Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing of Proposed Rule Change to Delete or Amend Outdated Rule Language, 60110-60112 [2016-20893]
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60110
Federal Register / Vol. 81, No. 169 / Wednesday, August 31, 2016 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78680; File No. SR–Phlx–
2016–86]
Self-Regulatory Organizations;
NASDAQ PHLX LLC; Notice of Filing of
Proposed Rule Change to Delete or
Amend Outdated Rule Language
August 25, 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 August
12, 2016, NASDAQ PHLX 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to delete or
amend outdated rule language
contained in Rules 1022, Securities
Accounts and Orders of Specialists and
Registered Options Traders, 1036,
Affiliated Persons of Specialists, and
1037, Floor Reports of Exchanges
Options Transactions.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaqphlx.cchwallstreet.
com/, at the principal office of the
Exchange, and at the Commission’s
Public Reference Room.
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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 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to delete
or amend several rules pertaining to the
obligations of specialists, as follows.3
Rule 1022
Rule 1022 (b) and (c) currently
provide that each specialist or
Registered Options Trader (‘‘ROT’’)
shall provide certain reports of options
and orders in a manner provided by the
Exchange. Section (b) requires each
specialist or ROT, no later than 10:00
a.m. on the business day following order
entry date, to report to the Exchange
opening positions and each purchase
and sale in each option in which the
Specialist or ROT is registered for each
account reported pursuant to Rule
1022.4
Likewise, Section (c) requires each
specialist or ROT, no later than 10:00
a.m. on the business day following order
entry date, to report to the Exchange
every order entered by the specialist or
ROT for the purchase or sale of a
security underlying any stock or
Exchange-Traded Fund Share options
contract traded on the Exchange or a
security convertible into or
exchangeable for such underlying
security as well as opening and closing
positions in all such securities held in
each account reported pursuant to the
rule.5 The requirements of both Sections
(c) and (d) are qualified—the reports are
required to be made ‘‘in a manner
prescribed by the Exchange.’’
The Exchange is deleting Sections (b)
and (c) as obsolete and reserving those
sections. The Exchange has previously
stated with respect to Rule 1022 that the
required reports of activity in each
option, as well as activity in the
underlying stock, is reviewed daily to
insure compliance with Exchange and
SEC rules and regulation.6 However, the
Exchange does not require nor does it
currently receive the reports specified in
those sections because it believes that
3 A ‘‘specialist’’ is an Exchange member who is
registered as an options specialist pursuant to
Exchange Rule 1020(a). Specialists are subject to
quoting and registration obligations set forth in
Rules 1014(b), 1020 and 1080.02.
4 The report is required to designate the time and
type of tick at which such transaction was effected.
5 The report pertaining to orders must include the
terms of each order, identification of the brokerage
firms through which the orders were entered, the
times of entry or cancellation, the times reports of
executions were received and, if all or part of the
order was executed, the quantity and execution
price.
6 See Securities Exchange Act Release No. 19940
(July 1, 1983), 48 FR 31950 (July 12, 1983).
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the burden of filing the reports would
outweigh the benefits and it does not
believe the reports are necessary to
fulfill its regulatory obligations given
other sources of information now
available to the Exchange. While current
Exchange staff is unaware whether a
circular was issued advising specialists
that they were no longer required to
provide the reports required under Rule
1022, the reports have not been required
by or received by the Exchange for 15
years or more.
The information referred to in Section
(b) is available from The Options
Clearing Corporation. Much of the
information called for in Section (c) is
now available to the Exchange in the
ISG Equity Audit Trail known among
the exchanges as ECAT.
Rule 1036
Section (a) of Rule 1036, Affiliated
Persons of Specialists, currently
requires every limited partner, approved
person and every party who is affiliated
with a specialist member organization to
agree, in a stipulation approved by the
Exchange, not to violate any Exchange
rule or cause a specialist or a specialist
member organization to violate these or
any other rules relating to specialists.
