Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Make Clarifying Amendments to and Remove Obsolete Language From Rules 1053 and 1056, 40734-40736 [2016-14715]
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40734
Federal Register / Vol. 81, No. 120 / Wednesday, June 22, 2016 / Notices
Bzhilyanskaya; Comments Due: June 23,
2016.
4. Docket No(s).: CP2016–213; Filing
Title: Notice of the United States Postal
Service of Filing a Functionally
Equivalent Global Plus 1C Negotiated
Service Agreement and Application for
Non-Public Treatment of Materials Filed
Under Seal; Filing Acceptance Date:
June 15, 2016; Filing Authority: 39
U.S.C. 3642 and 39 CFR 3020.30–.35;
Public Representative: Lyudmila Y.
Bzhilyanskaya; Comments Due: June 23,
2016.
This notice will be published in the
Federal Register.
Stacy L. Ruble,
Secretary.
[FR Doc. 2016–14709 Filed 6–21–16; 8:45 am]
BILLING CODE 7710–FW–P
[Release No. 34–78091; File No. SR–Phlx–
2016–41]
Self-Regulatory Organizations;
NASDAQ PHLX LLC; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Make
Clarifying Amendments to and Remove
Obsolete Language From Rules 1053
and 1056
June 16, 2016.
mstockstill on DSK3G9T082PROD with NOTICES
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 June 8,
2016, 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to make
clarifying amendments to and remove
obsolete language from Exchange Rules
1053, Filing of Trade Information, and
1056, Maintaining Office and Filing
Signatures, relating to clearing of
Exchange options transactions.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxphlx.cchwallstreet.com/, at
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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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
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
SECURITIES AND EXCHANGE
COMMISSION
1 15
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
1. Purpose
The Exchange proposes to make
minor amendments to Rules 1053 and
Rule 1056 relating to options clearing
responsibilities of members. The
changes are intended to update and
improve readability of the rules by
deleting archaic and internally
inconsistent provisions.
Phlx Rule 1053 currently provides
that member organizations which are
clearing members are responsible for
supplying, ‘‘at the time of execution’’
certain trade information to the
Exchange covering each Exchange
options transactions ‘‘effected during
said business day’’ for which such
clearing member is responsible.3 The
3 Rule 1053 provides that ‘‘[a]t the time of
execution, each member organization which is a
clearing member of the Options Clearing
Corporation shall be responsible for supplying to
the Exchange trade information in a form prescribed
by the Exchange, covering each Exchange options
transaction effected during said business day for
which such clearing member is responsible. The
trade information shall show for each transaction (i)
the identity of the purchasing clearing member and
the writing clearing member given up at the time
of execution, (ii) the underlying stock, ExchangeTraded Fund Share or foreign currency, as the case
may be, (iii) the exercise price, (iv) the expiration
month, (v) the number of option contracts, (vi) the
premium per share of the underlying stock or the
premium per unit of the underlying foreign
currency, (vii) whether a purchase or a writing
transaction, (viii) except for a transaction in a
specialist’s account, whether an opening or closing,
(ix) the identity of the account of the clearing
member in which the transaction was effected, (x)
if a closing writing transaction, whether a certificate
will be surrendered, (xi) whether a put or call, and
(xii) such other information as may be required by
the Exchange. Each member or member
organization which is a clearing member of the
Options Clearing Corporation shall be responsible
to the Exchange in respect of all trade information
filed with the Exchange on such form prescribed by
the Exchange.’’
PO 00000
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Exchange is deleting the phrase
‘‘effected during said business day’’
because the word ‘‘said’’ has no
antecedent in the rule and is therefore
meaningless. As written the sentence is
therefore awkward and illogical. The
phrase being deleted adds nothing to the
rule and stands in the way of
comprehension of the rule’s meaning.
The Exchange is also deleting obsolete
language following clause (x) in Rule
1053 which requires the clearing
member to supply to the Exchange
information as to whether a certificate
will be surrendered if the transaction is
a closing writing transaction. The
deleted text is replaced with the word
‘‘Reserved’’. At one time, the By-Laws
and the Rules of The Options Clearing
Corporation (‘‘OCC’’) provided for the
issuance of physical certificates in
respect of options contracts at the
request of OCC participants. Certificates
could be issued in respect of any option
contract included in a long position in
a customer’s account to evidence a
clearing member’s position as the holder
of one or more options of a specified
type (put or call) in a specified options
series. The certificate was nonnegotiable
and conferred no separate legal rights on
the holder. Certificated options
contracts could only be exercised or
closed out upon the surrender of the
physical certificate. Until the certificate
was surrendered, any attempt by a
clearing member to write a closing
options transaction with respect to a
corresponding long certificated options
position was considered by OCC to be
an opening transaction subject to OCC’s
margin requirements on short positions.
