Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing of Proposed Rule Change To Amend Rule 1000 and Commentary .11 to Rule 1012, 61047-61050 [2017-27700]
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Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Notices
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Date of notice required under 39
U.S.C. 3642(d)(1): December 26, 2017.
FOR FURTHER INFORMATION CONTACT:
Elizabeth A. Reed, 202–268–3179.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on December 19,
2017, it filed with the Postal Regulatory
Commission a Request of the United
States Postal Service to Add Parcel
Select Contract 27 to Competitive
Product List. Documents are available at
www.prc.gov, Docket Nos. MC2018–71,
CP2018–111.
Elizabeth A. Reed,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2017–27655 Filed 12–22–17; 8:45 am]
BILLING CODE 7710–12–P
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
SUMMARY:
Date of notice required under 39
U.S.C. 3642(d)(1): December 26, 2017.
DATES:
FOR FURTHER INFORMATION CONTACT:
ACTION:
Postal ServiceTM.
Notice.
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 December
6, 2017, Nasdaq PHLX LLC (‘‘Phlx’’ or
‘‘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.
Service®
POSTAL SERVICE
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Date of notice required under 39
U.S.C. 3642(d)(1): December 26, 2017.
FOR FURTHER INFORMATION CONTACT:
Elizabeth A. Reed, 202–268–3179.
SUPPLEMENTARY INFORMATION: The
United States Postal Service ® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on December 19,
2017, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Contract 399 to
Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2018–70, CP2018–110.
SUMMARY:
Elizabeth A. Reed,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2017–27659 Filed 12–22–17; 8:45 am]
ethrower on DSK3G9T082PROD with NOTICES
BILLING CODE 7710–12–P
POSTAL SERVICE
Product Change—Parcel Select
Negotiated Service Agreement
Postal ServiceTM.
Notice.
AGENCY:
ACTION:
VerDate Sep<11>2014
20:21 Dec 22, 2017
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing of
Proposed Rule Change To Amend Rule
1000 and Commentary .11 to Rule 1012
The
United States Postal
hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on December 19,
2017, it filed with the Postal Regulatory
Commission a Request of the United
States Postal Service to Add Parcel
Select Contract 28 to Competitive
Product List. Documents are available at
www.prc.gov, Docket Nos. MC2018–72,
CP2018–112.
SUPPLEMENTARY INFORMATION:
BILLING CODE 7710–12–P
AGENCY:
[Release No. 34–82363; File No. SR–Phlx–
2017–103]
December 19, 2017.
[FR Doc. 2017–27656 Filed 12–22–17; 8:45 am]
Product Change—Priority Mail
Negotiated Service Agreement
SECURITIES AND EXCHANGE
COMMISSION
Elizabeth A. Reed, 202–268–3179.
Elizabeth A. Reed,
Attorney, Corporate and Postal Business Law.
POSTAL SERVICE
Product Change—Parcel Select
Negotiated Service Agreement
AGENCY:
ACTION:
Postal ServiceTM.
Notice.
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
SUMMARY:
Date of notice required under 39
U.S.C. 3642(d)(1): December 26, 2017.
DATES:
FOR FURTHER INFORMATION CONTACT:
Elizabeth A. Reed, 202–268–3179.
The
United States Postal Service ® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on December 19,
2017, it filed with the Postal Regulatory
Commission a Request of the United
States Postal Service to Add Parcel
Select Contract 29 to Competitive
Product List. Documents are available at
www.prc.gov, Docket Nos. MC2018–73,
CP2018–113.
SUPPLEMENTARY INFORMATION:
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to expand the
Short Term Option Series Program to
allow Monday expirations for options
listed pursuant to the Short Term
Option Series Program, including
options on the SPDR S&P 500 ETF
Trust.
The text of the proposed rule change
is available on the Exchange’s website 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.