The Exchange currently does not collect
such stipulations. The violation of such
a stipulation would have provided the
Exchange with a separate basis for
proceeding against the provider of the
stipulation in the event of an Exchange
rule violation by that person or by a
specialist or specialist member
organization. However, the Exchange
has determined that the burden of
collecting such stipulations would
outweigh any benefits and is
accordingly proposing to delete and
reserve Section (a) of Rule 1036.
Rule 1036(b) provides that no issuer,
or parent or subsidiary thereof, or any
officer, director or 10% stockholder
thereof, may become an approved
person in a specialist member
organization whose members are
registered in a security of that issuer.
Rule 1036(b) however applies only to
options trading on the Exchange.
Therefore, the Exchange is amending
Rule 1036(b) to refer to members who
are registered in options overlying a
security of that issuer.7
Rule 1037
Rule 1037, Floor Reports of Exchanges
Options Transactions, provides for a
specialist’s liability for missed orders on
the book. Under the rule a specialist was
liable for any loss sustained for orders
7 The Exchange is also correcting the rule by
changing the word ‘‘who’’ to ‘‘whose’’.
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Federal Register / Vol. 81, No. 169 / Wednesday, August 31, 2016 / Notices
entrusted to him which should have
been executed, and for which he should
have sent an execution report, when the
specialist was made aware of the error
by 9:30 on the business day following
the submission of the order.8 Rule 1037
is being deleted as obsolete and
reserved. Due to the migration of the
Exchange to a new electronic trading
system (‘‘Phlx XL II’’) in 2009, missed
orders by Specialists no longer occur
because Specialists no longer handle
orders for other market participants in
their capacity as Specialists.9 Missed
orders cannot occur because orders are
not held or guaranteed by Specialists,
who now trade only for their own
accounts in that capacity. The deletion
of Rule 1037 should prevent confusion
that may result from having obsolete
rules in the Exchange’s rulebook.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,10 in general, and furthers the
objectives of Section 6(b)(5) of the Act,11
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
deleting obsolete provisions and
generally providing clarity to the rules.
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Rule 1022
The amendments to Rule 1022 are
consistent with the Act because they
delete requirements that specialists and
ROTs provide reports which the
Exchange no longer needs in order to
fulfill its regulatory responsibilities. The
elimination of the requirements reduces
an unnecessary burden on ROTs and
specialists, which therefore removes an
8 In a May 17, 1991 amendment to SR-Phlx-91–
21, the Exchange amended the introductory
language of Rule 1037 by replacing ‘‘12:00 noon’’
with ‘‘9:30 a.m.’’. The same change was also made
to Commentary .03. It appears that although the
change to Commentary .03 was then carried over
into the rulebook, the same change to the
introductory language was inadvertently overlooked
and thus not reflected in the rulebook. See
Securities Exchange Act Release No. 32695 (July 29,
1993), 58 FR 41821 (August 5, 1993).
9 In May 2009, the Exchange enhanced the
options trading system and adopted corresponding
rules referring to it as ‘‘Phlx XL II.’’ See Securities
Exchange Act Release No. 59995 (May 28, 2009), 74
FR 26750 (June 3, 2009) (SR-Phlx-2009–32).
Thereafter, the Exchange submitted a number of
filings updating various rules and deleting obsolete
provisions. See Securities Exchange Act Release
Nos. 61397 (January 22, 2010), 75 FR 4893 (January
29, 2010) (SR-Phlx-2010–07); 63036 (October 4,
2010), 75 FR 62621 (October 12, 2010) (SR-Phlx2010–131); and 67469 (July 19, 2012), 77 FR 43633
(July 25, 2012) (SR-Phlx-2012–92).
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
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60111
impediment to a free and open market
and a national market system.
to determine whether the proposed rule
change should be disapproved.
Rule 1036
The amendments to Rule 1036 are
consistent with the Act because they
clarify that Rule 1036(b) applies to
option specialist member organizations.
They also eliminate requirements that
certain affiliates of specialists or related
persons provide stipulations the
collection of which the Exchange
believes to be a burden that is not
outweighed by its benefits. The
elimination of the requirement reduces
an unnecessary burden on the
Exchange, which therefore removes an
impediment to a free and open market
and a national market system.