In 1982, OCC eliminated all provisions
in its By-Laws and Rules providing for,
or referring to certificates, after
concluding that certificates were
unnecessary and imposed
administrative burdens and costs on
OCC and on clearing members.4 Because
OCC no longer issues these certificates,
Phlx Rule 1053(x) is obsolete.
Phlx Rule 1056 currently requires
clearing members to maintain an office
at a location approved by the Exchange
for the purpose of comparing Exchange
options transactions.5 The Exchange is
4 See Securities Exchange Act Release No. 19064
(September 20, 1982), 47 FR 42483 (September 27,
1982) (order approving SR–OCC–82–15). The
Exchange notes that the Chicago Board Options
Exchange (‘‘CBOE’’) Rule 6.51(d) once contained
the same language as Exchange Rule 1053(x). See
Securities Exchange Act Release No. 16618 (March
3, 1980), 45 FR 15352 (March 10, 1980). That
language no longer appears in the CBOE rulebook.
5 Rule 1056 provides that ‘‘[e]very member
organization which is a clearing member of the
Options Clearing Corporation shall maintain an
office at a location approved by the Exchange for
the purpose of comparing Exchange options
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Federal Register / Vol. 81, No. 120 / Wednesday, June 22, 2016 / Notices
deleting the Exchange approval
requirement because it has determined
that the location of the clearing
member’s office is of no importance to
the Exchange. The Exchange is also
deleting the last sentence of the rule
which requires that each member
organization shall file with the
Exchange a certified list of signatures of
its representatives who are authorized to
sign instruments and transact all
business necessary for conducting
comparison of Exchange options
transactions. Although certain Exchange
forms and procedures continue to
require manual signatures, the Exchange
does not believe the burdens of
constantly updating the list of certified
signatures is justified by any marginal
benefit such a list may provide to
Exchange staff who are not in any case
handwriting experts trained to ascertain
the validity of signatures.
mstockstill on DSK3G9T082PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 6 in general, and furthers the
objectives of Section 6(b)(5) of the Act 7
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
improving the accuracy and readability
of the amended rules.
With respect to Rules 1053, deleting
the illogical reference to ‘‘effected
during said business day’’ makes the
rule understandable. Deleting an
obsolete reference to a certificate which
no longer has any meaning also
eliminates a barrier to comprehension of
that rule. With respect to Rule 1056,
deleting the Exchange approval
requirement eliminates a rule imposing
an unnecessary administrative burden
on the Exchange, given that the
transactions. Any such member organization may
use for the purpose of these Rules the office of
another member organization which is a clearing
member of the Options Clearing Corporation
provided such use is pursuant to a written
agreement approved by the Exchange. There shall
be present at such office, between such hours as the
Exchange shall from time to time fix, on every
business day a representative of the member
organization authorized to sign in the name of the
member organization all instruments and transact
all business requisite in connection with the
comparison of Exchange options transactions. Each
such member organization shall file with the
Exchange, in such form as the Exchange shall
prescribe, a certified list of signatures of its
representatives who are authorized to sign
instruments and transact all business necessary for
conducting comparison of Exchange options
transactions.’’
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
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Exchange is indifferent in any event as
to a clearing member’s office location,
thereby perfecting the mechanism of a
free and open market and a national
market system. Additionally, deleting
the requirement that the Exchange be
provided with a certified list of
signatures eliminates another rule
imposing an unnecessary administrative
burden from the rulebook, streamlining
the rulebook by removing a requirement
whose marginal benefit, if any, is not
justified by its cost. The Exchange notes
that at least two other options
exchanges, NASDAQ BX and NASDAQ
Options Market, do not impose a similar
‘‘certified list of signatures’’
requirement.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
clarifying amendments proposed herein
will impose any burden on competition
not necessary or appropriate in
furtherance of the purposes of the Act
inasmuch as they simply improve the
accuracy and readability of the rules
and delete unnecessary administrative
burdens. As noted above with respect to
the certified list of signatures
requirement, at least two other options
exchanges, NASDAQ BX and NASDAQ
Options Market, do not impose a similar
requirement. Eliminating the
requirement on Phlx should therefore
reduce a burden on competition.
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 8 and
subparagraph (f)(6) of Rule 19b–4
thereunder.9
8 15
U.S.C. 78s(b)(3)(a)(iii).
