Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Phlx's Pricing Schedule, 5525-5531 [2020-01647]
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Federal Register / Vol. 85, No. 20 / Thursday, January 30, 2020 / Notices
not been paid since the date on which
it should have been paid.
[(f) Gross Revenues. The term ‘‘gross
revenues from the securities business’’
includes the revenues in the definition
of gross revenues from the securities
business set forth in the applicable
sections of the Act.
(g) Net Operating Revenues. The term
‘‘net operating revenues from the
securities business’’ means gross
revenues from the securities business
less interest and dividend expenses, and
includes those clarifications as are set
forth in the SIPC assessment forms and
instructions.]
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Section 2. Overpayments
If the final annual reconciliation filed
by a terminated member reflects an
assessment overpayment carried
forward that exceeds $150.00, SIPC may
refund such excess to the member upon
receipt of the member’s written request
therefor and after [the member’s] SIPC
[collection agent] has confirmed [to
SIPC]that all of the member’s SIPC
assessment form filings and payments
and reports required by SEC Rule 17a–
5 covering periods through the
termination date have been reviewed
and accepted.
Section 3. Interpretation of Terms
(a) For purposes of calculating
assessments [this article]:
[(a)](i) The term ‘‘securities in trading
accounts’’ shall mean securities held for
sale in the ordinary course of business
and not identified as having been held
for investment.
[(b)](ii) The term ‘‘securities in
investment accounts’’ shall mean
securities that are clearly identified as
having been acquired for investment in
accordance with provisions of the
Internal Revenue Code applicable to
dealers in securities.
[(c)](iii) The term ‘‘fees and other
income from such other categories of the
securities business’’ shall mean all
revenue related either directly or
indirectly to the securities business
except revenue included in Section
16(9)(A)–(K) and revenue specifically
excepted in Section 4(c)(3)(C).
(b) For purposes of this Article:
(i) Gross Revenues. The term ‘‘gross
revenues from the securities business’’
includes the revenues in the definition
of gross revenues from the securities
business set forth in the applicable
sections of the Act.
(ii) Net Operating Revenues. The term
‘‘net operating revenues from the
securities business’’ means gross
revenues from the securities business
less interest and dividend expenses, and
includes those clarifications as are set
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forth in the SIPC assessment forms and
instructions.
(iii) SIPC Fund or Fund. The term
‘‘SIPC Fund’’ or ‘‘Fund’’ is as defined in
Section 4(a)(2) of the Act, exclusive of
confirmed lines of credit.
(iv) SIPC’s unrestricted net assets. The
term ‘‘SIPC’s unrestricted net assets’’
means the lesser of SIPC’s unrestricted
net assets as reflected in SIPC’s most
recent audited Statement of Financial
Position or reasonably expected by SIPC
to be reflected in its next audited
Statement of Financial Position.
5525
All submissions should refer to File
Number SIPC–2019–02, and should be
submitted on orbefore February 20,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–01610 Filed 1–29–20; 8:45 am]
BILLING CODE 8011–01–P
V. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing by
any of the following methods:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/other.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number
SIPC–2019–02 on the subject line.
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Phlx’s Pricing
Schedule
Paper Comments
• Send paper comments to Secretary,
Securities and Exchange Commission,
100 F Street NE, Washington, DC
20549–1090.
All comments should refer to File
Number SIPC–2019–02. 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/other.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed bylaw
changes that are filed with the
Commission, and all written
communications relating to the
proposed bylaw changes 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 Commission. 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.
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[Release No. 34–88036; File No. SR–Phlx–
2020–02]
January 24, 2020.
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 January
14, 2020, Nasdaq PHLX LLC (‘‘Phlx’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Phlx’s Pricing Schedule. Specifically,
the Exchange proposes to amend
Options 7, Section 4, titled ‘‘Multiply
Listed Options Fees (Includes options
overlying equities, ETFs, ETNs and
indexes which are Multiply Listed).’’
The Exchange originally filed the
proposed pricing changes on January 2,
2020 (SR-Phlx-2020–01). On January 14,
2020, the Exchange withdrew that filing
and submitted this filing.
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.
20 17
CFR 200.30–3(f)(2)(i); 17 CFR 200.30–3(f)(3).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Phlx proposes to amend its Pricing
Schedule at Options 7, Section 4, titled
‘‘Multiply Listed Options Fees (Includes
options overlying equities, ETFs, ETNs
and indexes which are Multiply
Listed).’’ The Exchange proposes to
amend pricing for certain strategy caps.
The Exchange believes the proposed
amendments will incentivize market
participants to transact various options
strategies on Phlx to take advantage of
the opportunity to cap floor option
transaction charges and lower their
costs.
