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Friday, May 11, 2018

Options Regulatory Alert #2018 - 11
Update: Nasdaq PHLX Intra-day Electronic Quoting Requirements

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  • Regulatory

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Effective Thursday, May 10, 2018, the Exchange has amended its electronic quoting requirements. New Phlx Rule 1081 governs intra-day electronic quoting obligations for Registered Options Traders (ROTs), Specialists, Directed Streaming Quote Traders (SQTs) and Directed Remote Streaming Quote Traders (RSQTs). The changes to the quoting requirements are noted below. A member organization is required to meet each market making obligation separately. An SQT and RSQT who is also the Specialist will be held to the Specialist obligations in options series in which the Specialist is assigned and will be held to SQT and RSQT obligations in all other options series where assigned. An SQT or RSQT who receives a Directed Order shall be held to the standard of a Directed SQT or Directed RSQT in all options series for all underlying symbols the SQT or RSQT is assigned.

SQTs and RSQTs:

Rule RequirementRule 1014(b)(ii)(D)Rule 1081
Percentage of Series to be Quotednot less than 60% of the seriesSQTs and RSQTs, associated with the same member organization, are collectively required to provide two-sided quotations in 60% of the cumulative number of seconds, or such higher percentage as Phlx may announce in advance, for which that member organization’s assigned options series are open for trading. Notwithstanding the foregoing, a member organization shall not be required to make two-sided markets pursuant to this Rule 1081(c)(ii) in any Quarterly Option Series, any adjusted option series, and any option series with an expiration of nine months or greater.
Exceptions to Quoting RequirementsQuarterly option Series, any adjusted option series, and any option series with an expiration of nine months or greaterNo change
Quote Width RequirementsNo wider than $5 between the bid and offerNo change

Specialists:

Rule RequirementRule 1014(b)(ii)(D)Rule 1081
Percentage of Series to be Quoted99% of the series listed on the Exchange or 100% of the series listed on the Exchange minus one call-put pair, in each case in at least 60% of the options in which such SpecialistSpecialists (including Remote Specialists), associated with the same member organization, are collectively required to provide two-sided quotations in 90% of the cumulative number of seconds, or such higher percentage as Phlx may announce in advance, for which that member organization’s assigned options series are open for trading. Specialists shall be required to make two-sided markets pursuant to this rule in any Quarterly Option Series, any Adjusted Option Series, and any option series with an expiration of nine months or greater.
Exceptions to Quoting RequirementsNone*None*
Quote Width Requirementsno wider than $5 between the bid and offerNo change

*Specialists will be required to quote Quarterly Option Series, any adjusted option series, and any option series with an expiration of nine months or greater.

Directed SQTs and Directed RSQTs:

Rule RequirementRule 1014(b)(ii)(D)Rule 1081
Percentage of Series to be Quoted99% of the series listed on the Exchange or 100% of the series listed on the Exchange minus one call-put pair, in each case in at least 60% of the options in which such DSQT or DRSQT is assignedDirected SQTs and Directed RSQTs, associated with the same member organization, are collectively required to provide two-sided quotations in 90% of the cumulative number of seconds, or such higher percentage as Phlx may announce in advance, for which that member organization’s assigned options series are open for trading. A member organization shall be considered directed in all assigned options once the member organization receives a Directed Order in any option in which they are assigned and shall be considered a Directed SQT or Directed RSQT until such time as the member organization notifies the Exchange that they are no longer directed. Notwithstanding the foregoing, a member organization shall not be required to make two-sided markets pursuant to this Rule 1081(c)(ii) in any Quarterly Option Series, any Adjusted Option Series, and any option series with an expiration of nine months or greater.
Exceptions to Quoting RequirementsQuarterly Option Series, any adjusted option series, and any option series with an expiration of nine months or greaterNo change
Quote Width Requirementsno wider than $5 between the bid and offerNo change

The Exchange will calculate the percentage of the series to be quoted by (i) taking the total number of seconds the member organization disseminates quotes in each assigned options series, excluding Quarterly Option Series, any Adjusted Option Series, and any option series with an expiration of nine months or greater for SQTs, RSQTs, Directed SQTs and Directed RSQTs ; and (ii) dividing that time by the eligible total number of seconds each assigned option series is open for trading that day. Quoting is not required in every assigned options series. Compliance with this requirement is determined by reviewing the aggregate of quoting in assigned options series for the member organization.

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