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.
9 17
PO 00000
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40735
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: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) 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 rule-comments@
sec.gov. Please include File Number SR–
Phlx–2016–41 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–2016–41. 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 Web site (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 Web site 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
10:00 a.m. and 3:00 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
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40736
Federal Register / Vol. 81, No. 120 / Wednesday, June 22, 2016 / Notices
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–Phlx–
2016–41 and should be submitted on or
before July 13, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–14715 Filed 6–21–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[Release No. 34–78089; File No. SR–
NASDAQ–2016–083]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Rules 7018(a) and 7014(h)
June 16, 2016.
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 June 8,
2016, The NASDAQ Stock Market LLC
(‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘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.
mstockstill on DSK3G9T082PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to amend
Rules 7018(a) and 7014(h) to: (i) Provide
a new credit for providing liquidity in
securities of all three Tapes; (ii) amend
the requirements of an existing credit
tier provided in securities of all three
Tapes; (iii) delete text from the
preamble of Rule 7018(a) and from Rule
7014(h)(5) concerning Consolidated
Volume; and (iv) make technical
corrections to the rule text.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaq.cchwallstreet.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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
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.
1. Purpose
The purpose of the proposed rule
change is to amend certain credits for
the use of the order execution and
routing services of the Nasdaq Market
Center by members for all securities
priced at $1 or more that it trades, and
to make clarifying and technical
changes to Rule 7018(a). Specifically,
the Exchange proposes to amend Rules
7018(a) and 7014(h) to: (i) Provide a
new credit for providing liquidity in
securities of all three Tapes;3 (ii) amend
the requirements of an existing credit
tier provided in securities of all three
Tapes; (iii) delete text from the
preamble of Rule 7018(a) and from Rule
7014(h)(5) concerning Consolidated
Volume;4 and (iv) make technical
corrections to the rule text.
First Change
The purpose of the first change is to
provide an additional credit to members
for displayed quotes/orders (other than
Supplemental Orders or Designated
Retail Orders) that provide liquidity.
Currently, the Exchange provides
several credits under Rules 7018(a)(1),
(2), and (3), each of which apply to
securities of a different Tape, in return
3 There are three Tapes, which are based on the
listing venue of the security: Tape C securities are
Nasdaq-listed; Tape A securities are New York
Stock Exchange-listed; and Tape B securities are
listed on exchanges other than Nasdaq and NYSE.
4 Consolidated Volume is defined as the total
consolidated volume reported to all consolidated
transaction reporting plans by all exchanges and
trade reporting facilities during a month in equity
securities, excluding executed orders with a size of
less than one round lot. For purposes of calculating
Consolidated Volume and the extent of a member’s
trading activity, expressed as a percentage of, or
ratio to, Consolidated Volume, the date of the
annual reconstitution of the Russell Investments
Indexes shall be excluded from both total
Consolidated Volume and the member’s trading
activity. See Rule 7018(a).
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
for market-improving behavior. The
Exchange is proposing to add a new
credit tier of $0.00305 per share
executed to a member that has shares of
liquidity provided in all securities
during the month representing at least
0.60% of Consolidated Volume during
the month, through one or more of its
Nasdaq Market Center MPIDs, adds
NOM 5 Market Maker liquidity in Penny
Pilot Options and/or Non-Penny Pilot
Options of 0.10% or more of total
industry ADV in the Customer clearing
range 6 for Equity and ETF option
contracts per day in a month on the
Nasdaq Options Market, and adds
Customer, Professional, Firm, Non-NOM
Market Maker and/or Broker-Dealer
liquidity in Penny Pilot Options and/or
Non-Penny Pilot Options of 1.50% or
more of total industry ADV in the
Customer clearing range for Equity and
ETF option contracts per day in a month
on the Nasdaq Options Market. Thus, to
qualify under the new proposed credit
tiers under Rule 7018(a)(1), (2) and (3),
an Exchange member must be a NOM
Participant and meet the NOM rebate
criteria described above, in addition to
providing at least 0.60% of
Consolidated Volume on the Exchange.
Second Change
The purpose of the second change is
to amend the criteria required to qualify
for an existing credit, which is available
5 NOM is an abbreviation of the ‘‘Nasdaq Options
Market.’’
6 NOM Chapter XV provides the following
defined terms:
The term ‘‘Customer’’ or (‘‘C’’) applies to any
transaction that is identified by a Participant for
clearing in the Customer range at The Options
Clearing Corporation (‘‘OCC’’) which is not for the
account of broker or dealer or for the account of a
‘‘Professional’’ (as that term is defined in Chapter
I, Section 1(a)(48)).