Today, to qualify for a strategy cap,
the buy and sell side of a transaction
must originate from the Exchange floor.3
Today, the Exchange offers the
following strategy caps:
Floor Options Transactions—Multiply Listed Options
Strategy
Qualification
Specialist, Market Maker, Professional, Firm and
Broker-Dealer.
dividend, merger and short stock
interest strategies.
Specialist, Market Maker, Professional, Firm and
Broker-Dealer.
Specialist, Market Maker, Professional, Firm and
Broker-Dealer.
Specialist, Market Maker, Professional, Firm and
Broker-Dealer.
Per member organization ...........................................
reversal and conversion strategies
executed on the same trading day
in the same options class when
such members are trading in
their own proprietary accounts..
executed on the same trading day
in the same options class.
executed on the same trading day
in the same options class.
executed on the same trading day
in the same options class.
combined executions in a month
when trading in own proprietary
accounts.
jelly rolls .........................................
box spreads ...................................
dividend, merger, short stock interest, reversal and conversion,
jelly roll and box spread strategies (‘‘Monthly Strategy Cap’’).
Cap
$1,500
700
700
700
65,000
Today, to qualify for a dividend cap,
a Specialist, Market Maker, Professional,
Firm or Broker-Dealer must execute on
the same trading day in the same
options class when such members are
trading in their own proprietary
accounts. If the qualification is met,
Specialists, Market Makers,
Professionals, Firms and Broker-Dealers
floor option transaction charges are
capped at $1,500. The Exchange
proposes to amend the qualification for
Specialists, Market Makers,
Professionals, Firms and Broker-Dealers
dividend strategies by lowering the cap
from $1,500 to $1,100 and also
amending the qualification for dividend
strategies. The proposed qualification
would be expanded to allow Specialists,
Market Makers, Professionals, Firms and
Broker-Dealers to qualify for the cap by
executing on the same trading in the
same options class when (1) such
members are trading in their own
proprietary account, as is the case today,
or (2) when transacted on an agency
basis. If transacted on an agency basis,
the daily cap will apply per beneficial
account. For example, if Firm A
transacted $600 of qualifying dividend
strategies for customer A, $1,500
qualifying dividend strategies for
customer B and $2,000 qualifying
dividend strategies for customer C, then
customer A would not qualify for a
3 See Phlx’s Pricing Schedule at Options 7,
Section 4.
4 Today, reversal and conversion, jelly roll and
box spread strategy executions are not included in
the Monthly Strategy Cap for a Firm. Also, all
dividend, merger, short stock interest, reversal and
conversion, jelly roll and box spread strategy
executions are excluded from the Monthly Market
Maker Cap. Specialists and Market Makers are
subject to a ‘‘Monthly Market Maker Cap’’ of
$500,000 which is explained in greater detail
within Options 7, Section 4.
5 The term ‘‘Specialist’’ applies to transactions for
the account of a Specialist (as defined in Exchange
Rule 1020(a)). A Specialist is an Exchange member
who is registered as an options specialist pursuant
to Rule 1020(a). An options Specialist includes a
Remote Specialist which is defined as an options
specialist in one or more classes that does not have
a physical presence on an Exchange floor and is
approved by the Exchange pursuant to Rule 501.
6 The term ‘‘Market Maker’’ will be utilized to
describe fees and rebates applicable to Registered
Options Traders, Streaming Quote Traders
(‘‘SQTs’’) and Remote Streaming Quote Traders
(‘‘RSQTs’’). RSQTs may also be referred to as
Remote Market Markers (‘‘RMMs’’). The term
‘‘Registered Option Trader’’ or ‘‘ROT’’ is defined in
Exchange Rule 1000(b)(57). A ROT includes SQTs
and RSQTs as well as on and off-floor ROTS. The
term ‘‘Streaming Quote Trader’’ is defined in
Exchange Rule 1000(b)(59). The term ‘‘Remote
Streaming Quote Trader’’ is defined in Exchange
Rule in 1000(b)(60). A Remote Streaming Quote
Trader Organization or ‘‘RSQTO,’’ which may also
be referred to as a Remote Market Making
Organization (‘‘RMO’’), is a member organization in
good standing that satisfies the RSQTO readiness
requirements in Rule 507(a).
7 The term ‘‘Professional’’ applies to transactions
for the accounts of Professionals, as defined in
Exchange Rule 1000(b)(14) means any person or
entity that (i) is not a broker or dealer in securities,
and (ii) places more than 390 orders in listed
options per day on average during a calendar month
for its own beneficial account(s).
8 The term ‘‘Firm’’ applies to any transaction that
is identified by a member or member organization
for clearing in the Firm range at The Options
Clearing Corporation. See Options 7, Section 1.