Elizabeth A. Reed,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2017–27657 Filed 12–22–17; 8:45 am]
1 15
BILLING CODE 7710–12–P
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Notices
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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 proposes to amend
Phlx Rules 1000(b)(44) and Rule 1012 at
Commentary .11 to expand the Short
Term Option Series Program
(‘‘Program’’) to permit the listing and
trading of options series with Monday
expirations that are listed pursuant to
the Program, including options on the
SPDR S&P 500 ETF Trust (‘‘SPY’’).
As set forth in Rule 1044(b)(44), a
Short Term Option Series is a series in
an option class that is approved for
listing and trading on the Exchange in
which the series is opened for trading
on any Tuesday, Wednesday, Thursday
or Friday that is a business day and that
expires on the Wednesday or Friday of
the next business week. The Exchange
is now proposing to amend Rule
1000(b)(44) to permit the listing of
options series that expire on Mondays.
Specifically, the Exchange is proposing
that it may open for trading series of
options on any Monday that is a
business day and that expires on the
Monday of the next business week. The
Exchange is also proposing to list
Monday expirations series on Fridays
that precede the expiration Monday by
one business week plus one business
day. Since Rule 1000(b)(44) already
provides for the listing of short term
option series on Fridays, the Exchange
is not modifying this provision to allow
for Friday listing of Monday expiration
series. However, the Exchange is
amending Rule 1000(b)(44) to clarify
that, in the case of a series that is listed
on a Friday and expires on a Monday,
that series must be listed one business
week and one business day prior to that
expiration (i.e., two Fridays prior to
expiration).
As part of this proposal, the Exchange
is also amending Rule 1000(b)(44) to
address the expiration of Monday
expiration series when the Monday is
not a business day. In that case, the rule
will provide that the series shall expire
on the first business day immediately
following that Monday. This procedure
differs from the expiration date of
Wednesday expiration series that are
scheduled to expire on a holiday. In that
case, the Wednesday expiration series
shall expire on the first business day
immediately prior to that Wednesday,
e.g., Tuesday of that week.3 However,
the Exchange believes that it is
preferable to require Monday expiration
series in this scenario to expire on the
3 See
Phlx Rule 1000(b)(44).
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20:21 Dec 22, 2017
Jkt 244001
Tuesday of that week rather than the
previous business day, e.g., the previous
Friday, since the Tuesday is closer in
time to the scheduled expiration date of
the series than the previous Friday, and
therefore may be more representative of
anticipated market conditions. The
Exchange also notes that Cboe
Exchange, Inc. (‘‘Cboe’’) uses the same
procedure for options on the S&P 500
index (‘‘SPX’’) with Monday expirations
that listed pursuant to its Nonstandard
Expirations Pilot Program and that are
scheduled to expire on a holiday.4
The Exchange also proposes to make
corresponding changes to Commentary
.11 to Rule 1012, which sets forth the
requirements for SPY options that are
listed pursuant to the Short Term
Options Series Program, to permit
Monday SPY expirations (‘‘Monday SPY
Expirations’’). Accordingly, the
Exchange proposes to amend
Commentary .11 to state that, with
respect to Monday SPY Expirations, the
Exchange may open for trading on any
Friday or Monday that is a business day
series of options on the SPY to expire
on any Monday of the month that is a
business day and is not a Monday in
which Quarterly Options Series expire,
provided that Monday SPY Expirations
that are listed on a Friday must be listed
at least one business week and one
business day prior to the expiration. As
with the current rules for Wednesday
SPY Expirations, the Exchange will also
amend Commentary .11 to state that it
may list up to five consecutive Monday
SPY Expirations at one time, and may
have no more than a total of five
Monday SPY Expirations (in addition to
a maximum of five Short Term Option
Series expirations for SPY expiring on
Friday and five Wednesday SPY
Expirations). The Exchange will also
clarify that, as with Wednesday SPY
Expirations, Monday SPY Expirations
will be subject to the provisions of this
Rule.
