Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the FLEX No Minimum Value Pilot, 9039-9041 [2016-03661]

Download as PDF Federal Register / Vol. 81, No. 35 / Tuesday, February 23, 2016 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–77153; File No. SR–Phlx– 2016–19] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the FLEX No Minimum Value Pilot February 17, 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 February 2, 2016, NASDAQ OMX PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘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. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange is filing with the Commission a proposal to amend Phlx Rule 1079 (FLEX Index, Equity and Currency Options) to extend a pilot program that eliminates minimum value sizes for opening transactions in new series of FLEX index options and FLEX equity options (together known as ‘‘FLEX Options’’).3 The text of the amended Exchange rule is set forth immediately below. Additions are in italics and deletions are [bracketed]. Rules of the Exchange Options Rules * * * * * Rule 1079. FLEX Index, Equity and Currency Options A Requesting Member shall obtain quotes and execute trades in certain non-listed FLEX options at the specialist post of the non-FLEX option on the Exchange. The term ‘‘FLEX option’’ means a FLEX option contract that is traded subject to this Rule. Although FLEX options are generally subject to the Rules in this section, to the extent that the provisions 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 In addition to FLEX Options, FLEX currency options are also traded on the Exchange. These flexible index, equity, and currency options provide investors the ability to customize basic option features including size, expiration date, exercise style, and certain exercise prices, and may have expiration dates within five years. See Rule 1079. FLEX currency options traded on the Exchange are also known as FLEX FX Options. The pilot program discussed herein does not encompass FLEX currency options. mstockstill on DSK4VPTVN1PROD with NOTICES 2 17 VerDate Sep<11>2014 18:28 Feb 22, 2016 Jkt 238001 of this Rule are inconsistent with other applicable Exchange Rules, this Rule takes precedence with respect to FLEX options. (a)–(f) No Change. • • • Commentary: .01 Notwithstanding subparagraphs (a)(8)(A)(i) and (a)(8)(A)(ii) above, for a pilot period ending the earlier of [January 31] March 15, 2016, or the date on which the pilot is approved on a permanent basis, there shall be no minimum value size requirements for FLEX options. * * * * * 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 purpose of this proposed rule change is to amend Phlx Rule 1079 (FLEX Index, Equity and Currency Options) to extend a pilot program that eliminates minimum value sizes for opening transactions in new series of FLEX Options (the ‘‘Pilot Program’’ or ‘‘Pilot’’). The Exchange has submitted a separate filing for permanent approval of the Pilot Program; 4 and is submitting this extension proposal so the Pilot Program continues while the Commission considers such permanent approval. Rule 1079 deals with the process of listing and trading FLEX equity, index, and currency options on the Exchange. Rule 1079(a)(8)(A) currently sets the minimum opening transaction value size in the case of a FLEX Option in a newly established (opening) series if 4 See Securities Exchange Act Release No. 76593 (December 8, 2015), 80 FR 77399 (December 14, 2015) (SR–Phlx–2015–94) (notice of amended proposal to make the Pilot Program permanent) (the ‘‘permanent approval filing’’). PO 00000 Frm 00145 Fmt 4703 Sfmt 4703 9039 there is no open interest in the particular series when a Request-forQuote (‘‘RFQ’’) is submitted (except as provided in Commentary .01 to Rule 1079): (i) $10 million underlying equivalent value, respecting FLEX market index options, and $5 million underlying equivalent value respecting FLEX industry index options; 5 (ii) the lesser of 250 contracts or the number of contracts overlying $1 million in the underlying securities, with respect to FLEX equity options (together the ‘‘minimum value size’’).6 Presently, Commentary .01 to Rule 1079 states that by virtue of the Pilot Program ending January 31, 2016, or the date on which the pilot is approved on a permanent basis, there shall be no minimum value size requirements for FLEX Options as noted in subsections (a)(8)(A)(i) and (a)(8)(A)(ii) of Rule 1079.7 The Exchange now proposes to extend the Pilot Program for a pilot period ending the earlier of March 15, 2016, or the date on which the Pilot is approved on a permanent basis.8 The Exchange believes that there is sufficient investor interest and demand in the Pilot Program to warrant an extension. The Exchange believes that the Pilot Program has provided investors with additional means of managing their risk exposures and carrying out their investment objectives. Extension of the Pilot Program would continue to provide greater opportunities for traders and investors to manage risk through the use of FLEX Options, including investors that may otherwise trade in the unregulated over 5 Market index options and industry index options are broad-based index options and narrowbased index options, respectively. See Rule 1000A(b)(11) and (12). 6 Subsection (a)(8)(A) also provides a third alternative: (iii) 50 contracts in the case of FLEX currency options. However, this alternative is not part of the Pilot Program. 