9 The term ‘‘Broker-Dealer’’ applies to any
transaction which is not subject to any of the other
transaction fees applicable within a particular
category. See Options 7, Section 1.
10 A dividend strategy is defined as transactions
done to achieve a dividend arbitrage involving the
purchase, sale and exercise of in-the-money options
of the same class, executed the first business day
prior to the date on which the underlying stock goes
ex-dividend. See Options 7, Section 4.
11 A merger strategy is defined as transactions
done to achieve a merger arbitrage involving the
purchase, sale and exercise of options of the same
class and expiration date, executed the first
business day prior to the date on which
shareholders of record are required to elect their
respective form of consideration, i.e., cash or stock.
See Options 7, Section 4.
12 A short stock interest strategy is defined as
transactions done to achieve a short stock interest
arbitrage involving the purchase, sale and exercise
of in-the-money options of the same class. See
Options 7, Section 4.
NDX and NDXP Options Transactions
are excluded from Strategy Cap pricing.4
The Exchange proposes to amend the
strategy caps applicable to Specialists,5
Market Makers,6 Professionals,7 Firms 8
and Broker-Dealers 9 with respect to
dividend,10 merger 11 and short stock
interest 12 strategies.
Dividend Strategy
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the most significant aspects of such
statements.
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dividend strategy cap and customers B
and C would each separately cap at
$1,100 for qualifying dividend strategies
pursuant to this proposal. The Exchange
believes that its proposal will
incentivize members to transact a
greater number of dividend strategies
because the cap is being lowered from
$1,500 to $1,100 and the Exchange is
permitting members to qualify for the
cap by transacting dividend strategies
either in their proprietary account or on
an agency basis.
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Merger and Short Stock Interest
Strategies
The Exchange proposes to amend the
current merger and short stock interest
strategy cap which require the strategies
to be executed on the same trading day
in the same options class when such
members are trading in their own
proprietary accounts, to qualify for a
$1,500 cap. The Exchange proposes to
instead require Specialists, Market
Makers, Professionals, Firms and
Broker-Dealers that transact merger and
short stock interest strategies, along
with reversal, conversion, jelly roll and
box spread strategies, to execute these
strategies on the same trading day for all
options classes in the aggregate when
such members are trading (1) in their
own proprietary accounts, as is the case
today, or (2) on an agency basis. If
transacted on an agency basis, the daily
cap will apply per beneficial account.
The Exchange would offer a cap of
$1,100 to Specialists, Market Makers,
Professionals, Firms and Broker-Dealers
who qualify for the merger, short stock
interest, reversal, conversion, jelly roll
and box spread strategies, collectively.
The Exchange believes that its proposal
will incentivize members to transact a
greater number of merger and short
stock interest strategies because the cap
for merger and short stock interest
strategies is being lowered from $1,500
to $1,100 and the Exchange is
permitting members to aggregate all
options classes to qualify for the cap
and also permitting members to transact
merger, short stock interest, reversal,
conversion, jelly roll and box spread
strategies either in their proprietary
account or on an agency basis.
Reversal and Conversion, Jelly Roll and
Box Spread Strategies
The Exchange proposes to eliminate
the current reversal and conversion,13
jelly roll 14 and box spread15 strategy
caps for Specialists, Market Makers,
Professionals, Firms and Broker-Dealers
which require the strategies to be
executed on the same trading day in the
same options class for a cap of $700,
respectively, for each strategy and adopt
strategy caps similar to those proposed
for the merger and short stock interest
strategies. Specifically, Phlx proposes to
adopt a new strategy cap for Specialists,
Market Makers, Professionals, Firms and
Broker-Dealers for merger, short stock
interest, reversal and conversion, jelly
roll and box spread strategies,
collectively, which requires that these
strategies be executed on the same
trading day for all options classes in the
aggregate. Today, members are not
limited as to the manner in which they
may transact reversal and conversion,
jelly roll or box spread strategies. For
clarity, the Exchange proposes to state
within the rule text that members may
transact these strategies in their own
proprietary accounts or on an agency
basis to qualify for the merger, short
stock interest, reversal and conversion,
jelly roll and box spread strategy cap.
The Exchange proposes to limit
members who transact merger, short
stock interest, reversal and conversion,
jelly roll or box spread strategies on an
agency basis by applying the cap per
beneficial account similar to the
dividend strategy cap. The Exchange
would offer a cap of $1,100 for
qualifying merger, short stock interest,
reversal and conversion, jelly roll or box
spread strategies. The Exchange believes
that its proposal will incentivize
members to transact a greater number of
reversal and conversion, jelly roll and
box spread strategies despite the
increase in the cap from $700 to $1,100
because members may aggregate all
options classes and collectively
aggregate merger, short stock interest,
reversal and conversion, jelly roll or box
spread strategies to qualify for the cap.
