SEC approves Nasdaq PHLX’s proposal to expand use of Snapshot functionality of Floor-Based Management System

Maria Nikolova

The proposed change will allow for the Snapshot functionality of the Floor-Based Management System to be used for all orders.

The United States Securities and Exchange Commission (SEC) has approved a proposed change to the rules of Nasdaq PHLX LLC that will see expansion of the application of Snapshot functionality of the Floor-Based Management System (FBMS). The proposed rule change will allow the Snapshot functionality to be used for all orders on the trading floor.

The “Snapshot” functionality of the FBMS allows a Floor Broker, Registered Options Trader (ROT), or Specialist to “provisionally execute” a trade in the trading crowd and capture and record the market conditions that exist at the time of the provisional execution. When the member triggers the Snapshot, the member has up to 30 seconds to use the information recorded on the Snapshot for purposes of entering the terms of the provisionally-executed trade into FBMS and submitting the trade to the Trading System. Once submitted, the Trading System will only execute the trade if it is consistent with the applicable priority and trade-through rules based upon the prevailing market as reflected on the Snapshot at the time of the provisional execution. The Trading System will reject a trade that is subject to a Snapshot if it would violate trade-though or priority rules.

At present, the “Snapshot” feature of the FBMS may only be used to provisionally execute certain types of orders in the trading crowd. In particular, Floor Brokers, Specialists, and ROTS may only use Snapshot to provisionally execute multi-leg orders and simple orders in options on Exchange Traded Funds (ETFs) that are included in the Options Penny Pilot.

The Exchange has proposed to expand the use of the Snapshot functionality to all orders on the trading floor, subject to the current procedures for and the limitations on the use of Snapshot. According to the Exchange, this is set to make the functionality simpler, more consistent, and more useful in a greater number of circumstances than it is currently.

According to the Exchange, Snapshot promotes just and equitable principles of trade and serves the interests of investors and the public by increasing the likelihood that investors will be able to execute their orders and do so in line with their expectations. The Exchange further says that Snapshot is designed to mitigate the risk that the Trading System will reject a trade due to a change in market conditions that occurs between the time when the parties to a trade negotiate a valid trade on the trading floor and the time when the Trading System receives the trade. The Exchange believes that expanding the availability of Snapshot to all orders will broaden the scope of these protections to the benefit of investors and will make the exchange’s trading floor more competitive with other trading venues because it will make the trading floor operate more efficiently.

After careful review, the SEC has determined that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.

The Commission explains that, at the time Snapshot was adopted, the Exchange implemented several measures to help ensure that Snapshot operates, and is used by members, in a manner that is consistent with the Act and Phlx’s rules.

The Commission notes that these measures will continue to apply to the expanded application of Snapshot to all orders and should continue to ensure that the Snapshot functionality will be used in a manner that is consistent with the Act and Phlx’s Rules. For example, Phlx Rule 1069(a)(i)(B) will continue to prohibit all members from triggering the Snapshot feature for the purpose of obtaining favorable, or avoiding unfavorable, priority or trade-through conditions.

Read this next

Technology

SteelEye tries ChatGPT for market surveillance

This capability can be used as a starting point for initiating a surveillance investigation and to standardize workflow processes to boost the throughput and consistency of cases. It is also useful when analyzing communications in foreign languages, as the system returns the above insights in English regardless of the languages being used.

Industry News

SEC charges ex-Morgan Stanley advisor of NBA players after $13m fraud

Darryl Matthew Cohen was arrested this week and is facing three different federal counts of fraud, which could amount to 20 years in prison if convicted, besides the SEC complaint. 

Industry News

AWS FinTech Africa Accelerator launched, applications until April 27, 2023

Founders will be offered tech resources, expert guidance, and a global network of industry leaders, technologists, entrepreneurs, investors, associations, and partners, in order to build their fintech products. 

Industry News

Interactive Brokers pays unmatched interest up to USD 4.33% on cash balances over $10,000

For clients of Interactive Brokers, interest accrues daily, and payments are posted on a monthly basis. Interactive Brokers’ cash management is integrated into client broker accounts, making it simple to earn interest and borrow at the lowest rates without transferring cash.

Retail FX

FP Markets adds cTrader to roster of trading platforms that include MT4, MT5, Iress

“Our market share swings towards the more sophisticated segment of traders and we have been inundated with requests for an additional platform with more institutional-style characteristics. The addition of the cTrader trading platform offering allows our clients the choice to further shape their trading experience with us.”

Digital Assets

SEC mulls lawsuit against Coinbase’s staking and spot trading

Shares in Coinbase fell 15 percent after the US Securities and Exchange Commission threatened a potential enforcement action against the crypto exchange over certain products.

Digital Assets

Kraken halts ACH transactions amid banking crisis

San Francisco-based cryptocurrency exchange Kraken says it will no longer process Automated Clearing House (ACH) following the failure of its payments partner, Silvergate Bank.

Digital Assets

French influencers face two years in jail for promoting crypto products

France’s National Assembly’s Economics Committee voted in favor of a law that bans social media influencers from touting risky financial services, including cryptocurrencies.

Interviews

Exberry’s Guy Melamed on paradigm shift with cloud-native exchanges at FIA Boca 2023

FinanceFeeds Editor-in-Chief Nikolai Isayev spoke with Guy Melamed about Exberry’s cloud-native exchange SaaS platform certified by AWS to bring about a paradigm shift in the industry at a time of cybersecurity concerns.

<