IV. Solicitation of Comments
Rule 1037
The deletion of Rule 1037 is
consistent with the Act because this rule
language is operationally obsolete, as
explained above; moreover, having clear
and up-to-date rules should promote
just and equitable principles of trade on
the Exchange. The proposal should
result in a more accurate and
understandable rule book, particularly
for Exchange specialists who no longer
operate a book or handle orders for
accounts other than their own.
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. The proposal
raises neither intra-market nor intermarket competition issues. The proposal
deletes or amends obsolete or
unnecessary provisions or clarifies rules
and therefore does not impact how the
market operates today.
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
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the Exchange consents,
the Commission shall: (a) By order
approve or disapprove such proposed
rule change, or (b) institute proceedings
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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–2016–86 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–Phlx–2016–86. 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
submissions. You should submit only
information that you wish to make
available publicly.
All submissions should refer to File
Number SR–Phlx–2016–86 and should
be submitted on or before September 21,
2016.
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60112
Federal Register / Vol. 81, No. 169 / Wednesday, August 31, 2016 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Robert W. Errett,
Deputy Secretary.
Dated: August 25, 2016.
Mark Taplin,
Principal Deputy Assistant Secretary, Bureau
of Educational and Cultural Affairs,
Department of State.
[FR Doc. 2016–20893 Filed 8–30–16; 8:45 am]
[FR Doc. 2016–20966 Filed 8–30–16; 8:45 am]
BILLING CODE 8011–01–P
BILLING CODE 4710–05–P
DEPARTMENT OF STATE
DEPARTMENT OF STATE
[Public Notice 9696]
[Public Notice 9697]
Culturally Significant Objects Imported
for Exhibition Determinations: ‘‘God’s
Servant First: The Life and Legacy of
Thomas More’’ Exhibition
Notice is hereby given of the
following determinations: Pursuant to
the authority vested in me by the Act of
October 19, 1965 (79 Stat. 985; 22 U.S.C.
2459), E.O. 12047 of March 27, 1978, the
Foreign Affairs Reform and
Restructuring Act of 1998 (112 Stat.
2681, et seq.; 22 U.S.C. 6501 note, et
seq.), Delegation of Authority No. 234 of
October 1, 1999, Delegation of Authority
No. 236–3 of August 28, 2000 (and, as
appropriate, Delegation of Authority No.
257 of April 15, 2003), I hereby
determine that the objects to be
included in the exhibition ‘‘God’s
Servant First: The Life and Legacy of
Thomas More,’’ imported from abroad
for temporary exhibition within the
United States, are of cultural
significance. The objects are imported
pursuant to loan agreements with the
foreign owner or custodian. I also
determine that the exhibition or display
of the exhibit objects at the Saint John
Paul II National Shrine, Washington,
District of Columbia, from on about
September 16, 2016, until on or about
March 31, 2017, and at possible
additional exhibitions or venues yet to
be determined, is in the national
interest. I have ordered that Public
Notice of these Determinations be
published in the Federal Register.
SUMMARY:
For
further information, including a list of
the imported objects, contact the Office
of Public Diplomacy and Public Affairs
in the Office of the Legal Adviser, U.S.
Department of State (telephone: 202–
632–6471; email: section2459@
state.gov). The mailing address is U.S.
Department of State, L/PD, SA–5, Suite
5H03, Washington, DC 20522–0505.
mstockstill on DSK3G9T082PROD with NOTICES
FOR FURTHER INFORMATION CONTACT:
Culturally Significant Objects Imported
for Exhibition Determinations:
‘‘Medardo Rosso: Experiments in Light
and Form’’ Exhibition
Notice is hereby given of the
following determinations: Pursuant to
the authority vested in me by the Act of
October 19, 1965 (79 Stat. 985; 22 U.S.C.
2459), E.O. 12047 of March 27, 1978, the
Foreign Affairs Reform and
Restructuring Act of 1998 (112 Stat.