The interval between strike prices for
the proposed Monday SPY Expirations
will be the same as those for the current
Short Term Option Series for
Wednesday and Friday SPY Expirations.
Specifically, the Monday SPY
Expirations will have a $0.50 strike
interval minimum. As is the case with
other options series listed pursuant to
the Short Term Option Series, the
4 See CBOE Rule 24.9(e)(1) (‘‘If the Exchange is
not open for business on a respective Monday, the
normally Monday expiring Weekly Expirations will
expire on the following business day. If the
Exchange is not open for business on a respective
Wednesday or Friday, the normally Wednesday or
Friday expiring Weekly Expirations will expire on
the previous business day.’’)
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Monday SPY Expiration series will be
P.M.-settled.
Currently, for each option class
eligible for participation in the Program,
the Exchange is limited to opening
thirty (30) series for each expiration date
for the specific class. The thirty (30)
series restriction does not include series
that are open by other securities
exchanges under their respective short
term option rules; the Exchange may list
these additional series that are listed by
other exchanges.5 This thirty (30) series
restriction shall apply to Monday SPY
Expiration series as well. In addition,
the Exchange will be able to list series
that are listed by other exchanges,
assuming they file similar rules with the
Commission to list SPY options expiring
on Mondays.
Finally, the Exchange is amending
Commentary .11(b) to Rule 1012, which
addresses the listing of Short Term
Options Series that expire in the same
week as monthly or quarterly options
series. Currently, that rule states that no
Short Term Option Series may expire in
the same week in which monthly option
series on the same class expire (with the
exception of Wednesday SPY
Expirations) or, in the case of Quarterly
Options Series, on an expiration that
coincides with an expiration of
Quarterly Option Series on the same
class. As with Wednesday SPY
Expirations, the Exchange is proposing
to permit Monday SPY Expirations to
expire in the same week as monthly
options series on the same class. The
Exchange believes that it is reasonable
to extend this exemption to Monday
SPY Expirations because Monday SPY
Expirations and standard monthly
options will not expire on the same
trading day, as standard monthly
options expire on Fridays. Additionally,
the Exchange believes that not listing
Monday SPY Expirations for one week
every month because there was a
monthly SPY expiration on the Friday
of that week would create investor
confusion.
Relatedly, Phlx is also amending
Commentary .11(b) to Rule 1012 to
clarify that Monday and Wednesday
SPY Expirations may expire in the same
week as monthly option series in the
same class expire, but that no Short
Term Option Series may expire on the
same day as an expiration of Quarterly
Option Series on the same class. This
change will make that provision more
consistent with the existing language in
Commentary .11 that prohibits
Wednesday SPY Expirations from
expiring on a Wednesday in which
Quarterly Options Series expire.
5 See
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Phlx Rule 1012 at Commentary .11(a).
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The Exchange does not believe that
any market disruptions will be
encountered with the introduction of
P.M.-settled Monday expirations. The
Exchange has the necessary capacity
and surveillance programs in place to
support and properly monitor trading in
the proposed Monday expiration series,
including Monday SPY Expirations. The
Exchange currently trades P.M.-settled
Short Term Option Series that expire
almost every Wednesday and Friday,
which provide market participants a
tool to hedge special events and to
reduce the premium cost of buying
protection. The Exchange notes that it
has been listing Wednesday expirations
pursuant to Rule 1000 and Rule 1012
since 2016.6 With the exception of
Monday expiration series that are
scheduled to expire on a holiday, the
Exchange does not believe that there are
any material differences between
Monday expirations and Wednesday or
Friday expirations for Short Term
Option Series.
The Exchange seeks to introduce
Monday expirations to, among other
things, expand hedging tools available
to market participants and to continue
the reduction of the premium cost of
buying protection. The Exchange
believes that Monday expirations,
similar to Wednesday and Friday
expirations, will allow market
participants to purchase an option based
on their timing as needed and allow
them to tailor their investment and
hedging needs more effectively.