For purposes of the Exhibit 5 rule
text, the dividend strategy cap will have
its own qualification and cap and the
remainder of the strategies, merger,
short stock interest, reversal and
conversion, jelly roll and box spread,
will be grouped into a second category
with a collective qualification and cap
applicable to those strategies. The
Exchange proposes the below rule text:
Floor Options Transactions—Multiply Listed Options
Strategy
Qualification
Specialist, Market Maker, Professional, Firm and
Broker-Dealer.
dividend ..........................................
Specialist, Market Maker, Professional, Firm and
Broker-Dealer.
reversal and conversion, merger,
short stock interest, jelly roll, and
box spread strategies.
executed on the same trading day
in the same options class when
such members are trading: (1) In
their own proprietary accounts;
or (2) on an agency basis. If
transacted on an agency basis,
the daily cap will apply per beneficial account.
executed on the same trading day
for all options classes in the aggregate when such members
are trading. (1) In their own proprietary accounts; or (2) on an
agency basis. If transacted on
an agency basis, the daily cap
will apply per beneficial account.
13 Reversal and conversion strategies are
transactions that employ calls and puts of the same
strike price and the underlying stock. Reversals are
established by combining a short stock position
with a short put and a long call position that shares
the same strike and expiration. Conversions employ
long positions in the underlying stock that
accompany long puts and short calls sharing the
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same strike and expiration. See Options 7, Section
4.
14 A jelly roll strategy is defined as transactions
created by entering into two separate positions
simultaneously. One position involves buying a put
and selling a call with the same strike price and
expiration. The second position involves selling a
put and buying a call, with the same strike price,
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Cap
$1,100
1,100
but with a different expiration from the first
position. See Options 7, Section 4.
15 A box spread strategy is a strategy that
synthesizes long and short stock positions to create
a profit. Specifically, a long call and short put at
one strike is combined with a short call and long
put at a different strike to create synthetic long and
synthetic short stock positions, respectively. See
Options 7, Section 4.
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Floor Options Transactions—Multiply Listed Options
Strategy
Qualification
Per member organization ...........................................
dividend, merger, short stock interest, reversal and conversion,
jelly roll and box spread strategies (‘‘Monthly Strategy Cap’’).
combined executions in a month
when trading in its own proprietary accounts.
The Exchange is not proposing to
amend the $65,000 cap per member
organization which is currently
offered.16 The Exchange is proposing a
technical amendment to add the word
‘‘its’’ for the qualifying language for a
member organization. The amended
phrase would state ‘‘combined
executions in a month when trading in
its own proprietary account.’’
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2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,17 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,18 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Commission and the courts have
repeatedly expressed their preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, while
adopting a series of steps to improve the
current market model, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 19
Likewise, in NetCoalition v. Securities
and Exchange Commission 20
(‘‘NetCoalition’’) the D.C. Circuit upheld
the Commission’s use of a market-based
approach in evaluating the fairness of
market data fees against a challenge
claiming that Congress mandated a costbased approach.21 As the court
16 Member organization that qualify for a Monthly
Strategy Cap for a dividend, merger, short stock
interest, reversal and conversion, jelly roll and box
spread strategy by combining executions in a month
when trading in their own proprietary accounts are
capped at $65,000 for the month.
17 15 U.S.C. 78f(b).
18 15 U.S.C. 78f(b)(4) and (5).
19 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
20 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
2010).
21 See NetCoalition, at 534–535.
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emphasized, the Commission ‘‘intended
in Regulation NMS that ‘market forces,
rather than regulatory requirements’
play a role in determining the market
data . . . to be made available to
investors and at what cost.’’ 22
Further, ‘‘[n]o one disputes that
competition for order flow is ‘fierce.’
. . . As the SEC explained, ‘[i]n the U.S.
national market system, buyers and
sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’ 23 Although the court
and the SEC were discussing the cash
equities markets, the Exchange believes
that these views apply with equal force
to the options markets.
Dividend Strategy
The Exchange’s proposal to amend
the Specialist, Market Maker,
Professional, Firm and Broker-Dealer
qualification and cap for dividend
strategies cap is reasonable. The
Exchange is lowering the cap from
$1,500 to $1,100. Also, the proposed
qualification would be expanded to
allow Specialists, Market Makers,
Professionals, Firms and Broker-Dealers
to qualify for the cap by executing on
the same trading in the same options
class when such members are trading:
(1) In their own proprietary account, as
is the case today; or (2) on an agency
basis.24 This expanded qualification
would allow additional options
transactions to qualify for the dividend
strategy cap. The combination of the
expansion of the qualification and
lowering of the dividend cap should
encourage members to transact
additional dividend strategies on Phlx.
