Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 3304, 58232-58235 [2017-26555]

Download as PDF 58232 Federal Register / Vol. 82, No. 236 / Monday, December 11, 2017 / Notices standards for the payment, clearing, and settlement activities of designated clearing entities engaged in designated activities for which the Commission is the supervisory agency. Section 805(b) of the Act 21 provides the following objectives and principles for the Commission’s risk-management standards prescribed under Section 805(a): • To promote robust risk management; • To promote safety and soundness; • To reduce systemic risks; and • To support the stability of the broader financial system. Section 805(c) provides, in addition, that the Commission’s risk-management standards may address such areas as risk-management and default policies and procedures, among others areas.22 The Commission has adopted riskmanagement standards under Section 805(a)(2) of the Act and the Exchange Act (the ‘‘Clearing Agency Rules’’).23 The Clearing Agency Rules require each covered clearing agency, among other things, to establish, implement, maintain, and enforce written policies and procedures that are reasonably designed to meet certain minimum requirements for operations and riskmanagement practices on an ongoing basis. As such, it is appropriate for the Commission to review advance notices for consistency with the objectives and principles for risk-management standards described in Section 805(b) of the Act and the Clearing Agency Rules. A. Consistency With Section 805(b) of the Payment, Clearing and Settlement Supervision Act The Commission believes each proposal in OCC’s Advance Notice is consistent with promoting robust risk management, promoting safety and soundness, reducing systemic risks, and supporting the stability of the broader financial system, the stated objectives and principles of Section 805(b) of the Act.24 21 12 U.S.C. 5464(b). U.S.C. 5464(c). 23 17 CFR 240.17Ad–22. See Securities Exchange Act Release No. 68080 (October 22, 2012), 77 FR 66220 (November 2, 2012) (S7–08–11). See also Securities Exchange Act Release No. 78961 (September 28, 2016), 81 FR 70786 (October 13, 2016) (S7–03–14) (‘‘Covered Clearing Agency Standards’’). The Commission established an effective date of December 12, 2016, and a compliance date of April 11, 2017, for the Covered Clearing Agency Standards. On March 4, 2017, the Commission granted covered clearing agencies a temporary exemption from compliance with Rule 17Ad–22(e)(3)(ii) and certain requirements in Rules 17Ad–22(e)(15)(i) and (ii) until December 31, 2017, subject to certain conditions. OCC is a ‘‘covered clearing agency’’ as defined in Rule 17Ad–22(a)(5). 24 12 U.S.C. 5464(b). daltland on DSKBBV9HB2PROD with NOTICES 22 12 VerDate Sep<11>2014 17:54 Dec 08, 2017 Jkt 244001 First, the Commission believes that OCC’s proposal to implement the SWIFT messaging network as the primary means of transmitting cash settlement instructions between OCC and each Clearing Bank is consistent with promoting safety and soundness. The Commission agrees with OCC’s analysis that usage of the SWIFT messaging network would mitigate risks that arise in the existing cash settlement process due to manual processing steps and inconsistent practices across OCC’s Clearing Banks. By having an automated and standardized process that sends automatic messages without requiring Clearing Bank staff members to log into OCS to manually accept or reject settlement instructions, the Commission further believes the proposal would enhance the resiliency, efficiency, and consistency of OCC’s cash settlement process. The Commission therefore believes this specific proposal is consistent with promoting safety and soundness. Second, the Commission believes that OCC’s proposal to update, enhance and standardize a uniform set of CSPAs between OCC and each Clearing Bank would promote robust risk management. Specifically, the Commission believes that this proposal will reduce the risk of settlement delay or error that may arise due to each Clearing Bank operating according to disparate CSPA terms and requirements. The Commission therefore believes this specific proposal is consistent with promoting robust risk management. Consistent with the conclusions discussed above, the Commission also believes that OCC’s proposal is consistent with supporting the broader stability of the financial system. Specifically, the Commission believes that promoting the prompt and accurate messaging between OCC and the Clearing Banks would promote safety and soundness of both OCC and Clearing Banks. The reduction in errors and delays arising from the proposed implementation of SWIFT and more harmonized CSPAs would also enhance the reliability and resilience of OCC’s cash settlement process for Clearing Members, thereby decreasing systemic risks. Accordingly, the proposed changes would support the stability of the broader financial system. Thus, the Commission believes that the proposals contained in the Advance Notice are consistent with the stated objectives and principles of Section 805(b) of the Act. B. Consistency With Rule 17Ad– 22(e)(22) Under the Exchange Act The Commission further believes that OCC’s proposals in the Advance Notice PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 are consistent with the Covered Clearing Agency Standards, specifically Rule 17Ad–22(e)(22) under the Exchange Act.25 Rule 17Ad–22(e)(22) requires each covered clearing agency to establish, implement, maintain, and enforce written policies and procedures reasonably designed to, ‘‘use, or at a minimum, accommodate, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, and settlement.’’ 