2681, et seq.; 22 U.S.C. 6501 note, et
seq.), Delegation of Authority No. 234 of
October 1, 1999, Delegation of Authority
No. 236–3 of August 28, 2000, and
Delegation of Authority No. 257 of April
15, 2003, I hereby determine that the
objects to be included in the exhibition
‘‘Medardo Rosso: Experiments in Light
and Form,’’ imported from abroad for
temporary exhibition within the United
States, are of cultural significance. The
objects are imported pursuant to loan
agreements with the foreign owners or
custodians. I also determine that the
exhibition or display of the exhibit
objects at the Pulitzer Arts Foundation,
St. Louis, Missouri, from on or about
November 11, 2016, until on or about
May 13, 2017, and at possible additional
exhibitions or venues yet to be
determined, is in the national interest.
I have ordered that Public Notice of
these Determinations be published in
the Federal Register.
SUMMARY:
For
further information, including a list of
the imported objects, contact the Office
of Public Diplomacy and Public Affairs
in the Office of the Legal Adviser, U.S.
Department of State (telephone: 202–
632–6471; email: section2459@
state.gov). The mailing address is U.S.
Department of State, L/PD, SA–5, Suite
5H03, Washington, DC 20522–0505.
FOR FURTHER INFORMATION CONTACT:
Dated: August 23, 2016.
Mark Taplin,
Principal Deputy Assistant Secretary, Bureau
of Educational and Cultural Affairs,
Department of State.
[FR Doc. 2016–20957 Filed 8–30–16; 8:45 am]
12 17
CFR 200.30–3(a)(12).
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21:59 Aug 30, 2016
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SURFACE TRANSPORTATION BOARD
[Docket No. AB 1245X]
Michigan Southern Railroad Company,
d/b/a Napoleon, Defiance & Western
Railway—Discontinuance of Service
Exemption—in Henry County, Ohio
On August 11, 2016, Michigan
Southern Railroad Company, d/b/a
Napoleon, Defiance & Western Railway
(NDW) filed with the Surface
Transportation Board (Board) a petition
under 49 U.S.C. 10502 for exemption
from the provisions of 49 U.S.C. 10903
to discontinue rail service over
approximately 5.43 miles of rail line
between milepost TN 28.0, near Liberty
Center, Ohio, and milepost TN 33.43,
near Napoleon, Ohio, in Henry County,
Ohio. The line traverses U.S. Postal
Service Zip Codes 43545 and 43532,
and includes the station of Liberty
Center, which NDW states will be
discontinued.
NDW states that the line does not
contain any federally granted rights-ofway. Any documentation in NDW’s
possession will be made available
promptly to those requesting it.
The interest of railroad employees
will be protected by the conditions set
forth in Oregon Short Line Railroad–
Abandonment Portion Goshen Branch
Between Firth & Ammon, in Bingham &
Bonneville Counties, Idaho, 360 I.C.C.
91 (1979).
By issuance of this notice, the Board
is instituting an exemption proceeding
pursuant to 49 U.S.C. 10502(b). A final
decision will be issued by November 29,
2016.
Because this is a discontinuance
proceeding and not an abandonment
proceeding, trail use/rail banking and
public use conditions are not
appropriate. Because there will be
environmental review during
abandonment, this discontinuance does
not require an environmental review.
Any offer of financial assistance
(OFA) under 49 CFR 1152.27(b)(2) to
subsidize continued rail service will be
due no later than December 9, 2016, or
10 days after service of a decision
granting the petition for exemption,
whichever occurs sooner. Each offer
must be accompanied by a $1,600 filing
fee. See 49 CFR 1002.2(f)(25).
All filings in response to this notice
must refer to Docket No. AB 1245X and
must be sent to: (1) Surface
Transportation Board, 395 E Street, SW.,
Washington, DC 20423–0001; and (2)
William A. Mullins, Baker & Miller
PLLC, 2401 Pennsylvania Ave., NW.,
Suite 300, Washington, DC 20037.
Replies to the petition are due on or
before September 20, 2016.
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]]>Agencies
[Federal Register Volume 81, Number 169 (Wednesday, August 31, 2016)]
[Notices]
[Pages 60110-60112]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20893]
[[Page 60110]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78680; File No. SR-Phlx-2016-86]
Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing
of Proposed Rule Change to Delete or Amend Outdated Rule Language
August 25, 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 August 12, 2016, NASDAQ PHLX 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.