Finally, the proposal to permit the
dividend strategy cap to apply to each
beneficial account is reasonable. As
explained herein, members would be
permitted to transact dividend strategies
22 Id.
at 537.
at 539 (quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74782–83 (December 9, 2008) (SR–
NYSEArca–2006–21)).
24 If transacted on an agency basis, the daily cap
will apply per beneficial account.
23 Id.
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Cap
65,000
in their own proprietary account or on
an agency basis. To the extent that a
member is transacting a dividend
strategy on an agency basis, the benefit
of the dividend cap would apply
separately to each beneficial account on
whose behalf the member is executing
the dividend strategy. The Exchange
believes that it is reasonable to apply
the cap to each beneficial account when
the dividend strategy was transacted on
an agency basis, as compared to the
member that transacts a dividend
strategy for his own proprietary account
and therefore may capture the benefit of
the dividend strategy for all qualifying
transactions in their proprietary
account. When the member transacts the
dividend strategy on an agency basis, it
is for the benefit of a customer. The
Exchange believes that applying the
dividend cap to each of those customer
accounts separately is reasonable as the
dividend cap is intended to encourage
each member to execute a greater
amount of dividend strategies. The
Exchange believes applying the
dividend cap per beneficial account
when transacted on an agency basis
would allow the Exchange to
incentivize dividend strategies in
accordance with the order flow that
each member executes on the Exchange.
The Exchange’s proposal to amend
the qualification for Specialists, Market
Makers, Professionals, Firms and
Broker-Dealers dividend strategies by
lowering the cap from $1,500 to $1,100
and also amending the qualification for
dividend strategies is equitable and not
unfairly discriminatory because all
members may qualify for the dividend
strategy cap provided they transact the
requisite amount of dividend strategies
wherein the buy and sell side of a
transaction originated from the
Exchange floor. The Exchange also
believes that it is equitable and not
unfairly discriminatory to permit a
dividend strategy cap to apply to each
beneficial account when transacted on
an agency basis. To the extent that a
member is transacting a dividend
strategy on an agency basis, the
Exchange would uniformly apply the
benefit of the dividend cap separately to
each beneficial account on whose behalf
the member is executing the dividend
strategy because the transaction is for
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the benefit of a customer and not the
member.
Merger and Short Stock Strategies
The Exchange’s proposal to amend
the current merger and short stock
interest strategy cap, which requires that
the strategies be executed on the same
trading day in the same options class
when such members are trading in their
own proprietary accounts, to qualify for
a $1,500 cap is reasonable. The
Exchange proposes to expand the
current requirement to permit
Specialists, Market Makers,
Professionals, Firms and Broker-Dealers
that transact merger and short stock
interest strategies, along with reversal,
conversion, jelly roll and box spread
strategies, to execute these strategies on
the same trading day for all options
classes in the aggregate when such
members are trading in their own
proprietary accounts or on an agency
basis to qualify. Today, members may
transact merger and short stock interest
strategies in their own proprietary
account. Adding the ability to transact
merger and short stock interest on an
agency basis to qualify for the cap is
proposed herein. To the extent that a
member is transacting merger or short
stock interest strategies on an agency
basis, or a reversal, conversion, jelly roll
and box spread strategy, the benefit of
the cap would apply separately to each
beneficial account on whose behalf the
member is executing the merger, short
stock interest, reversal, conversion, jelly
roll and box spread strategy. The
Exchange believes that it is reasonable
to apply the cap to each beneficial
account when the merger or short stock
interest strategy, along with the reversal,
conversion, jelly roll and box spread
strategy, was transacted on an agency
basis, as compared to the member that
transacts a merger or short stock interest
strategy, or reversal, conversion, jelly
roll and box spread strategy, for his own
proprietary account and therefore may
capture the benefit of the merger or
short stock interest strategy, or reversal,
conversion, jelly roll and box spread
strategy, for all qualifying transactions
in their proprietary account. When the
member transacts the merger or short
stock interest strategy on an agency
basis, or reversal, conversion, jelly roll
and box spread strategy, it is for the
benefit of a customer. The Exchange
believes that applying the merger, short
stock interest, reversal, conversion, jelly
roll and box spread strategy cap to each
of those customer accounts separately is
reasonable as the merger, short stock
interest, reversal, conversion, jelly roll
and box spread strategy cap is intended
to encourage each member to execute a
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16:56 Jan 29, 2020
Jkt 250001
greater amount of these strategies. The
Exchange believes applying the merger,
short stock interest, reversal,
conversion, jelly roll and box spread
strategy cap per beneficial account
when transacted on an agency basis
would allow the Exchange to
incentivize merger and short stock
interest strategies in accordance with
the order flow that each member
executes on the Exchange.