While other exchanges do not
currently list Monday SPY Expirations,
the Exchange notes that other exchanges
currently permit Monday expirations for
other options. For example, Cboe lists
options on the SPX with a Monday
expiration as part of its Nonstandard
Expirations Pilot Program.7
2. Statutory Basis
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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
perfect the mechanism of a free and
open market and a national market
6 See Securities Exchange Act Release No. 78693
(August 26, 2016), 81 FR 60074 (August 31, 2016)
(SR–Phlx–2016–89).
7 See CBOE Rule 24.9(e)(1) (‘‘The Exchange may
open for trading Weekly Expirations on any broadbased index eligible for standard options trading to
expire on any Monday, Wednesday, or Friday (other
than the third Friday-of-the-month or days that
coincide with an EOM expiration.’’).
8 15 U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(5).
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20:21 Dec 22, 2017
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system, and, in general to protect
investors and the public interest.
In particular, the Exchange believes
the Short Term Option Series Program
has been successful to date and that
Monday expirations, including Monday
SPY Expirations, simply expand the
ability of investors to hedge risk against
market movements stemming from
economic releases or market events that
occur throughout the month in the same
way that the Short Term Option Series
Program has expanded the landscape of
hedging. Similarly, the Exchange
believes Monday expirations, including
Monday SPY Expirations, should create
greater trading and hedging
opportunities and flexibility, and will
provide customers with the ability to
tailor their investment objectives more
effectively. While other exchanges do
not currently list Monday SPY
Expirations, the Exchange notes that
Cboe currently permits Monday
expirations for other options with a
weekly expiration, such as options on
the SPX.
With the exception of Monday
expiration series that are scheduled to
expire on a holiday, the Exchange does
not believe that there are any material
differences between Monday
expirations, including Monday SPY
expirations, and Wednesday or Friday
expirations, including Wednesday and
Friday SPY Expirations, for Short Term
Option Series. The Exchange notes that
it has been listing Wednesday
expirations pursuant to Rule 1000 and
Rule 1012 since 2016. The Exchange
believes that it is consistent with the
Act to treat Monday expiration series
that expire on a holiday differently than
Wednesday or Friday expiration series,
since the proposed treatment for
Monday expiration series will result in
an expiration date that is closer in time
to the scheduled expiration date of the
series, and therefore may be more
representative of anticipated market
conditions. The Exchange also notes
that Cboe uses the same procedure for
SPX options with Monday expirations
that are listed pursuant to its
Nonstandard Expirations Pilot Program
and that are scheduled to expire on a
holiday.
Given the similarities between
Monday SPY Expiration series and
Wednesday and Friday SPY Expiration
series, the Exchange believes that
applying the provisions in Commentary
.11 to Rule 1012 that currently apply to
Wednesday SPY Expirations to Monday
SPY Expirations is justified. For
example, the Exchange believes that
allowing Monday SPY Expirations and
monthly SPY expirations in the same
week will benefit investors and
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61049
minimize investor confusion by
providing Monday SPY Expirations in a
continuous and uniform manner. The
Exchange also believes that is
appropriate to amend Commentary
.11(b) to Rule 1012 to clarify that no
Short Term Option Series may expire on
the same day as an expiration of
Quarterly Option Series on the same
class. This change will make that
provision more consistent with the
existing language in Commentary .11
that prohibits Wednesday SPY
Expirations from expiring on a
Wednesday in which Quarterly Options
Series expire.
Finally, the Exchange represents that
it has an adequate surveillance program
in place to detect manipulative trading
in Monday expirations, including
Monday SPY Expirations, in the same
way that it monitors trading in the
current Short Term Option Series. The
Exchange also represents that it has the
necessary systems capacity to support
the new options series.