The term ‘‘NOM Market Maker’’ or (‘‘M’’) is a
Participant that has registered as a Market Maker on
NOM pursuant to Chapter VII, Section 2, and must
also remain in good standing pursuant to Chapter
VII, Section 4. In order to receive NOM Market
Maker pricing in all securities, the Participant must
be registered as a NOM Market Maker in at least one
security.
The term ‘‘Non-NOM Market Maker’’ or (‘‘O’’) is
a registered market maker on another options
exchange that is not a NOM Market Maker. A NonNOM Market Maker must append the proper NonNOM Market Maker designation to orders routed to
NOM.
The term ‘‘Firm’’ or (‘‘F’’) applies to any
transaction that is identified by a Participant for
clearing in the Firm range at OCC.
The term ‘‘Professional’’ or (‘‘P’’) 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) pursuant to
Chapter I, Section 1(a)(48). All Professional orders
shall be appropriately marked by Participants.
The term ‘‘Broker-Dealer’’ or (‘‘B’’) applies to any
transaction which is not subject to any of the other
transaction fees applicable within a particular
category.
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]]>Agencies
[Federal Register Volume 81, Number 120 (Wednesday, June 22, 2016)]
[Notices]
[Pages 40734-40736]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14715]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78091; File No. SR-Phlx-2016-41]
Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Make Clarifying
Amendments to and Remove Obsolete Language From Rules 1053 and 1056
June 16, 2016.
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 June 8, 2016, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to make clarifying amendments to and remove
obsolete language from Exchange Rules 1053, Filing of Trade
Information, and 1056, Maintaining Office and Filing Signatures,
relating to clearing of Exchange options transactions.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqomxphlx.cchwallstreet.com/, 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
The Exchange proposes to make minor amendments to Rules 1053 and
Rule 1056 relating to options clearing responsibilities of members. The
changes are intended to update and improve readability of the rules by
deleting archaic and internally inconsistent provisions.
Phlx Rule 1053 currently provides that member organizations which
are clearing members are responsible for supplying, ``at the time of
execution'' certain trade information to the Exchange covering each
Exchange options transactions ``effected during said business day'' for
which such clearing member is responsible.\3\ The Exchange is deleting
the phrase ``effected during said business day'' because the word
``said'' has no antecedent in the rule and is therefore meaningless. As
written the sentence is therefore awkward and illogical. The phrase
being deleted adds nothing to the rule and stands in the way of
comprehension of the rule's meaning.
---------------------------------------------------------------------------
\3\ Rule 1053 provides that ``[a]t the time of execution, each
member organization which is a clearing member of the Options
Clearing Corporation shall be responsible for supplying to the
Exchange trade information in a form prescribed by the Exchange,
covering each Exchange options transaction effected during said
business day for which such clearing member is responsible. The
trade information shall show for each transaction (i) the identity
of the purchasing clearing member and the writing clearing member
given up at the time of execution, (ii) the underlying stock,
Exchange-Traded Fund Share or foreign currency, as the case may be,
(iii) the exercise price, (iv) the expiration month, (v) the number
of option contracts, (vi) the premium per share of the underlying
stock or the premium per unit of the underlying foreign currency,
(vii) whether a purchase or a writing transaction, (viii) except for
a transaction in a specialist's account, whether an opening or
closing, (ix) the identity of the account of the clearing member in
which the transaction was effected, (x) if a closing writing
transaction, whether a certificate will be surrendered, (xi) whether
a put or call, and (xii) such other information as may be required
by the Exchange. Each member or member organization which is a
clearing member of the Options Clearing Corporation shall be
responsible to the Exchange in respect of all trade information
filed with the Exchange on such form prescribed by the Exchange.''
---------------------------------------------------------------------------
The Exchange is also deleting obsolete language following clause
(x) in Rule 1053 which requires the clearing member to supply to the
Exchange information as to whether a certificate will be surrendered if
the transaction is a closing writing transaction. The deleted text is
replaced with the word ``Reserved''. At one time, the By-Laws and the
Rules of The Options Clearing Corporation (``OCC'') provided for the
issuance of physical certificates in respect of options contracts at
the request of OCC participants. Certificates could be issued in
respect of any option contract included in a long position in a
customer's account to evidence a clearing member's position as the
holder of one or more options of a specified type (put or call) in a
specified options series. The certificate was nonnegotiable and
conferred no separate legal rights on the holder. Certificated options
contracts could only be exercised or closed out upon the surrender of
the physical certificate. Until the certificate was surrendered, any
attempt by a clearing member to write a closing options transaction
with respect to a corresponding long certificated options position was
considered by OCC to be an opening transaction subject to OCC's margin
requirements on short positions. In 1982, OCC eliminated all provisions
in its By-Laws and Rules providing for, or referring to certificates,
after concluding that certificates were unnecessary and imposed
administrative burdens and costs on OCC and on clearing members.\4\
Because OCC no longer issues these certificates, Phlx Rule 1053(x) is
obsolete.