26 In adopting this requirement, the Commission stated that, ‘‘[r]elevant internationally accepted communication procedures and standards could include messaging standards such as SWIFT, FIX and FpML.’’ 27 Accordingly, the Commission believes that the proposals to expand the usage of the SWIFT messaging network and standardize the CSPAs with each Clearing Bank pursuant to the SWIFT messaging network implementation are consistent with Rule 17Ad–22(e)(22) under the Exchange Act. IV. Conclusion It is therefore noticed, pursuant to Section 806(e)(1)(G) of the Payment, Clearing and Settlement Supervision Act,28 that the Commission does not object to Advance Notice (SR–OCC– 2017–805) and that OCC is authorized to implement the proposed change. By the Commission. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–26554 Filed 12–8–17; 8:45 am] BILLING CODE P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82219; File No. SR–Phlx– 2017–95] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 3304 December 5, 2017. 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 November 28, 2017, Nasdaq PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities 25 17 CFR 240.17Ad–22(e)(22). 26 Id. 27 Securities Exchange Act Release No. 78961 (September 28, 2016), 81 FR 70786, 70842 at n. 510 (October 13, 2016). 28 12 U.S.C. 5465(e)(1)(G). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. E:\FR\FM\11DEN1.SGM 11DEN1 Federal Register / Vol. 82, No. 236 / Monday, December 11, 2017 / Notices and Exchange Commission (‘‘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 Substance of the Proposed Rule Change The Exchange proposes to add additional detail about the purposes for which Nasdaq PSX (‘‘PSX’’) uses securities information processor data pursuant to Rule 3304, and to make other technical corrections to that rule. 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 daltland on DSKBBV9HB2PROD with NOTICES 1. Purpose The purpose of the proposed rule change is to add additional detail about the purposes for which the Exchange uses securities information processor (‘‘SIP’’) data pursuant to Rule 3304, and to make other technical corrections to that rule. Rule 3304 lists the proprietary and network processor feeds that are utilized for the handling, routing, and execution of orders, as well as for the regulatory compliance processes related to those functions. The PSX trading system utilizes proprietary market data as the Primary Source of quotation data for the following markets that provide a reliable direct feed: Nasdaq, NYSE American, Nasdaq BX, CBOE EDGA, CBOE EDGX, CHX, NYSE, NYSE Arca, Nasdaq, Nasdaq PSX, CBOE BYX, and CBOE BZX.3 For each of these markets, 3 Several of the exchanges mentioned in this filing have been renamed recently; the names used herein reflect the current names of the exchanges. This proposed rule change also includes amendments to reflect the new names for these exchanges. VerDate Sep<11>2014 17:54 Dec 08, 2017 Jkt 244001 58233 the Exchange uses SIP data as the Secondary Source of quotation data.4 Generally, Rule 3304 provides that the Primary Source of data is used for the handling, routing, and execution of orders, as well as for the regulatory compliance processes related to those functions, unless it is delayed by a configurable amount compared to the Secondary Source of data. While this is true for quotation data used by the trading system for the handling, routing, and execution of orders, and also regulatory compliance processes related to those functions, including, for example, determination of tradethroughs under Rule 611 of Regulation NMS, the Exchange uses SIP data for certain trade and administrative messages. For example, the Exchange uses SIP data for limit-up limit-down price bands, market-wide circuit breaker decline and status messages, Regulation SHO state messages, trading state messages (i.e., halts and resumes), and trade messages (i.e., last sale). As described in more detail below, with the exception of last sale information, these messages originate from the SIP, and are often not available on the direct feeds. To mitigate risks associated with a potential SIP outage, however, where the information is available on a direct feed from one or more exchanges, the Exchange uses such direct feed data solely as a backup to the SIP data. The Exchange therefore proposes to amend Rule 3304 to provide that the PSX System consumes quotation data from the listed proprietary and network processor feeds for the handling, routing, and execution of orders, as well as for the regulatory compliance processes related to those functions.5 Furthermore, with the proposed changes, Rule 3304 will provide that the SIP is the Primary Source of certain trade and administrative messages such as limit-up limit-down price bands, market-wide circuit breaker decline and status messages, Regulation SHO state messages, halts and resumes, and last sale information, and that, where available, the direct feeds are the Secondary Source of such information. For the reasons discussed in this filing, the Exchange believes that it is appropriate to use the SIP as the Primary Source of data for these trade and administrative messages. Limit-up limit down price bands, for instance, are not available on any of the direct feeds used by the Exchange as these bands are calculated and disseminated by the SIP pursuant to the Plan to Address Extraordinary Market Volatility. Similarly, market-wide circuit breaker decline and status messages, Regulation SHO state messages, and trading state messages are available on some but not other direct feeds. Again, the SIP is responsible for calculating any decline in the S&P 500 Index and disseminating halt messages for the market-wide circuit breaker, and also for disseminating other halts, resumes, and Regulation SHO state messages. In addition, the Exchange’s trading system consumes last sale information from the SIP, which is used for the limited purpose of determining