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
Exchange notes that having Monday
expirations is not a novel proposal, as
Cboe currently lists and trades shortterm SPX options with a Monday
expiration. The Exchange does not
believe the proposal will impose any
burden on intra-market competition, as
all market participants will be treated in
the same manner under this proposal.
Additionally, the Exchange does not
believe the proposal will impose any
burden on inter-market competition, as
nothing prevents the other options
exchanges from proposing similar rules
to list and trade short-term options
series with Monday expirations.
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,
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Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Notices
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
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–2017–103 on the subject line.
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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–2017–103. 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 website (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 website 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–
2017–103 and should be submitted on
or before January 16, 2018. For the
Commission, by the Division of Trading
20:21 Dec 22, 2017
Jkt 244001
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–27700 Filed 12–22–17; 8:45 am]
BILLING CODE 8011–01–P
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:
VerDate Sep<11>2014
and Markets, pursuant to delegated
authority.10
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82367; File No. SR–BX–
2017–056]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend the Penny
Pilot Program
December 19, 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 December
11, 2017, Nasdaq BX, Inc. (‘‘BX’’ 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 Substance of
the Proposed Rule Change
The Exchange proposes to amend
Chapter VI, Section 5 (Minimum
Increments),3 to extend through June 30,
2018 or the date of permanent approval,
if earlier, the Penny Pilot Program in
options classes in certain issues (‘‘Penny
Pilot’’ or ‘‘Pilot’’), and to change the
date when delisted classes may be
replaced in the Penny Pilot.
The text of the proposed rule change
is set forth below. Proposed new
language is underlined; deleted text is
in brackets.
*
*
*
*
*
Nasdaq BX Rules
Options Rules
*
*
*
*
*
Chapter VI Trading Systems
*
*
*
*
*
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 References herein to Chapter and Series refer to
rules of the BX Options Market (‘‘BX Options’’),
unless otherwise noted.
1 15
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Sec. 5
Minimum Increments
(a) The Board may establish minimum
quoting increments for options contracts
traded on BX Options. Such minimum
increments established by the Board
will be designated as a stated policy,
practice, or interpretation with respect
to the administration of this Section
within the meaning of Section 19 of the
Exchange Act and will be filed with the
SEC as a rule change for effectiveness
upon filing. Until such time as the
Board makes a change in the
increments, the following principles
shall apply:
(1)–(2) No Change.
(3) For a pilot period scheduled to
expire on [December 31, 2017]June 30,
2018 or the date of permanent approval,
if earlier, if the options series is trading
pursuant to the Penny Pilot program one
(1) cent if the options series is trading
at less than $3.00, five (5) cents if the
options series is trading at $3.00 or
higher, unless for QQQQs, SPY and
IWM where the minimum quoting
increment will be one cent for all series
regardless of price. A list of such
options shall be communicated to
membership via an Options Trader Alert
(‘‘OTA’’) posted on the Exchange’s
website.
The Exchange may replace any pilot
issues that have been delisted with the
next most actively traded multiply
listed options classes that are not yet
included in the pilot, based on trading
activity in the previous six months. The
replacement issues may be added to the
pilot on the second trading day
following [July 1, 2017]January 1, 2018.
(4) No Change.
(b) No Change.
*
*
*
*
*
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.
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]]>Agencies
[Federal Register Volume 82, Number 246 (Tuesday, December 26, 2017)]
[Notices]
[Pages 61047-61050]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27700]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82363; File No. SR-Phlx-2017-103]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
of Proposed Rule Change To Amend Rule 1000 and Commentary .11 to Rule
1012
December 19, 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 December 6, 2017, Nasdaq PHLX LLC (``Phlx'' or ``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.
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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 Substance
of the Proposed Rule Change
The Exchange proposes to expand the Short Term Option Series
Program to allow Monday expirations for options listed pursuant to the
Short Term Option Series Program, including options on the SPDR S&P 500
ETF Trust.
The text of the proposed rule change is available on the Exchange's
website 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.