7 See Securities Exchange Act Release No. 75794 (August 31, 2015), 80 FR 53606 (September 4, 2015) (SR–Phlx–2015–74) (notice of filing and immediate effectiveness of proposal to extend Pilot Program). The Pilot Program was instituted in 2010. See Securities Exchange Act Release No. 62900 (September 13, 2010), 75 FR 57098 (September 17, 2010) (SR–Phlx–2010–123) (notice of filing and immediate effectiveness of proposal to institute Pilot Program). 8 The Exchange notes that any positions established under this Pilot would not be impacted by the expiration of the Pilot. For example, a 10 contract FLEX equity option opening position that overlies less than $1 million in the underlying security and expires in January 2017 could be established during the Pilot. If the Pilot Program were not extended, the position would continue to exist and any further trading in the series would be subject to the minimum value size requirements for continued trading in that series. E:\FR\FM\23FEN1.SGM 23FEN1 9040 Federal Register / Vol. 81, No. 35 / Tuesday, February 23, 2016 / Notices the counter (‘‘OTC’’) market where similar size restrictions do not apply.9 In support of the proposed extension of the Pilot Program, the Exchange has under separate cover submitted to the Commission a Pilot Program Report (‘‘Report’’) that provides an analysis of the Pilot Program covering the period during which the Pilot has been in effect. This Report includes: (i) Data and analysis on the open interest and trading volume in (a) FLEX equity options that have an opening transaction with a minimum size of 0 to 249 contracts and less than $1 million in underlying value; (b) FLEX index options that have an opening transaction with a minimum opening size of less than $10 million in underlying equivalent value; and (ii) analysis of the types of investors that initiated opening FLEX Options transactions (i.e., institutional, high net worth, or retail). The Report has been submitted to the Commission as Exhibit 3 to the Exchange’s permanent approval filing, and a subsequent Report with updated data, which the Exchange intends to make public, was also submitted to the Commission under separate cover.10 2. Statutory Basis mstockstill on DSK4VPTVN1PROD with NOTICES The Exchange’s proposal is consistent with Section 6(b) of the Act 11 in general, and furthers the objectives of Section 6(b)(5) of the Act 12 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanisms of a free and open market and a national market system. Specifically, the Exchange believes that the proposed extension of the Pilot Program, which eliminates the minimum value size applicable to opening transactions in new series of FLEX Options, would provide greater opportunities for investors to manage risk through the use of FLEX Options. The Exchange notes that it has not experienced any adverse market effects with respect to the Pilot Program. 9 The Exchange has not experienced any adverse market effects with respect to the Pilot Program. 10 In the event the Pilot Program is not permanently approved by March 15, 2016, the Exchange will submit an additional Report covering the extended Pilot period. 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 17:06 Feb 22, 2016 Jkt 238001 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. To the contrary, the proposal would give traders and investors the opportunity to more effectively tailor their trading, investing and hedging through FLEX options traded on the Exchange. Prior to the Pilot, options that represented opening transactions in new series that could not meet a minimum value size could not trade via FLEX on the Exchange, but rather had to trade OTC. Extension of the Pilot enables such options to continue to trade on the Exchange. 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) of the Act and Rule 19b– 4(f)(6) thereunder.13 A proposed rule change filed under Rule 19b–4(f)(6) 14 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),15 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the Exchange may seamlessly continue its Pilot Program. The Commission believes that waiving the 30-day operative delay is consistent with the protection of 13 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to give 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 this requirement. 14 17 CFR 240.19b–4(f)(6). 15 17 CFR 240.19b–4(f)(6)(iii). PO 00000 Frm 00146 Fmt 4703 Sfmt 4703 investors and the public interest.16 The Commission notes that waiving the 30day operative delay would enable the Pilot Program to continue as of the date of the filing of this proposed rule change. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing. 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 necessary or appropriate in the public interest, for the protection of investors, or 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–2016–19 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–2016–19. 