The Exchange would also lower the
current merger and short stock interest
cap from $1,500 to $1,100. The
Exchange believes that the combination
of expanding the qualifications to
permit members to aggregate all options
classes and transact on an agency basis,
in addition to also continuing to trade
in their own proprietary account, as
well as lowering the cap will encourage
members to transact a greater number of
merger and short stock interest
strategies.
The Exchange’s proposal to amend
the qualification for Specialists, Market
Makers, Professionals, Firms and
Broker-Dealers merger and short stock
interest strategies by lowering the cap
from $1,500 to $1,100 and also
amending the qualification for these
strategies is equitable and not unfairly
discriminatory because all members
may qualify for the merger, short stock
interest, reversal, conversion, jelly roll
and box spread strategy cap provided
they transact the requisite amount of
merger, short stock interest, reversal,
conversion, jelly roll and box spread
strategies wherein the buy and sell side
of a transaction originated from the
Exchange floor. The Exchange also
believes that it is equitable and not
unfairly discriminatory to permit a
merger, short stock interest, reversal,
conversion, jelly roll and box spread
strategy cap to apply to each beneficial
account when transacted on an agency
basis. To the extent that a member is
transacting a merger, short stock
interest, reversal, conversion, jelly roll
and box spread strategy on an agency
basis, the benefit of the merger or short
stock interest cap would apply
separately to each beneficial account on
whose behalf the member is executing
the merger, short stock interest, reversal,
conversion, jelly roll and box spread
strategy because the transaction is for
the benefit of a customer and not the
member.
Reversal and Conversion, Jelly Roll and
Box Spread Strategies
The Exchange’s proposal to eliminate
the current reversal and conversion,
jelly roll and box spread strategy caps
for Specialists, Market Makers,
Professionals, Firms and Broker-Dealers
PO 00000
Frm 00163
Fmt 4703
Sfmt 4703
5529
and adopt a new strategy cap for these
strategies, along with the merger and
short stock interest strategies, which
requires that these strategies be
executed on the same trading day for all
options classes in the aggregate when
such members are trading in their own
proprietary accounts or transacted on an
agency basis to qualify is reasonable.
Unlike the current qualification for
reversal and conversion, jelly roll and
box spread strategies which requires
that these strategies be executed on the
same trading day in the same options
class, the proposed qualification would
permit the strategies to be executed on
the same trading day for all options
classes in the aggregate, along with the
merger and short stock interest
strategies. Further, the Exchange will
continue to not limit the manner in
which the transactions may be executed,
either in a member’s proprietary
account or on an agency basis, for the
reversal and conversion, jelly roll and
box spread strategies. Today, there is no
limitation as to whether reversal and
conversion, jelly roll and box spread
strategy caps must be executed on a
proprietary or agency basis. For clarity,
the Exchange is noting within the rule
text that members may transact reversal
and conversion, jelly roll and box
spread strategy caps either in their own
proprietary accounts or on an agency
basis, in conjunction with merger and
short stock interest strategies. To the
extent that a member is transacting
merger, short stock interest, reversal and
conversion, jelly roll and box spread
strategies on an agency basis, the benefit
of the cap would apply separately to
each beneficial account on whose behalf
the member is executing the merger,
short stock interest, reversal and
conversion, jelly roll and box spread
strategy. The Exchange believes that it is
reasonable to apply the cap to each
beneficial account when the merger,
short stock interest, reversal and
conversion, jelly roll and box spread
strategies were transacted on an agency
basis, as compared to the member that
transacts a merger, short stock interest,
reversal and conversion, jelly roll and
box spread strategy for his own
proprietary account and therefore may
capture the benefit of these strategies for
all qualifying transactions in their
proprietary account. When the member
transacts a merger, short stock interest,
reversal and conversion, jelly roll and
box spread strategy on an agency basis,
it is for the benefit of a customer. The
Exchange believes that applying the
merger, short stock interest, reversal and
conversion, jelly roll and box spread
strategy cap to each of those customer
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30JAN1
khammond on DSKJM1Z7X2PROD with NOTICES
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accounts separately is reasonable as the
merger, short stock interest, reversal and
conversion, jelly roll and box spread
strategy cap is intended to encourage
each member to execute a greater
amount of these strategies. The
Exchange believes applying the merger,
short stock interest, reversal and
conversion, jelly roll and box spread
strategy cap per beneficial account
when transacted on an agency basis
would allow the Exchange to
incentivize reversal and conversion,
jelly roll and box spread strategies in
accordance with the order flow that
each member executes on the Exchange.