[[Page 61048]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Phlx Rules 1000(b)(44) and Rule 1012
at Commentary .11 to expand the Short Term Option Series Program
(``Program'') to permit the listing and trading of options series with
Monday expirations that are listed pursuant to the Program, including
options on the SPDR S&P 500 ETF Trust (``SPY'').
As set forth in Rule 1044(b)(44), a Short Term Option Series is a
series in an option class that is approved for listing and trading on
the Exchange in which the series is opened for trading on any Tuesday,
Wednesday, Thursday or Friday that is a business day and that expires
on the Wednesday or Friday of the next business week. The Exchange is
now proposing to amend Rule 1000(b)(44) to permit the listing of
options series that expire on Mondays. Specifically, the Exchange is
proposing that it may open for trading series of options on any Monday
that is a business day and that expires on the Monday of the next
business week. The Exchange is also proposing to list Monday
expirations series on Fridays that precede the expiration Monday by one
business week plus one business day. Since Rule 1000(b)(44) already
provides for the listing of short term option series on Fridays, the
Exchange is not modifying this provision to allow for Friday listing of
Monday expiration series. However, the Exchange is amending Rule
1000(b)(44) to clarify that, in the case of a series that is listed on
a Friday and expires on a Monday, that series must be listed one
business week and one business day prior to that expiration (i.e., two
Fridays prior to expiration).
As part of this proposal, the Exchange is also amending Rule
1000(b)(44) to address the expiration of Monday expiration series when
the Monday is not a business day. In that case, the rule will provide
that the series shall expire on the first business day immediately
following that Monday. This procedure differs from the expiration date
of Wednesday expiration series that are scheduled to expire on a
holiday. In that case, the Wednesday expiration series shall expire on
the first business day immediately prior to that Wednesday, e.g.,
Tuesday of that week.\3\ However, the Exchange believes that it is
preferable to require Monday expiration series in this scenario to
expire on the Tuesday of that week rather than the previous business
day, e.g., the previous Friday, since the Tuesday is closer in time to
the scheduled expiration date of the series than the previous Friday,
and therefore may be more representative of anticipated market
conditions. The Exchange also notes that Cboe Exchange, Inc. (``Cboe'')
uses the same procedure for options on the S&P 500 index (``SPX'') with
Monday expirations that listed pursuant to its Nonstandard Expirations
Pilot Program and that are scheduled to expire on a holiday.\4\
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\3\ See Phlx Rule 1000(b)(44).
\4\ See CBOE Rule 24.9(e)(1) (``If the Exchange is not open for
business on a respective Monday, the normally Monday expiring Weekly
Expirations will expire on the following business day. If the
Exchange is not open for business on a respective Wednesday or
Friday, the normally Wednesday or Friday expiring Weekly Expirations
will expire on the previous business day.'')
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The Exchange also proposes to make corresponding changes to
Commentary .11 to Rule 1012, which sets forth the requirements for SPY
options that are listed pursuant to the Short Term Options Series
Program, to permit Monday SPY expirations (``Monday SPY Expirations'').
Accordingly, the Exchange proposes to amend Commentary .11 to state
that, with respect to Monday SPY Expirations, the Exchange may open for
trading on any Friday or Monday that is a business day series of
options on the SPY to expire on any Monday of the month that is a
business day and is not a Monday in which Quarterly Options Series
expire, provided that Monday SPY Expirations that are listed on a
Friday must be listed at least one business week and one business day
prior to the expiration. As with the current rules for Wednesday SPY
Expirations, the Exchange will also amend Commentary .11 to state that
it may list up to five consecutive Monday SPY Expirations at one time,
and may have no more than a total of five Monday SPY Expirations (in
addition to a maximum of five Short Term Option Series expirations for
SPY expiring on Friday and five Wednesday SPY Expirations). The
Exchange will also clarify that, as with Wednesday SPY Expirations,
Monday SPY Expirations will be subject to the provisions of this Rule.
