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Home > > Phlx Equity 6
Equity 6 PSX Risk Management Services; Other Systems and Programs
Section 1 Reserved

 

Adopted Jan. 22, 2021 (SR-Phlx-2021-04).

Section 2 Reserved
 

Adopted Jan. 22, 2021 (SR-Phlx-2021-04).

Section 3 PHLX Kill Switch

(a) Definition. The PHLX Kill Switch is an optional tool offered at no charge that enables PSX Participants to establish pre-determined levels of risk exposure, to receive notifications as the value of executed orders and if applicable, unexecuted orders approaches the risk levels, and to have order entry ports disabled and unexecuted orders administratively cancelled when the value of executed orders, and if applicable unexecuted orders exceeds the risk levels set forth below. For purposes of this Rule, the term "PSX Participant" has the meaning set forth in Rule 3301(c).

(1) Gross Executed Risk Exposure . This refers to a pre-established maximum daily dollar amount for buy and sell orders across all symbols, where both buy and sell orders are counted as positive values. For purposes of calculating Gross Executed Risk Exposure, only executed orders are included.

(2) Gross Notional Risk Exposure . This refers to a pre-established maximum daily dollar amount for buy and sell orders across all symbols, where both buy and sell orders are counted as positive values. For purposes of calculating Gross Notional Risk Exposure, unexecuted orders on the Exchange book and executed orders are included.

(b) Establishing and Adjusting Levels. PSX Participants or a PSX Participant’s clearing member, as designated pursuant to paragraph (d), may set risk levels for each MPID individually. Each PSX Participant, or a PSX Participant’s clearing member, as designated pursuant to paragraph (d), is responsible for establishing and maintaining its risk levels.  PSX Participants or a PSX Participant’s clearing member, as designated pursuant to paragraph (d), may set and adjust risk level values before the beginning of a trading day and during the trading day.

(c) Notification. PSX Participants and a PSX Participant’s clearing member, as designated pursuant to paragraph (d), will receive notifications when the total value of executed orders and, if applicable, unexecuted orders associated with an MPID exceeds 50, 75, 85, 90, and 95 percent of either of the risk level values. When either risk level value is exceeded, the notification will include the total number of orders cancelled and remaining open in the System.

(d) Clearing Member Designation. A PSX Participant that does not self-clear may allocate the responsibility for establishing and adjusting the risk levels identified in paragraph (a) of this Rule to a clearing member that clears transactions on behalf of the PSX Participant, if designated in a manner prescribed by the Exchange. A PSX Participant that chooses to allocate responsibility to its clearing member may view any risk levels established by the clearing member pursuant to this Rule, and will be notified of any action taken by the Exchange with respect to its trading activity. By allocating responsibility to its clearing member, the PSX Participant consents to the Exchange taking action with respect to the PSX Participant’s trading activity as provided for in paragraph (e) of this Rule. A PSX Participant may revoke responsibility allocated to its clearing member pursuant to this paragraph at any time, if designated in a manner prescribed by the Exchange. 

(e) Breach Action and Reinstatement. When a pre-established risk level is breached and the Kill Switch is triggered, it shall result in the immediate cancellation of all unexecuted orders of any type or duration entered by the PSX Participant via the affected MPID, and in the immediate prevention of order entry of any type via the affected MPID. The PSX Participant or the PSX Participant’s clearing member, if designated pursuant to paragraph (d), must request reactivation of the MPID before trading will be reauthorized.

Adopted February 4, 2014 (SR-Phlx-2014-10), operative Mar. 6, 2014; amended Oct. 18, 2017 (SR-Phlx-2017-82); amended July 31, 2020 (SR-Phlx-2020-37), operative Sep. 14, 2020; amended Jan. 22, 2021 (SR-Phlx-2021-04).

Section 4. Exchange Sharing of PSX Participant Risk Settings

(a) The Exchange may share any PSX Participant risk settings in the trading system specified in the commentary below with the clearing member that clears transactions on behalf of the PSX Participant. For purposes of this Rule, the term "PSX Participant" has the meaning set forth in Equity 1, Section 1(c).

Adopted Jan. 22, 2021 (SR-Phlx-2021-04).

Section 5. Exchange Sharing of PSX Participant Risk Settings

The Exchange offers certain risk settings applicable to a PSX Participant's activities on the Exchange. The risk settings currently offered by the Exchange are:

(a) Share Size Control - When enabled by a PSX Participant, this optional control will allow a PSX Participant to limit the number of shares that the PSX Participant may associate with an order placed on the Exchange;

(b) ISO Control - When enabled by a PSX Participant, this optional control will prevent a PSX Participant from entering an ISO order onto the Exchange;

(c) Cancel-on-Disconnect Control - When enabled by a PSX Participant, this optional control will allow a PSX Participant, when it experiences a disruption in its connection to the Exchange, to immediately cancel all pending Exchange orders except for Good-Till-Canceled orders (RASH & FIX only);

(d) The Phlx Kill Switch - This control is described in Equity 6, Section 3;

(e) Limit Order Protection - This control is described in Equity 4, Rule 3307(f);

(f) Price Collar Check - This control will automatically restrict a routed order from executing at a price that differs from the NBBO (at the time of order entry) by more than five percent or $0.25, whichever difference is greater. The system will proceed to route an order unless and until it crosses the greater of these two price collars, and if it does so, then the system will block further routings of the order that fall outside of the collars. For example, if the NBBO is $99 x $100 at the time of entry of a buy order, then the system will route the order at prices at or below $105, but will stop doing so if the offer price rises above $105 (five percent of the NBO).

(g) Maximum Order Volume Check - This control will automatically reject an order for routing away that exceeds a maximum volume of shares. As applied to equity orders, the default maximum order volume is set at 25,000 shares, but the PSX Participant may request that the Exchange set a higher default based on historic volume.

(h) Maximum Single Order Notional Check - When enabled by a PSX Participant, this optional control will allow the PSX Participant to limit the maximum dollar amount that the Participant may associate with an order placed on the Exchange;

(i) Cumulative Order Volume Check - This control will automatically block an attempt by a PSX Participant using a particular MPID to route orders away to buy or sell equity securities that, cumulatively, exceed 9.5 million shares during a five second time period; and

(j) Duplication Control - This control will automatically reject an order that a PSX Participant submits to the Exchange to the extent that it is duplicative of another order that the PSX Participant submitted to the Exchange during the prior five seconds. 

Adopted Jan. 22, 2021 (SR-Phlx-2021-04).

Section 6. Reserved
 

Adopted Jan. 22, 2021 (SR-Phlx-2021-04).

 
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