when the Exchange can open securities after an IPO.6 Although last sale information is disseminated on proprietary market data feeds, this information is typically included in a different market data product than the Exchange uses for quotation data, and the Exchange’s trading system therefore also consumes last sale information from the SIP for the limited purpose described above. Finally, the Exchange proposes to make additional technical amendments to Rule 3304. Specifically, several of the exchanges and direct market data feeds described in the rule have been renamed since the Exchange adopted the rule. The Exchange therefore propose to: (1) Rename the exchanges described in the rule so that the exchanges are identified by their new names,7 and (2) replace the names of the individual direct feeds with a generic notation that the ‘‘Direct Feed’’ is used to avoid the need for future updates every time an exchange changes the name of its proprietary market data offerings. These changes are technical amendments and will have no impact on the operation of the Exchange or its use of the identified market data feeds. 4 SIP data is used as the Primary Source for NYSE National, FINRA ADF, and IEX. There is no Secondary Source for these markets. 5 The Exchange notes that the rule language currently provides that the Exchange ‘‘utilizes’’ these feeds. As a non-substantive change, the Exchange is changing this word to ‘‘consumes’’ as this word fits better with language being added to the rule. 6 The Exchange waits for a last sale from the listing market prior to starting the Exchange’s opening process following an IPO on another market. 7 The new names of each of the exchanges described in Rule 3304 are used earlier in this filing. See notes 4–5 supra and accompanying text. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,8 in general, and furthers the objectives of Section 6(b)(5) of the Act,9 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and E:\FR\FM\11DEN1.SGM 11DEN1 daltland on DSKBBV9HB2PROD with NOTICES 58234 Federal Register / Vol. 82, No. 236 / Monday, December 11, 2017 / Notices perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest. The Exchange believes that the proposed rule change removes impediments to and perfects the mechanism of a free and open market and protects investors and the public interest because it provides additional transparency around the purposes for which the Exchange uses SIP data. The proposed rule change does not change the operation of the Exchange or its use of data feeds; rather it clarifies the Exchange’s rules with regard to information consumed from the SIP. Specifically, the proposed rule change indicates that the Exchange uses SIP data for certain administrative messages, including, limit-up limit-down price bands, market-wide circuit breaker decline and status messages, Regulation SHO state messages, and trading state messages (i.e., halts and resumes), as well as trade messages (i.e., last sale). At least one other exchange uses SIP data for these purposes, while continuing to use the direct feeds for quotation data where the direct feeds often offer reduced latency.10 The Exchange believes that it is appropriate to use SIP data as the primary source for administrative messages that originate from the SIP and may or may not be available on particular proprietary market data feeds. Although quote data used for the handling, routing, and execution of orders is typically available with a lower latency over the direct feeds, the same is not true for the administrative messages described above that originate from the SIP and are re-disseminated (or not disseminated at all) by the various direct feeds. The Exchange therefore believes that it is consistent with the public interest and protection of investors to get this information directly from the SIP, i.e., the official source of the information, rather than indirectly from proprietary market data feeds that may or may not redistribute such information. Furthermore, with respect to last sale information, such information is used by the trading system for the limited purposes described in this filing, and is not typically available on the direct feeds that the Exchange uses for quotation data. The Exchange therefore also believes that it is appropriate to get last sale information from the SIP. Where the information described in this filing is available on a direct feed, however, direct feed data will be used in the event failover is necessary, thereby 10 See 17:54 Dec 08, 2017 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 that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is not designed to address any competitive issue but rather would provide members and other market participants with information about the purposes for which the Exchange uses SIP data, and make other technical corrections to Rule 3304. No changes to the Exchange’s trading or other systems are being introduced with the proposed rule change, and the Exchange believes that the proposed changes will increase transparency around the operation of the Exchange and its use of market data feeds without any significant impact 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. 