The interval between strike prices for the proposed Monday SPY
Expirations will be the same as those for the current Short Term Option
Series for Wednesday and Friday SPY Expirations. Specifically, the
Monday SPY Expirations will have a $0.50 strike interval minimum. As is
the case with other options series listed pursuant to the Short Term
Option Series, the Monday SPY Expiration series will be P.M.-settled.
Currently, for each option class eligible for participation in the
Program, the Exchange is limited to opening thirty (30) series for each
expiration date for the specific class. The thirty (30) series
restriction does not include series that are open by other securities
exchanges under their respective short term option rules; the Exchange
may list these additional series that are listed by other exchanges.\5\
This thirty (30) series restriction shall apply to Monday SPY
Expiration series as well. In addition, the Exchange will be able to
list series that are listed by other exchanges, assuming they file
similar rules with the Commission to list SPY options expiring on
Mondays.
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\5\ See Phlx Rule 1012 at Commentary .11(a).
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Finally, the Exchange is amending Commentary .11(b) to Rule 1012,
which addresses the listing of Short Term Options Series that expire in
the same week as monthly or quarterly options series. Currently, that
rule states that no Short Term Option Series may expire in the same
week in which monthly option series on the same class expire (with the
exception of Wednesday SPY Expirations) or, in the case of Quarterly
Options Series, on an expiration that coincides with an expiration of
Quarterly Option Series on the same class. As with Wednesday SPY
Expirations, the Exchange is proposing to permit Monday SPY Expirations
to expire in the same week as monthly options series on the same class.
The Exchange believes that it is reasonable to extend this exemption to
Monday SPY Expirations because Monday SPY Expirations and standard
monthly options will not expire on the same trading day, as standard
monthly options expire on Fridays. Additionally, the Exchange believes
that not listing Monday SPY Expirations for one week every month
because there was a monthly SPY expiration on the Friday of that week
would create investor confusion.
Relatedly, Phlx is also amending Commentary .11(b) to Rule 1012 to
clarify that Monday and Wednesday SPY Expirations may expire in the
same week as monthly option series in the same class expire, but that
no Short Term Option Series may expire on the same day as an expiration
of Quarterly Option Series on the same class. This change will make
that provision more consistent with the existing language in Commentary
.11 that prohibits Wednesday SPY Expirations from expiring on a
Wednesday in which Quarterly Options Series expire.
[[Page 61049]]
The Exchange does not believe that any market disruptions will be
encountered with the introduction of P.M.-settled Monday expirations.
The Exchange has the necessary capacity and surveillance programs in
place to support and properly monitor trading in the proposed Monday
expiration series, including Monday SPY Expirations. The Exchange
currently trades P.M.-settled Short Term Option Series that expire
almost every Wednesday and Friday, which provide market participants a
tool to hedge special events and to reduce the premium cost of buying
protection. The Exchange notes that it has been listing Wednesday
expirations pursuant to Rule 1000 and Rule 1012 since 2016.\6\ With the
exception of Monday expiration series that are scheduled to expire on a
holiday, the Exchange does not believe that there are any material
differences between Monday expirations and Wednesday or Friday
expirations for Short Term Option Series.
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\6\ See Securities Exchange Act Release No. 78693 (August 26,
2016), 81 FR 60074 (August 31, 2016) (SR-Phlx-2016-89).
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The Exchange seeks to introduce Monday expirations to, among other
things, expand hedging tools available to market participants and to
continue the reduction of the premium cost of buying protection. The
Exchange believes that Monday expirations, similar to Wednesday and
Friday expirations, will allow market participants to purchase an
option based on their timing as needed and allow them to tailor their
investment and hedging needs more effectively.