Despite the increase in the cap from
$700 to $1,100 for the reversal and
conversion, jelly roll and box spread
strategies, the Exchange believes that
members will be able to meet the new
qualification because members will be
able to aggregate all options classes to
qualify for the increased cap.
The Exchange’s proposal to eliminate
the current reversal and conversion,
jelly roll and box spread strategy caps
for Specialists, Market Makers,
Professionals, Firms and Broker-Dealers
and adopt a new strategy cap for these
strategies which requires that these
strategies be executed on the same
trading day for all options classes in the
aggregate, when such members are
trading in their own proprietary
accounts or on an agency basis, in
conjunction with the merger and short
stock interest strategies, is equitable and
not unfairly discriminatory. All
members may qualify for the merger,
short stock interest, reversal and
conversion, jelly roll and box spread
strategy caps provided they transact the
requisite amount of merger, short stock
interest, reversal and conversion, jelly
roll and box spread strategies wherein
the buy and sell side of a transaction
originated from the Exchange floor. The
Exchange also believes that it is
equitable and not unfairly
discriminatory to permit a merger, short
stock interest, reversal and conversion,
jelly roll and box spread strategy cap to
apply to each beneficial account when
transacted on an agency basis. To the
extent that a member is transacting a
merger, short stock interest, reversal and
conversion, jelly roll and box spread
strategy on an agency basis, the benefit
of the merger, short stock interest,
reversal and conversion, jelly roll and
box spread cap would apply separately
to each beneficial account on whose
behalf the member is executing these
strategies because the transaction is for
the benefit of a customer and not the
member.
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16:56 Jan 29, 2020
Jkt 250001
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.
Inter-market Competition
The proposal does not impose an
undue burden on inter-market
competition. The Exchange believes its
proposal remains competitive with
other options markets and will offer
market participants with another choice
of where to transact options. The
Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees to remain competitive with other
exchanges that have been exempted
from compliance with the statutory
standards applicable to exchanges.
Because competitors are free to modify
their own fees in response, and because
market participants may readily adjust
their order routing practices, the
Exchange believes that the degree to
which fee changes in this market may
impose any burden on competition is
extremely limited.
Intra-market Competition
The proposed amendments do not
impose an undue burden on intramarket competition. The Exchange’s
proposal to amend the qualification for
Specialists, Market Makers,
Professionals, Firms and Broker-Dealers
dividend strategies by lowering the cap
from $1,500 to $1,100 and also
amending the qualification for dividend
strategies does not impose an undue
burden on intra-market competition
because all members may qualify for the
dividend strategy cap provided they
transact the requisite amount of
dividend strategies wherein the buy and
sell side of a transaction originated from
the Exchange floor. The Exchange also
believes that it does not impose an
undue burden on competition to permit
a dividend cap to apply to each
beneficial account when transacted on
an agency basis. To the extent that a
member is transacting a dividend
strategy on an agency basis, the benefit
of the dividend cap would apply
separately to each beneficial account on
whose behalf the member is executing
the dividend strategy because the
PO 00000
Frm 00164
Fmt 4703
Sfmt 4703
transaction is for the benefit of a
customer and not the member.
The Exchange’s proposal to amend
the qualification for Specialists, Market
Makers, Professionals, Firms and
Broker-Dealers merger and short stock
interest strategies by lowering the cap
from $1,500 to $1,100 and also
amending the qualification for these
strategies to allow these strategies to be
in the aggregate for all options classes
and on an agency basis, along with
reversal and conversion, jelly roll and
box spread strategies, while continuing
to permit members to trade in their own
proprietary accounts, in conjunction
with the reversal and conversion, jelly
roll and box spread strategies, does not
impose an undue burden on
competition because all members may
qualify for the merger and short stock
interest strategy caps provided they
transact the requisite amount of merger,
short stock interest, reversal and
conversion, jelly roll and box spread
strategies wherein the buy and sell side
of a transaction originated from the
Exchange floor. The Exchange also
believes that it does not impose an
undue burden on competition to permit
a merger, short stock interest, reversal
and conversion, jelly roll and box
spread cap to apply to each beneficial
account when transacted on an agency
basis. To the extent that a member is
transacting a merger, short stock
interest, reversal and conversion, jelly
roll and box spread strategy on an
agency basis, the benefit of the merger,
short stock interest, reversal and
conversion, jelly roll and box spread
would apply separately to each
beneficial account on whose behalf the
member is executing these strategies
because the transaction is for the benefit
of a customer and not the member.