---------------------------------------------------------------------------
\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 delete or amend outdated rule language
contained in Rules 1022, Securities Accounts and Orders of Specialists
and Registered Options Traders, 1036, Affiliated Persons of
Specialists, and 1037, Floor Reports of Exchanges Options Transactions.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqphlx.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 is proposing to delete or amend several rules
pertaining to the obligations of specialists, as follows.\3\
---------------------------------------------------------------------------
\3\ A ``specialist'' is an Exchange member who is registered as
an options specialist pursuant to Exchange Rule 1020(a). Specialists
are subject to quoting and registration obligations set forth in
Rules 1014(b), 1020 and 1080.02.
---------------------------------------------------------------------------
Rule 1022
Rule 1022 (b) and (c) currently provide that each specialist or
Registered Options Trader (``ROT'') shall provide certain reports of
options and orders in a manner provided by the Exchange. Section (b)
requires each specialist or ROT, no later than 10:00 a.m. on the
business day following order entry date, to report to the Exchange
opening positions and each purchase and sale in each option in which
the Specialist or ROT is registered for each account reported pursuant
to Rule 1022.\4\
---------------------------------------------------------------------------
\4\ The report is required to designate the time and type of
tick at which such transaction was effected.
---------------------------------------------------------------------------
Likewise, Section (c) requires each specialist or ROT, no later
than 10:00 a.m. on the business day following order entry date, to
report to the Exchange every order entered by the specialist or ROT for
the purchase or sale of a security underlying any stock or Exchange-
Traded Fund Share options contract traded on the Exchange or a security
convertible into or exchangeable for such underlying security as well
as opening and closing positions in all such securities held in each
account reported pursuant to the rule.\5\ The requirements of both
Sections (c) and (d) are qualified--the reports are required to be made
``in a manner prescribed by the Exchange.''
---------------------------------------------------------------------------
\5\ The report pertaining to orders must include the terms of
each order, identification of the brokerage firms through which the
orders were entered, the times of entry or cancellation, the times
reports of executions were received and, if all or part of the order
was executed, the quantity and execution price.
---------------------------------------------------------------------------
The Exchange is deleting Sections (b) and (c) as obsolete and
reserving those sections. The Exchange has previously stated with
respect to Rule 1022 that the required reports of activity in each
option, as well as activity in the underlying stock, is reviewed daily
to insure compliance with Exchange and SEC rules and regulation.\6\
However, the Exchange does not require nor does it currently receive
the reports specified in those sections because it believes that the
burden of filing the reports would outweigh the benefits and it does
not believe the reports are necessary to fulfill its regulatory
obligations given other sources of information now available to the
Exchange. While current Exchange staff is unaware whether a circular
was issued advising specialists that they were no longer required to
provide the reports required under Rule 1022, the reports have not been
required by or received by the Exchange for 15 years or more.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 19940 (July 1,
1983), 48 FR 31950 (July 12, 1983).
---------------------------------------------------------------------------
The information referred to in Section (b) is available from The
Options Clearing Corporation. Much of the information called for in
Section (c) is now available to the Exchange in the ISG Equity Audit
Trail known among the exchanges as ECAT.
Rule 1036
Section (a) of Rule 1036, Affiliated Persons of Specialists,
currently requires every limited partner, approved person and every
party who is affiliated with a specialist member organization to agree,
in a stipulation approved by the Exchange, not to violate any Exchange
rule or cause a specialist or a specialist member organization to
violate these or any other rules relating to specialists. The Exchange
currently does not collect such stipulations. The violation of such a
stipulation would have provided the Exchange with a separate basis for
proceeding against the provider of the stipulation in the event of an
Exchange rule violation by that person or by a specialist or specialist
member organization. However, the Exchange has determined that the
burden of collecting such stipulations would outweigh any benefits and
is accordingly proposing to delete and reserve Section (a) of Rule
1036.
Rule 1036(b) provides that no issuer, or parent or subsidiary
thereof, or any officer, director or 10% stockholder thereof, may
become an approved person in a specialist member organization whose
members are registered in a security of that issuer. Rule 1036(b)
however applies only to options trading on the Exchange. Therefore, the
Exchange is amending Rule 1036(b) to refer to members who are
registered in options overlying a security of that issuer.\7\
---------------------------------------------------------------------------
\7\ The Exchange is also correcting the rule by changing the
word ``who'' to ``whose''.