While other exchanges do not currently list Monday SPY Expirations,
the Exchange notes that other exchanges currently permit Monday
expirations for other options. For example, Cboe lists options on the
SPX with a Monday expiration as part of its Nonstandard Expirations
Pilot Program.\7\
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\7\ See CBOE Rule 24.9(e)(1) (``The Exchange may open for
trading Weekly Expirations on any broad-based index eligible for
standard options trading to expire on any Monday, Wednesday, or
Friday (other than the third Friday-of-the-month or days that
coincide with an EOM expiration.'').
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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
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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In particular, the Exchange believes the Short Term Option Series
Program has been successful to date and that Monday expirations,
including Monday SPY Expirations, simply expand the ability of
investors to hedge risk against market movements stemming from economic
releases or market events that occur throughout the month in the same
way that the Short Term Option Series Program has expanded the
landscape of hedging. Similarly, the Exchange believes Monday
expirations, including Monday SPY Expirations, should create greater
trading and hedging opportunities and flexibility, and will provide
customers with the ability to tailor their investment objectives more
effectively. While other exchanges do not currently list Monday SPY
Expirations, the Exchange notes that Cboe currently permits Monday
expirations for other options with a weekly expiration, such as options
on the SPX.
With the exception of Monday expiration series that are scheduled
to expire on a holiday, the Exchange does not believe that there are
any material differences between Monday expirations, including Monday
SPY expirations, and Wednesday or Friday expirations, including
Wednesday and Friday SPY Expirations, for Short Term Option Series. The
Exchange notes that it has been listing Wednesday expirations pursuant
to Rule 1000 and Rule 1012 since 2016. The Exchange believes that it is
consistent with the Act to treat Monday expiration series that expire
on a holiday differently than Wednesday or Friday expiration series,
since the proposed treatment for Monday expiration series will result
in an expiration date that is closer in time to the scheduled
expiration date of the series, and therefore may be more representative
of anticipated market conditions. The Exchange also notes that Cboe
uses the same procedure for SPX options with Monday expirations that
are listed pursuant to its Nonstandard Expirations Pilot Program and
that are scheduled to expire on a holiday.
Given the similarities between Monday SPY Expiration series and
Wednesday and Friday SPY Expiration series, the Exchange believes that
applying the provisions in Commentary .11 to Rule 1012 that currently
apply to Wednesday SPY Expirations to Monday SPY Expirations is
justified. For example, the Exchange believes that allowing Monday SPY
Expirations and monthly SPY expirations in the same week will benefit
investors and minimize investor confusion by providing Monday SPY
Expirations in a continuous and uniform manner. The Exchange also
believes that is appropriate to amend Commentary .11(b) to Rule 1012 to
clarify that no Short Term Option Series may expire on the same day as
an expiration of Quarterly Option Series on the same class. This change
will make that provision more consistent with the existing language in
Commentary .11 that prohibits Wednesday SPY Expirations from expiring
on a Wednesday in which Quarterly Options Series expire.
Finally, the Exchange represents that it has an adequate
surveillance program in place to detect manipulative trading in Monday
expirations, including Monday SPY Expirations, in the same way that it
monitors trading in the current Short Term Option Series. The Exchange
also represents that it has the necessary systems capacity to support
the new options series.
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 Exchange notes that having
Monday expirations is not a novel proposal, as Cboe currently lists and
trades short-term SPX options with a Monday expiration. The Exchange
does not believe the proposal will impose any burden on intra-market
competition, as all market participants will be treated in the same
manner under this proposal. Additionally, the Exchange does not believe
the proposal will impose any burden on inter-market competition, as
nothing prevents the other options exchanges from proposing similar
rules to list and trade short-term options series with Monday
expirations.
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,
[[Page 61050]]
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 [email protected]. Please include
File Number SR-Phlx-2017-103 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-2017-103. 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 website (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 website 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-2017-103 and should be
submitted on or before January 16, 2018. For the Commission, by the
Division of Trading and Markets, pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-27700 Filed 12-22-17; 8:45 am]
BILLING CODE 8011-01-P