11 See e.g. IEX Rule 11.410(a); CBOE BZX Rule 11.26. IEX Rule 11.410(a)(3). VerDate Sep<11>2014 adding redundancy and mitigating risks associated with a potential SIP outage. The proposed rule change also makes certain technical amendments to Rule 3304, including updating the names of exchanges that have been renamed since the adoption of this rule. The Exchange believes that it is consistent with the public interest and the protection of investors to update the names of the exchanges listed in Rule 3304 as this change will make it easier for market participants to identify the exchanges for which the Exchange uses the direct feed and/or SIP for the purposes described in the rule. Furthermore, the proposed rule change replaces the names of the direct feeds with a generic notation that the ‘‘Direct Feed’’ is used. The Exchange believes that this change is consistent with the protection of investors and the public interest as the exchanges may change the names of their data feeds periodically, resulting in the list being out of date. Rather than update the list every time a market changes the names of their proprietary market data products, the Exchange believes that it is preferable to simply explain that the direct feed is used. Several other exchanges also similarly note that the direct feed is used rather than spelling out the names of each feed.11 Jkt 244001 PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 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 12 and subparagraph (f)(6) of Rule 19b–4 thereunder.13 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 14 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 15 permits the Commission to 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 proposal may become operative upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest as it will allow the Exchange to clarify the purposes for which the Exchange uses SIP data and avoid potential confusion among market participants. Accordingly, the Commission hereby waives the operative delay and designates the proposal operative upon filing.16 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. 12 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, along with a brief description and the 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). 16 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 13 17 E:\FR\FM\11DEN1.SGM 11DEN1 Federal Register / Vol. 82, No. 236 / Monday, December 11, 2017 / Notices 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: • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– Phlx–2017–95 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. daltland on DSKBBV9HB2PROD with NOTICES For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Eduardo A. Aleman, Assistant Secretary. places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements. [FR Doc. 2017–26555 Filed 12–8–17; 8:45 am] A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments All submissions should refer to File Number SR–Phlx–2017–95. 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 (http://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. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–Phlx–2017–95 and should be submitted on or before January 2, 2018. [Release No. 34–82216; File No. SR– CboeBZX–2017–006] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To List and Trade Shares of a Series of the Cboe Vest S&P 500 Enhanced Growth Strategy ETF Under the ETF Series Solutions Trust, Under Rule 14.11(c)(3), Index Fund Shares December 5, 2017. 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 November 21, 2017, Cboe BZX Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) filed with the Securities and Exchange Commission (‘‘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 Substance of the Proposed Rule Change The Exchange filed a proposal to list and trade shares of a series of the Cboe Vest S&P 500® Enhanced Growth Strategy ETF under the ETF Series Solutions Trust (the ‘‘Trust’’), under Rule 14.11(c)(3) (‘‘Index Fund Shares’’). The text of the proposed rule change is available at the Exchange’s Web site at www.markets.cboe.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 1 15 17 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:54 Dec 08, 2017 2 17 Jkt 244001 58235 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00069 Fmt 4703 1. Purpose The Exchange proposes to list and trade shares (‘‘Shares’’) of each series of the Cboe Vest S&P 500® Enhanced Growth Strategy ETF (each a ‘‘Fund’’ and, collectively, the ‘‘Funds’’) under Rule 14.11(c)(3), which governs the listing and trading of Index Fund Shares based on equity securities indexes on the Exchange. In total, the Exchange is proposing to list and trade Shares of twelve monthly series of the Cboe Vest S&P 500® Enhanced Growth Strategy ETF. Each Fund will be an index-based exchange traded fund (‘‘ETF’’). The Funds will include the following: Cboe Vest S&P 500® Enhanced Growth Strategy (January) ETF; Cboe Vest S&P 500® Enhanced Growth Strategy (February) ETF; Cboe Vest S&P 500® Enhanced Growth Strategy (March) ETF; Cboe Vest S&P 500® Enhanced Growth Strategy (April) ETF; Cboe Vest S&P 500® Enhanced Growth Strategy (May) ETF; Cboe Vest S&P 500® Enhanced Growth Strategy (June) ETF; Cboe Vest S&P 500® Enhanced Growth Strategy (July) ETF; Cboe Vest S&P 500® Enhanced Growth Strategy (August) ETF; Cboe Vest S&P 500® Enhanced Growth Strategy (September) ETF; Cboe Vest S&P 500® Enhanced Growth Strategy (October) ETF; Cboe Vest S&P 500® Enhanced Growth Strategy (November) ETF; and Cboe Vest S&P 500® Enhanced Growth Strategy (December) ETF. Each Fund will be based on the Cboe S&P 500 Enhanced Growth Index (Month) Series, where ‘‘Month’’ is the corresponding month associated with the roll date of the applicable Fund (each an ‘‘Index’’ and, collectively, the ‘‘Indexes’’). The Shares will be offered by the Trust, which was established as a Delaware statutory trust on February 9, 2012. The Trust is registered with the Commission as an open-end investment company and has filed a registration statement on behalf of the Funds on Form N–1A (‘‘Registration Statement’’) with the Commission.3 The Funds’ 3 See Registration Statement on Form N–1A for the Trust, dated October 27, 2017 (File Nos. 333– 179562 and 811–22668). The descriptions of the Funds and the Shares contained herein are based, in part, on information in the Registration Continued Sfmt 4703 E:\FR\FM\11DEN1.SGM 11DEN1