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\4\ See Securities Exchange Act Release No. 19064 (September 20,
1982), 47 FR 42483 (September 27, 1982) (order approving SR-OCC-82-
15). The Exchange notes that the Chicago Board Options Exchange
(``CBOE'') Rule 6.51(d) once contained the same language as Exchange
Rule 1053(x). See Securities Exchange Act Release No. 16618 (March
3, 1980), 45 FR 15352 (March 10, 1980). That language no longer
appears in the CBOE rulebook.
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Phlx Rule 1056 currently requires clearing members to maintain an
office at a location approved by the Exchange for the purpose of
comparing Exchange options transactions.\5\ The Exchange is
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deleting the Exchange approval requirement because it has determined
that the location of the clearing member's office is of no importance
to the Exchange. The Exchange is also deleting the last sentence of the
rule which requires that each member organization shall file with the
Exchange a certified list of signatures of its representatives who are
authorized to sign instruments and transact all business necessary for
conducting comparison of Exchange options transactions. Although
certain Exchange forms and procedures continue to require manual
signatures, the Exchange does not believe the burdens of constantly
updating the list of certified signatures is justified by any marginal
benefit such a list may provide to Exchange staff who are not in any
case handwriting experts trained to ascertain the validity of
signatures.
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\5\ Rule 1056 provides that ``[e]very member organization which
is a clearing member of the Options Clearing Corporation shall
maintain an office at a location approved by the Exchange for the
purpose of comparing Exchange options transactions. Any such member
organization may use for the purpose of these Rules the office of
another member organization which is a clearing member of the
Options Clearing Corporation provided such use is pursuant to a
written agreement approved by the Exchange. There shall be present
at such office, between such hours as the Exchange shall from time
to time fix, on every business day a representative of the member
organization authorized to sign in the name of the member
organization all instruments and transact all business requisite in
connection with the comparison of Exchange options transactions.
Each such member organization shall file with the Exchange, in such
form as the Exchange shall prescribe, a certified list of signatures
of its representatives who are authorized to sign instruments and
transact all business necessary for conducting comparison of
Exchange options transactions.''
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \6\ in general, and furthers the objectives of Section
6(b)(5) of the Act \7\ 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 improving the accuracy and readability of the amended rules.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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With respect to Rules 1053, deleting the illogical reference to
``effected during said business day'' makes the rule understandable.
Deleting an obsolete reference to a certificate which no longer has any
meaning also eliminates a barrier to comprehension of that rule. With
respect to Rule 1056, deleting the Exchange approval requirement
eliminates a rule imposing an unnecessary administrative burden on the
Exchange, given that the Exchange is indifferent in any event as to a
clearing member's office location, thereby perfecting the mechanism of
a free and open market and a national market system. Additionally,
deleting the requirement that the Exchange be provided with a certified
list of signatures eliminates another rule imposing an unnecessary
administrative burden from the rulebook, streamlining the rulebook by
removing a requirement whose marginal benefit, if any, is not justified
by its cost. The Exchange notes that at least two other options
exchanges, NASDAQ BX and NASDAQ Options Market, do not impose a similar
``certified list of signatures'' requirement.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that clarifying amendments proposed
herein will impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act inasmuch as they
simply improve the accuracy and readability of the rules and delete
unnecessary administrative burdens. As noted above with respect to the
certified list of signatures requirement, at least two other options
exchanges, NASDAQ BX and NASDAQ Options Market, do not impose a similar
requirement. Eliminating the requirement on Phlx should therefore
reduce a burden on competition.
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 \8\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(a)(iii).
\9\ 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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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 rule-comments@sec.gov. Please include
File Number SR-Phlx-2016-41 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-2016-41. 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 Web site (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 Web site 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
10:00 a.m. and 3:00 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
[[Page 40736]]
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
Phlx-2016-41 and should be submitted on or before July 13, 2016.
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\10\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-14715 Filed 6-21-16; 8:45 am]
BILLING CODE 8011-01-P