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 16 For 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). E:\FR\FM\23FEN1.SGM 23FEN1 Federal Register / Vol. 81, No. 35 / Tuesday, February 23, 2016 / Notices 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 such 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– 2016–19, and should be submitted on or before March 15, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–03661 Filed 2–22–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–77159; File No. SR–BATS– 2015–105] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Designation of a Longer Period for Commission Action on Proposed Rule Change to Rule 14.11(i), Managed Fund Shares, To List and Trade the Shares of the Elkhorn S&P GSCI Dynamic Roll Commodity ETF of Elkhorn ETF Trust mstockstill on DSK4VPTVN1PROD with NOTICES February 17, 2016. On December 18, 2015, BATS Exchange, Inc. (‘‘BATS’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade the shares of the Elkhorn S&P GSCI Dynamic Roll Commodity ETF of Elkhorn ETF Trust under BATS Rule 14.11(i). The proposed rule change was published for comment in the Federal Register on January 4, 2016.3 The Commission has not received any comments on the proposal. Section 19(b)(2) of the Act 4 provides that within 45 days of the publication of notice of the filing of a proposed rule 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 76776 (Dec. 28, 2015), 80 FR 120. 4 15 U.S.C. 78s(b)(2). 1 15 VerDate Sep<11>2014 17:06 Feb 22, 2016 Jkt 238001 9041 change, or within such longer period up to 90 days as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding, or as to which the self-regulatory organization consents, the Commission shall either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved. The 45th day after publication of the notice for this proposed rule change is February 18, 2016. The Commission is extending this 45-day time period. The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider this proposed rule change. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,5 designates April 1, 2016, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change (File No. SR–BATS–2015–105). BSECC, SCCP, BX, and NASDAQ, the ‘‘SROs’’), filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 proposed rule changes with respect to the By-Laws (‘‘By-Laws’’) of NASDAQ, Inc. (‘‘Company’’), the parent company of the SROs. The proposed rule changes would revise certain requirements regarding Director 3 qualifications and Director disqualification procedures for the Company’s Board of Directors (‘‘Board’’). On December 29, 2015, each SRO filed Amendment No. 1 to its respective proposal.4 On December 30, 2015, Phlx filed Amendment No. 2 to its proposal.5 The proposed rule changes, as modified by the amendments thereto, were published for comment in the Federal Register on January 7, 2016.6 The Commission did not receive any comment letters on the proposals. This order approves the proposed rule changes, as modified by the respective amendments thereto. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.6 Robert W. Errett, Deputy Secretary. The Company proposes to amend certain provisions of the By-Laws that relate to the qualification of Directors. First, the Company proposes to amend Section 4.3 of the By-Laws (Qualifications), which sets forth the compositional requirements of the Board. Currently, Section 4.3 requires that the number of Non-Industry Directors 7 on the Board equal or exceed [FR Doc. 2016–03666 Filed 2–22–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–77165; File Nos. SR– BSECC–2015–002; SR–SCCP–2015–02; SR– BX–2015–085; SR–NASDAQ–2015–160; SR– Phlx–2015–113] Self-Regulatory Organizations; Boston Stock Exchange Clearing Corporation; Stock Clearing Corporation of Philadelphia; NASDAQ OMX BX, Inc.; The NASDAQ Stock Market LLC; NASDAQ OMX PHLX LLC; Order Approving Proposed Rule Changes, as Modified by Amendments Thereto, To Amend the By-Laws of NASDAQ, Inc. February 17, 2016. I. Introduction On December 21, 2015, each of the Boston Stock Exchange Clearing Corporation (‘‘BSECC’’), Stock Clearing Corporation of Philadelphia (‘‘SCCP’’), NASDAQ OMX BX, Inc. (‘‘BX’’), The NASDAQ Stock Market LLC (‘‘NASDAQ’’), and NASDAQ OMX PHLX LLC (‘‘Phlx’’ and, together with 5 Id. 6 17 PO 00000 CFR 200.30–3(a)(31). Frm 00147 Fmt 4703 Sfmt 4703 II. Description of the Proposal 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 ‘‘Director’’ means a member of the Company’s Board of Directors. See Article I(j) of the By-Laws. 4 Amendment No. 1 for each of the proposals amended and replaced the original filing in its entirety. In Amendment No. 1, each SRO, among other things, clarified the operation of the current and proposed provisions of the By-Laws and how the proposed rule change would operate in conjunction with the Listing Rules (as herein defined) of NASDAQ. 5 On December 30, 2015, Phlx withdrew Amendment No. 1 for technical reasons and, subsequently, filed Amendment No. 2. Amendment No. 2 amended and replaced the original filing in its entirety. 6 Securities Exchange Act Release Nos. 76806 (December 31, 2015), 81 FR 838 (SR–BSCC–2015– 002); 76807 (December 31, 2015), 81 FR 828 (SR– SCCP–2015–02); 76808 (December 31, 2015), 81 FR 831 (SR–BX–2015–085); 76809 (December 31, 2015), 81 FR 817 (SR–NASDAQ–2015–160); 76810 (December 31, 2015), 81 FR 841 (SR–Phlx–2015– 113) (collectively, ‘‘Notices’’). 7 Under the By-Laws, ‘‘Non-Industry Director’’ or ‘‘Non-Industry committee member’’ means a Director (excluding any Staff Director) or committee member who is (1) a Public Director or Public committee member; (2) an Issuer Director or Issuer committee member; or (3) any other individual who would not be an Industry Director or Industry committee member. See Article I(q) of the By-Laws. 2 17 E:\FR\FM\23FEN1.SGM 23FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 81, Number 35 (Tuesday, February 23, 2016)]
[Notices]
[Pages 9039-9041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-03661]

