[Federal Register: August 13, 2009 (Volume 74, Number 155)]
[Notices]
[Page 40862-40864]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13au09-94]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60456; File No. SR-Phlx-2009-63]
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
to Extension of Sponsored Access Pilot Program
August 7, 2009.
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 July 29, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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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 renew its sponsored access rule for a
pilot period ending on October 29, 2009. The program expires on July
29, 2009.\3\ The text of the proposed rule change is available on the
Exchange's Web site at http://www.nasdaqtrader.com/
micro.aspx?id=PHLXRulefilings, at the principal office of the Exchange,
and at the Commission's Public Reference Room.
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\3\ See Securities Exchange Release No. 59362 (February 5,
2009), 74 FR 6931 (February 11, 2009) (SR-Phlx-2009-10).
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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 self-regulatory organization
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 those 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 proposed rule change is to attract additional
business by renewing its sponsored access rule, which is similar to
that of other exchanges. During the previous pilot program, no member
organizations availed themselves of the program, but the Exchange seeks
to make another attempt to institute the program, for a pilot period
expiring October 29, 2009. The Exchange will evaluate whether to
continue the sponsored access program or not.
A Sponsored Participant is a non-member of the Exchange, such as an
institutional investor, that gains access to the Exchange and trades
under a Sponsoring Member's execution and clearing identity pursuant to
a sponsorship arrangement between such non-member and a member
organization. Specifically, the Exchange proposes to permit Sponsored
Participants to be sponsored by Sponsoring Member Organizations, and
thereby access the Exchange, subject to certain requirements. These
requirements are intended to confirm that the Sponsored Participant is
required to and had procedures in place to comply with Exchange rules,
and that the Sponsoring Member Organization takes responsibility for
the Sponsored Participant's activity on the Exchange.
First, the Sponsored Participant and its Sponsoring Member
Organization must have entered into and maintained an Access Agreement
with the Exchange. The Sponsoring Member Organization must designate
the Sponsored Participant by name in an addendum to the Access
Agreement.
Second, there must be a Sponsored Participant Agreement between the
Sponsoring Member Organization and the Sponsored Participant that
contains the following sponsorship provisions, enumerated in full in
Rule 1094(b)(ii):
(i) The orders of the Sponsored Participant are binding in all
respects on the Sponsoring Member Organization;
(ii) The Sponsoring Member Organization is responsible for the
actions of the Sponsored Participant;
(iii) In addition to the Sponsoring Member Organization being
required to comply with the Exchange Certificate of Incorporation, By-
laws, Rules and procedures of the Exchange, the Sponsored Participant
shall do so as if such Sponsored Participant were an Exchange member
organization;
(iv) The Sponsored Participant shall maintain, keep current and
provide to the Sponsoring Member Organization a list of individuals
authorized to obtain access to the Exchange on behalf of the Sponsored
Participant;
(v) The Sponsored Participant shall familiarize its authorized
individuals with all of the Sponsored Participant's obligations under
this Rule and will assure that they receive appropriate training prior
to any use or access to the Exchange;
(vi) The Sponsored Participant may not permit anyone other than
authorized individuals to use or obtain access to the Exchange; \4\
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\4\ If the Exchange determines that an authorized individual has
caused a Member Organization to violate the Exchange's Rules, the
Exchange could direct the Member Organization to suspend or withdraw
the person's status as an authorized individual.
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[[Page 40863]]
(vii) The Sponsored Participant shall take reasonable security
precautions to prevent unauthorized use or access to the Exchange,
including unauthorized entry of information into the Exchange, and
agrees that it is responsible for any and all orders, trades and other
messages and instructions entered, transmitted or received under
identifiers, passwords and security codes of authorized individuals,
and for the trading and other consequences thereof;
(viii) The Sponsored Participant acknowledges its responsibility to
establish adequate procedures and controls that permit it to
effectively monitor its employees', agents' and Participants' use and
access to the Exchange for compliance with the terms of this agreement;
(ix) The Sponsored Participant shall pay when due all amounts, if
any, payable to Sponsoring Member Organization, the Exchange, or any
other third parties that arise from the Sponsored Participant's access
to and use of the Exchange. Such amounts include, but are not limited
to applicable exchange and regulatory fees.
Third, the Sponsoring Member Organization must provide the Exchange
with a Sponsored Participant Addendum to its Access Agreement
acknowledging its responsibility for the orders, executions and actions
of its Sponsored Participant at issue.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \5\ in general, and furthers the objectives of Section
6(b)(5) of the Act \6\ 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
helping market participants seeking access to a marketplace.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change does not: (1) Significantly
affect the protection of investors or the public interest; (2) impose
any significant burden on competition; and (3) become operative for 30
days after the date of this filing, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under 19b-4(f)(6) normally may not
become operative prior to 30 days after the date of filing.\9\ However,
Rule 19b-4(f)(6)(iii) \10\ permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay so that the proposal may
become operative upon filing. The Commission believes that waiving the
30-day operative delay is consistent with the protection of investors
and the public interest because such waiver would allow the pilot
program to continue uninterrupted. The Commission notes that the
proposal is substantially similar to the rules of other national
securities exchanges.\11\ Accordingly, the Commission hereby grants the
Exchange's request and designates the proposal operative upon
filing.\12\
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\9\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to
the Commission written notice of its intent to file the proposed
rule change, along with a brief description and text of 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 the five-day pre-filing
notice requirement.
\10\ Id.
\11\ See, e.g., International Securities Exchange, LLC Rule 706
and NYSE Arca, Inc. Rule 7.29.
\12\ For the purposes only of waiving the 30-day operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors or otherwise in
furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Phlx-2009-63 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2009-63. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 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. 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-2009-63 and should be submitted on or before September 3, 2009.
[[Page 40864]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-19407 Filed 8-12-09; 8:45 am]
BILLING CODE 8010-01-P