---------------------------------------------------------------------------
Rule 1037
Rule 1037, Floor Reports of Exchanges Options Transactions,
provides for a specialist's liability for missed orders on the book.
Under the rule a specialist was liable for any loss sustained for
orders
[[Page 60111]]
entrusted to him which should have been executed, and for which he
should have sent an execution report, when the specialist was made
aware of the error by 9:30 on the business day following the submission
of the order.\8\ Rule 1037 is being deleted as obsolete and reserved.
Due to the migration of the Exchange to a new electronic trading system
(``Phlx XL II'') in 2009, missed orders by Specialists no longer occur
because Specialists no longer handle orders for other market
participants in their capacity as Specialists.\9\ Missed orders cannot
occur because orders are not held or guaranteed by Specialists, who now
trade only for their own accounts in that capacity. The deletion of
Rule 1037 should prevent confusion that may result from having obsolete
rules in the Exchange's rulebook.
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\8\ In a May 17, 1991 amendment to SR-Phlx-91-21, the Exchange
amended the introductory language of Rule 1037 by replacing ``12:00
noon'' with ``9:30 a.m.''. The same change was also made to
Commentary .03. It appears that although the change to Commentary
.03 was then carried over into the rulebook, the same change to the
introductory language was inadvertently overlooked and thus not
reflected in the rulebook. See Securities Exchange Act Release No.
32695 (July 29, 1993), 58 FR 41821 (August 5, 1993).
\9\ In May 2009, the Exchange enhanced the options trading
system and adopted corresponding rules referring to it as ``Phlx XL
II.'' See Securities Exchange Act Release No. 59995 (May 28, 2009),
74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32). Thereafter, the
Exchange submitted a number of filings updating various rules and
deleting obsolete provisions. See Securities Exchange Act Release
Nos. 61397 (January 22, 2010), 75 FR 4893 (January 29, 2010) (SR-
Phlx-2010-07); 63036 (October 4, 2010), 75 FR 62621 (October 12,
2010) (SR-Phlx-2010-131); and 67469 (July 19, 2012), 77 FR 43633
(July 25, 2012) (SR-Phlx-2012-92).
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\11\ 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 deleting obsolete provisions and generally providing
clarity to the rules.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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Rule 1022
The amendments to Rule 1022 are consistent with the Act because
they delete requirements that specialists and ROTs provide reports
which the Exchange no longer needs in order to fulfill its regulatory
responsibilities. The elimination of the requirements reduces an
unnecessary burden on ROTs and specialists, which therefore removes an
impediment to a free and open market and a national market system.
Rule 1036
The amendments to Rule 1036 are consistent with the Act because
they clarify that Rule 1036(b) applies to option specialist member
organizations. They also eliminate requirements that certain affiliates
of specialists or related persons provide stipulations the collection
of which the Exchange believes to be a burden that is not outweighed by
its benefits. The elimination of the requirement reduces an unnecessary
burden on the Exchange, which therefore removes an impediment to a free
and open market and a national market system.
Rule 1037
The deletion of Rule 1037 is consistent with the Act because this
rule language is operationally obsolete, as explained above; moreover,
having clear and up-to-date rules should promote just and equitable
principles of trade on the Exchange. The proposal should result in a
more accurate and understandable rule book, particularly for Exchange
specialists who no longer operate a book or handle orders for accounts
other than their own.
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. The proposal raises neither
intra-market nor inter-market competition issues. The proposal deletes
or amends obsolete or unnecessary provisions or clarifies rules and
therefore does not impact how the market operates today.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) By order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be 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-2016-86 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2016-86. 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 submissions. You should
submit only information that you wish to make available publicly.
All submissions should refer to File Number SR-Phlx-2016-86 and
should be submitted on or before September 21, 2016.
[[Page 60112]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-20893 Filed 8-30-16; 8:45 am]
BILLING CODE 8011-01-P