[[Page 9039]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77153; File No. SR-Phlx-2016-19]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
the FLEX No Minimum Value Pilot

February 17, 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 February 2, 2016, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``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 the
Substance of the Proposed Rule Change

The Exchange is filing with the Commission a proposal to amend Phlx
Rule 1079 (FLEX Index, Equity and Currency Options) to extend a pilot
program that eliminates minimum value sizes for opening transactions in
new series of FLEX index options and FLEX equity options (together
known as ``FLEX Options'').\3\
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\3\ In addition to FLEX Options, FLEX currency options are also
traded on the Exchange. These flexible index, equity, and currency
options provide investors the ability to customize basic option
features including size, expiration date, exercise style, and
certain exercise prices, and may have expiration dates within five
years. See Rule 1079. FLEX currency options traded on the Exchange
are also known as FLEX FX Options. The pilot program discussed
herein does not encompass FLEX currency options.
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The text of the amended Exchange rule is set forth immediately
below.
Additions are in italics and deletions are [bracketed].

Rules of the Exchange

Options Rules

* * * * *

Rule 1079. FLEX Index, Equity and Currency Options

A Requesting Member shall obtain quotes and execute trades in
certain non-listed FLEX options at the specialist post of the non-
FLEX option on the Exchange. The term ``FLEX option'' means a FLEX
option contract that is traded subject to this Rule. Although FLEX
options are generally subject to the Rules in this section, to the
extent that the provisions of this Rule are inconsistent with other
applicable Exchange Rules, this Rule takes precedence with respect
to FLEX options.
(a)-(f) No Change.

Commentary:
.01 Notwithstanding subparagraphs (a)(8)(A)(i) and (a)(8)(A)(ii)
above, for a pilot period ending the earlier of [January 31] March
15, 2016, or the date on which the pilot is approved on a permanent
basis, there shall be no minimum value size requirements for FLEX
options.
* * * * *
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 purpose of this proposed rule change is to amend Phlx Rule 1079
(FLEX Index, Equity and Currency Options) to extend a pilot program
that eliminates minimum value sizes for opening transactions in new
series of FLEX Options (the ``Pilot Program'' or ``Pilot''). The
Exchange has submitted a separate filing for permanent approval of the
Pilot Program; \4\ and is submitting this extension proposal so the
Pilot Program continues while the Commission considers such permanent
approval.
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\4\ See Securities Exchange Act Release No. 76593 (December 8,
2015), 80 FR 77399 (December 14, 2015) (SR-Phlx-2015-94) (notice of
amended proposal to make the Pilot Program permanent) (the
``permanent approval filing'').
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Rule 1079 deals with the process of listing and trading FLEX
equity, index, and currency options on the Exchange. Rule 1079(a)(8)(A)
currently sets the minimum opening transaction value size in the case
of a FLEX Option in a newly established (opening) series if there is no
open interest in the particular series when a Request-for-Quote
(``RFQ'') is submitted (except as provided in Commentary .01 to Rule
1079): (i) $10 million underlying equivalent value, respecting FLEX
market index options, and $5 million underlying equivalent value
respecting FLEX industry index options; \5\ (ii) the lesser of 250
contracts or the number of contracts overlying $1 million in the
underlying securities, with respect to FLEX equity options (together
the ``minimum value size'').\6\
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\5\ Market index options and industry index options are broad-
based index options and narrow-based index options, respectively.
See Rule 1000A(b)(11) and (12).
\6\ Subsection (a)(8)(A) also provides a third alternative:
(iii) 50 contracts in the case of FLEX currency options. However,
this alternative is not part of the Pilot Program.
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Presently, Commentary .01 to Rule 1079 states that by virtue of the
Pilot Program ending January 31, 2016, or the date on which the pilot
is approved on a permanent basis, there shall be no minimum value size
requirements for FLEX Options as noted in subsections (a)(8)(A)(i) and
(a)(8)(A)(ii) of Rule 1079.\7\
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\7\ See Securities Exchange Act Release No. 75794 (August 31,
2015), 80 FR 53606 (September 4, 2015) (SR-Phlx-2015-74) (notice of
filing and immediate effectiveness of proposal to extend Pilot
Program). The Pilot Program was instituted in 2010. See Securities
Exchange Act Release No. 62900 (September 13, 2010), 75 FR 57098
(September 17, 2010) (SR-Phlx-2010-123) (notice of filing and
immediate effectiveness of proposal to institute Pilot Program).
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The Exchange now proposes to extend the Pilot Program for a pilot
period ending the earlier of March 15, 2016, or the date on which the
Pilot is approved on a permanent basis.\8\
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\8\ The Exchange notes that any positions established under this
Pilot would not be impacted by the expiration of the Pilot. For
example, a 10 contract FLEX equity option opening position that
overlies less than $1 million in the underlying security and expires
in January 2017 could be established during the Pilot. If the Pilot
Program were not extended, the position would continue to exist and
any further trading in the series would be subject to the minimum
value size requirements for continued trading in that series.
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The Exchange believes that there is sufficient investor interest
and demand in the Pilot Program to warrant an extension. The Exchange
believes that the Pilot Program has provided investors with additional
means of managing their risk exposures and carrying out their
investment objectives. Extension of the Pilot Program would continue to
provide greater opportunities for traders and investors to manage risk
through the use of FLEX Options, including investors that may otherwise
trade in the unregulated over

