Section 8. The 
Exchange proposes to remove specific references to All-or-None Orders 
in Options 3, Section 8(b), (h) and (k)(C)(6).
    All-or-None Orders do not need to be excluded from the internal 
PBBO in Options 3, Section 10, which describes the Exchange's 
allocation process, because All-or-None Orders will not rest on the 
order book with this proposed amendment. The Exchange proposes to 
remove the language concerning All-or-None Orders from Options 3, 
Section 10(a)(1)(B), (C), and (D)(i) and (ii).
    As proposed, Public Customers All-or None Orders, similar to all 
other Public Customer Orders which are Immediate-or-Cancel Orders, will 
not be considered for purposes of checking the order book prior to 
executing a Qualified Contingent Cross Order since they will not rest 
on the order book. Therefore, the Exchange proposes to remove the 
language within Supplementary Material .01 to Options 3, Section 12 and 
Options 8, Section 30 concerning All-or-None Orders.
    As proposed, All-or None Orders will not be considered when 
checking the order book to start a PIXL Auction or to allocate the PIXL 
Order at the end of the PIXL Auction because All-or-None Orders will 
not rest on the order book. Therefore, the Exchange proposes to remove 
the language within Options 3, Section 13(a)(2) and (f) related to All-
or-None Orders on the order book.
    As amended, All-or-None Orders will be treated in the same manner 
as other Immediate-or-Cancel Orders with respect to a Complex Opening 
Process and a Complex Order Live Auction. Also, All-or-None Orders will 
not rest on the order book and are not considered for purposes of 
legging into the simple order book. Therefore, the Exchange is removing 
language concerning All-or-None Orders within Options 3, Section 
14(d)(ii)(C), (e)(vi)(A)(1), (e)(viii)(C)(3), and (f)(iii)(A) because 
All-or-None Orders do not need to be treated differently.
    For purposes of the PHLX Orders feed, All-or-None Orders will be 
treated the same as all other Immediate-or-Cancel Orders and not 
displayed on the PHLX Orders feed. Options 3, Section 23(a)(2) is being 
amended to remove All-or-None Orders from the feed description.
    Since All-or-None Orders will not rest on the order book the 
Exchange proposes to amend Options 5, Section 4(a), 4(a)(iii)(C)(3), 
(5), (7) and (9), concerning Routing, to remove references to the 
exclusion of All-or-None Orders from the PBBO and their partial 
exclusion from the internal PBBO.
    The Exchange proposes to remove the following pricing from Options 
7, Section 3, Rebates and Fees for Adding and Removing Liquidity in 
SPY, ``The Cancellation Fee for each cancelled electronically delivered 
Professional \9\ AON order will continue to apply to the SPY. The 
Cancellation Fee will not apply for each cancelled electronically 
delivered Customer order in SPY.'' Today, only Public Customers may 
submit All-or-None Orders.\10\ In 2019, Phlx amended its All-or-None 
Order type to offer it only to Public Customers and no longer offer the 
order type to Professionals.\11\ This pricing should have been removed 
in 2019, as Professionals could no longer enter All-or-None Orders 
after the 2019 amendment.
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    \9\ The term ``Professional'' means any person or entity that 
(i) is not a broker or dealer in securities, and (ii) places more 
than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s). Member 
organizations must indicate whether orders are for Professionals. 
See Options 1, Section 1(b)(45).
    \10\ See Options 3, Section 7(b)(5).
    \11\ See Securities Exchange Act Release No. 85262 (March 7, 
2019), 84 FR 9192 (March 13, 2019) (SR-Phlx-2019-03).
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Implementation
    The Exchange proposes to implement this rule proposal before 
January 31, 2024. The Exchange will announce the implementation date in 
an Options Trader Alert to provide notice to members and member 
organizations.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\12\ in general, and furthers the objectives of section 
6(b)(5) of the Act,\13\ 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.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposal is appropriate and 
reasonable, because the time-in-force designation of Immediate-Or-
Cancel will offer members and member organizations certainty with 
respect to their order handling. Today, All-or-None Orders are executed 
in price-time priority among all Public Customer orders if the size 
contingency can be met, but otherwise

[[Page 57142]]

have no priority on the order book. With this proposal, an All-Or-None 
Order will either execute immediately or be cancelled back to the 
member or member organization. This proposal would remove uncertainty 
with respect to the manner in which these orders would be handled in 
the order book by cancelling back an All-Or-None Order if it cannot be 
immediately executed in its entirety. This proposal would harmonize 
Phlx's All-or-None Order type across its various options markets.\14\
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    \14\ See GEMX, MRX, ISE Options 3, Section 7(c), NOM Options 3, 
Section 7(a)(8) and BX Options 3, Section 7(a)(7). GEMX, MRX, ISE, 
NOM and BX have All-or-None Orders that are Immediate-or-Cancel.
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    The Exchange notes that members and member organizations are aware 
of this proposed change.\15\
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    \15\ See Options Trader Alert 2023-17. The Exchange has not 
received any feedback from members or member organizations regarding 
the change to the All-or-None Order as a result of the Options 
Trader Alert. Further, the Exchange reached out to member 
organizations about the All-or-None change and, based on those 
conversations, the Exchange does not believe that member 
organizations have any concerns with the proposed change.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that the proposed rule change will impact the intense competition that 
exists in the options market. With this change, no market participant 
would be able to submit an All-Or-None Order without a time-in-force 
designation of Immediate-Or-Cancel. The Exchange believes the All-Or-
None Order type, as proposed, will continue to offer members and member 
organizations a competitive alternative for submitting orders for 
execution. Furthermore, the proposed rule changes align the Exchange's 
System functionality across the Nasdaq affiliated options exchanges 
that have all-or-none order types.\16\
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    \16\ See supra note 14.
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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)(iii) of the Act \17\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\18\
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    \17\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-Phlx-2023-34 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-2023-34. 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 website (https://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 website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-Phlx-2023-34 and should be 
submitted on or before September 12, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-17976 Filed 8-21-23; 8:45 am]
BILLING CODE 8011-01-P