Agencies

[Federal Register Volume 82, Number 236 (Monday, December 11, 2017)]
[Notices]
[Pages 58232-58235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-26555]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82219; File No. SR-Phlx-2017-95]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 3304

December 5, 2017.
    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 November 28, 2017, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities

[[Page 58233]]

and Exchange Commission (``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.
---------------------------------------------------------------------------

    \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 add additional detail about the purposes 
for which Nasdaq PSX (``PSX'') uses securities information processor 
data pursuant to Rule 3304, and to make other technical corrections to 
that rule.

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 the proposed rule change is to add additional detail 
about the purposes for which the Exchange uses securities information 
processor (``SIP'') data pursuant to Rule 3304, and to make other 
technical corrections to that rule. Rule 3304 lists the proprietary and 
network processor feeds that are utilized for the handling, routing, 
and execution of orders, as well as for the regulatory compliance 
processes related to those functions. The PSX trading system utilizes 
proprietary market data as the Primary Source of quotation data for the 
following markets that provide a reliable direct feed: Nasdaq, NYSE 
American, Nasdaq BX, CBOE EDGA, CBOE EDGX, CHX, NYSE, NYSE Arca, 
Nasdaq, Nasdaq PSX, CBOE BYX, and CBOE BZX.\3\ For each of these 
markets, the Exchange uses SIP data as the Secondary Source of 
quotation data.\4\
---------------------------------------------------------------------------

    \3\ Several of the exchanges mentioned in this filing have been 
renamed recently; the names used herein reflect the current names of 
the exchanges. This proposed rule change also includes amendments to 
reflect the new names for these exchanges.
    \4\ SIP data is used as the Primary Source for NYSE National, 
FINRA ADF, and IEX. There is no Secondary Source for these markets.
---------------------------------------------------------------------------