[[Page 9040]]

the counter (``OTC'') market where similar size restrictions do not
apply.\9\
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\9\ The Exchange has not experienced any adverse market effects
with respect to the Pilot Program.
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In support of the proposed extension of the Pilot Program, the
Exchange has under separate cover submitted to the Commission a Pilot
Program Report (``Report'') that provides an analysis of the Pilot
Program covering the period during which the Pilot has been in effect.
This Report includes: (i) Data and analysis on the open interest and
trading volume in (a) FLEX equity options that have an opening
transaction with a minimum size of 0 to 249 contracts and less than $1
million in underlying value; (b) FLEX index options that have an
opening transaction with a minimum opening size of less than $10
million in underlying equivalent value; and (ii) analysis of the types
of investors that initiated opening FLEX Options transactions (i.e.,
institutional, high net worth, or retail). The Report has been
submitted to the Commission as Exhibit 3 to the Exchange's permanent
approval filing, and a subsequent Report with updated data, which the
Exchange intends to make public, was also submitted to the Commission
under separate cover.\10\
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\10\ In the event the Pilot Program is not permanently approved
by March 15, 2016, the Exchange will submit an additional Report
covering the extended Pilot period.
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2. Statutory Basis
The Exchange's proposal is consistent with Section 6(b) of the Act
\11\ in general, and furthers the objectives of Section 6(b)(5) of the
Act \12\ in particular, in that it is designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanisms of a free and open
market and a national market system. Specifically, the Exchange
believes that the proposed extension of the Pilot Program, which
eliminates the minimum value size applicable to opening transactions in
new series of FLEX Options, would provide greater opportunities for
investors to manage risk through the use of FLEX Options. The Exchange
notes that it has not experienced any adverse market effects with
respect to the Pilot Program.
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\11\ 15 U.S.C. 78f(b).
\12\ 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. To the contrary, the proposal
would give traders and investors the opportunity to more effectively
tailor their trading, investing and hedging through FLEX options traded
on the Exchange. Prior to the Pilot, options that represented opening
transactions in new series that could not meet a minimum value size
could not trade via FLEX on the Exchange, but rather had to trade OTC.
Extension of the Pilot enables such options to continue to trade on the
Exchange.

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) of the Act and Rule 19b-
4(f)(6) thereunder.\13\
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\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give 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 this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the Exchange
may seamlessly continue its Pilot Program. The Commission believes that
waiving the 30-day operative delay is consistent with the protection of
investors and the public interest.\16\ The Commission notes that
waiving the 30-day operative delay would enable the Pilot Program to
continue as of the date of the filing of this proposed rule change.
Therefore, the Commission hereby waives the 30-day operative delay and
designates the proposal operative upon filing.
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ For 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 the proposed rule
change, the Commission summarily may temporarily suspend 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. 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-2016-19 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-2016-19. 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

[[Page 9041]]

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
such 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-2016-19, and should be submitted on or before March
15, 2016.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-03661 Filed 2-22-16; 8:45 am]
BILLING CODE 8011-01-P

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