    Generally, Rule 3304 provides that the Primary Source of data is 
used for the handling, routing, and execution of orders, as well as for 
the regulatory compliance processes related to those functions, unless 
it is delayed by a configurable amount compared to the Secondary Source 
of data. While this is true for quotation data used by the trading 
system for the handling, routing, and execution of orders, and also 
regulatory compliance processes related to those functions, including, 
for example, determination of trade-throughs under Rule 611 of 
Regulation NMS, the Exchange uses SIP data for certain trade and 
administrative messages. For example, the Exchange uses SIP data for 
limit-up limit-down price bands, market-wide circuit breaker decline 
and status messages, Regulation SHO state messages, trading state 
messages (i.e., halts and resumes), and trade messages (i.e., last 
sale). As described in more detail below, with the exception of last 
sale information, these messages originate from the SIP, and are often 
not available on the direct feeds. To mitigate risks associated with a 
potential SIP outage, however, where the information is available on a 
direct feed from one or more exchanges, the Exchange uses such direct 
feed data solely as a backup to the SIP data.
    The Exchange therefore proposes to amend Rule 3304 to provide that 
the PSX System consumes quotation data from the listed proprietary and 
network processor feeds for the handling, routing, and execution of 
orders, as well as for the regulatory compliance processes related to 
those functions.\5\ Furthermore, with the proposed changes, Rule 3304 
will provide that the SIP is the Primary Source of certain trade and 
administrative messages such as limit-up limit-down price bands, 
market-wide circuit breaker decline and status messages, Regulation SHO 
state messages, halts and resumes, and last sale information, and that, 
where available, the direct feeds are the Secondary Source of such 
information. For the reasons discussed in this filing, the Exchange 
believes that it is appropriate to use the SIP as the Primary Source of 
data for these trade and administrative messages. Limit-up limit down 
price bands, for instance, are not available on any of the direct feeds 
used by the Exchange as these bands are calculated and disseminated by 
the SIP pursuant to the Plan to Address Extraordinary Market 
Volatility. Similarly, market-wide circuit breaker decline and status 
messages, Regulation SHO state messages, and trading state messages are 
available on some but not other direct feeds. Again, the SIP is 
responsible for calculating any decline in the S&P 500 Index and 
disseminating halt messages for the market-wide circuit breaker, and 
also for disseminating other halts, resumes, and Regulation SHO state 
messages. In addition, the Exchange's trading system consumes last sale 
information from the SIP, which is used for the limited purpose of 
determining when the Exchange can open securities after an IPO.\6\ 
Although last sale information is disseminated on proprietary market 
data feeds, this information is typically included in a different 
market data product than the Exchange uses for quotation data, and the 
Exchange's trading system therefore also consumes last sale information 
from the SIP for the limited purpose described above.
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    \5\ The Exchange notes that the rule language currently provides 
that the Exchange ``utilizes'' these feeds. As a non-substantive 
change, the Exchange is changing this word to ``consumes'' as this 
word fits better with language being added to the rule.
    \6\ The Exchange waits for a last sale from the listing market 
prior to starting the Exchange's opening process following an IPO on 
another market.
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    Finally, the Exchange proposes to make additional technical 
amendments to Rule 3304. Specifically, several of the exchanges and 
direct market data feeds described in the rule have been renamed since 
the Exchange adopted the rule. The Exchange therefore propose to: (1) 
Rename the exchanges described in the rule so that the exchanges are 
identified by their new names,\7\ and (2) replace the names of the 
individual direct feeds with a generic notation that the ``Direct 
Feed'' is used to avoid the need for future updates every time an 
exchange changes the name of its proprietary market data offerings. 
These changes are technical amendments and will have no impact on the 
operation of the Exchange or its use of the identified market data 
feeds.
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    \7\ The new names of each of the exchanges described in Rule 
3304 are used earlier in this filing. See notes 4-5 supra and 
accompanying text.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\9\ in particular, in that it is designed to promote 
just and equitable principles of trade, to remove impediments to and

[[Page 58234]]

perfect the mechanism of a free and open market and a national market 
system, and, in general to protect investors and the public interest.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change removes 
impediments to and perfects the mechanism of a free and open market and 
protects investors and the public interest because it provides 
additional transparency around the purposes for which the Exchange uses 
SIP data. The proposed rule change does not change the operation of the 
Exchange or its use of data feeds; rather it clarifies the Exchange's 
rules with regard to information consumed from the SIP. Specifically, 
the proposed rule change indicates that the Exchange uses SIP data for 
certain administrative messages, including, limit-up limit-down price 
bands, market-wide circuit breaker decline and status messages, 
Regulation SHO state messages, and trading state messages (i.e., halts 
and resumes), as well as trade messages (i.e., last sale). At least one 
other exchange uses SIP data for these purposes, while continuing to 
use the direct feeds for quotation data where the direct feeds often 
offer reduced latency.\10\
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    \10\ See IEX Rule 11.410(a)(3).
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    The Exchange believes that it is appropriate to use SIP data as the 
primary source for administrative messages that originate from the SIP 
and may or may not be available on particular proprietary market data 
feeds. Although quote data used for the handling, routing, and 
execution of orders is typically available with a lower latency over 
the direct feeds, the same is not true for the administrative messages 
described above that originate from the SIP and are re-disseminated (or 
not disseminated at all) by the various direct feeds. The Exchange 
therefore believes that it is consistent with the public interest and 
protection of investors to get this information directly from the SIP, 
i.e., the official source of the information, rather than indirectly 
from proprietary market data feeds that may or may not redistribute 
such information. Furthermore, with respect to last sale information, 
such information is used by the trading system for the limited purposes 
described in this filing, and is not typically available on the direct 
feeds that the Exchange uses for quotation data. The Exchange therefore 
also believes that it is appropriate to get last sale information from 
the SIP. Where the information described in this filing is available on 
a direct feed, however, direct feed data will be used in the event 
failover is necessary, thereby adding redundancy and mitigating risks 
associated with a potential SIP outage.
    The proposed rule change also makes certain technical amendments to 
Rule 3304, including updating the names of exchanges that have been 
renamed since the adoption of this rule. The Exchange believes that it 
is consistent with the public interest and the protection of investors 
to update the names of the exchanges listed in Rule 3304 as this change 
will make it easier for market participants to identify the exchanges 
for which the Exchange uses the direct feed and/or SIP for the purposes 
described in the rule. Furthermore, the proposed rule change replaces 
the names of the direct feeds with a generic notation that the ``Direct 
Feed'' is used. The Exchange believes that this change is consistent 
with the protection of investors and the public interest as the 
exchanges may change the names of their data feeds periodically, 
resulting in the list being out of date. Rather than update the list 
every time a market changes the names of their proprietary market data 
products, the Exchange believes that it is preferable to simply explain 
that the direct feed is used. Several other exchanges also similarly 
note that the direct feed is used rather than spelling out the names of 
each feed.\11\
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    \11\ See e.g. IEX Rule 11.410(a); CBOE BZX Rule 11.26.
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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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change is 
not designed to address any competitive issue but rather would provide 
members and other market participants with information about the 
purposes for which the Exchange uses SIP data, and make other technical 
corrections to Rule 3304. No changes to the Exchange's trading or other 
systems are being introduced with the proposed rule change, and the 
Exchange believes that the proposed changes will increase transparency 
around the operation of the Exchange and its use of market data feeds 
without any significant impact 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 \12\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 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, along 
with a brief description and the 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 pursuant to Rule 19b-4(f)(6) under the 
Act \14\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \15\ permits the 
Commission to 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 proposal may become operative upon filing. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest as it will allow the 
Exchange to clarify the purposes for which the Exchange uses SIP data 
and avoid potential confusion among market participants. Accordingly, 
the Commission hereby waives the operative delay and designates the 
proposal operative upon filing.\16\
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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 also 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: (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.

[[Page 58235]]

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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-Phlx-2017-95 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-2017-95. 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 (http://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. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-Phlx-2017-95 and should be 
submitted on or before January 2, 2018.

    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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-26555 Filed 12-8-17; 8:45 am]
 BILLING CODE 8011-01-P