The Exchange’s proposal to eliminate
the current reversal and conversion,
jelly roll and box spread strategy caps
for Specialists, Market Makers,
Professionals, Firms and Broker-Dealers
and adopt a new strategy increased cap
of $1,100 for these strategies which
requires that these strategies be
executed on the same trading day for all
options classes in the aggregate, when
such members are trading in their own
proprietary accounts or on an agency
basis, in conjunction with merger and
short stock interest strategies, does not
impose an undue burden on
competition. All members may qualify
for the merger, short stock interest,
reversal and conversion, jelly roll and
box spread strategy caps provided they
transact the requisite amount of merger,
short stock interest, reversal and
conversion, jelly roll and box spread
strategies wherein the buy and sell side
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Federal Register / Vol. 85, No. 20 / Thursday, January 30, 2020 / Notices
of a transaction originated from the
Exchange floor. Further, increasing the
cap from $700 to $1,100 for the reversal
and conversion, jelly roll and box
spread strategies does not impose an
undue burden on competition because
all members may qualify for the new
qualification by aggregating all options
classes to qualify for the increased cap
in the merger and short stock interest,
reversal and conversion, jelly roll and
box spread strategies
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
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.25
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
khammond on DSKJM1Z7X2PROD with NOTICES
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–2020–02 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–2020–02. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
25 15
U.S.C. 78s(b)(3)(A)(ii).
VerDate Sep<11>2014
16:56 Jan 29, 2020
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.
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–2020–02 and should
be submitted on or before February 20,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–01647 Filed 1–29–20; 8:45 am]
BILLING CODE 8011–01–P
TENNESSEE VALLEY AUTHORITY
North Alabama Utility-Scale Solar
Environmental Impact Statement
ACTION:
The Tennessee Valley
Authority (TVA) intends to prepare an
Environmental Impact Statement (EIS)
for the proposed TVA-developed solar
facility in Lawrence County, Alabama.
The purpose of this EIS is to address the
potential environmental effects
associated with building, operating, and
maintaining the solar facility, North
Alabama Utility-Scale Solar Project, in
Lawrence County, Alabama. The
proposed facility would encompass
approximately 3,000 acres. Public
comments are invited concerning both
SUMMARY:
26 17
Jkt 250001
Tennessee Valley Authority.
Notice of Intent.
AGENCY:
PO 00000
CFR 200.30–3(a)(12).
Frm 00165
Fmt 4703
Sfmt 4703
5531
the scope of the EIS and environmental
issues that should be addressed as part
of this EIS.
DATES: Comments must be received or
postmarked by March 2, 2020.
ADDRESSES: Written comments should
be sent to Elizabeth Smith, NEPA
Specialist, Tennessee Valley Authority,
400 W Summit Hill Drive #WT11B,
Knoxville, Tennessee 37902. Comments
may be sent electronically to esmith14@
tva.gov.
FOR FURTHER INFORMATION CONTACT:
Contact Elizabeth Smith by email at
esmith14@tva.gov, by phone at (865)
632–3053, or by mail at the address
above.
SUPPLEMENTARY INFORMATION: This
notice is provided in accordance with
the Council on Environmental Quality’s
regulations (40 CFR parts 1500 to 1508),
TVA’s procedures for implementing the
National Environmental Policy Act
(NEPA), and Section 106 of the National
Historic Preservation Act (NHPA) and
its implementing regulations (36 CFR
part 800).
The proposed North Alabama UtilityScale Solar facility, hereafter referred to
as the project, would occupy two sites:
Wheeler North and Wheeler South. The
sites together encompass approximately
3,000 acres, and are located entirely in
Lawrence County, Alabama. The
Wheeler North site is within the city
limits of Wheeler, Alabama, and is
located approximately 3.6 miles
southeast of Courtland, Alabama. The
southern edge of the Wheeler North site
is paralleled by US Highway 72. The
Wheeler North site is mostly cultivated
crop fields with portions of forested
areas. The Wheeler South site is the
larger of the two sites and runs along the
eastern portion of State Highway 33
with County Road 85 running west in
the southwest portion of the site. The
Wheeler South site is located 0.21 miles
southwest of Wheeler, Alabama and
2.25 miles southeast of Courtland,
Alabama. The Wheeler South site is
mostly forested with portions of
cultivated crop fields and wooded
private residences. Two power line
easements run through the Wheeler
South site.
Background
TVA is a federal agency and
instrumentality of the United States of
America, created in 1933 by an act of
Congress to foster the social and
economic well-being of the residents of
the Tennessee Valley region. As part of
its diversified energy strategy, TVA
produces or obtains electricity from a
diverse portfolio of energy sources,
including solar, hydroelectric, wind,
E:\FR\FM\30JAN1.SGM
30JAN1
]]>Agencies
[Federal Register Volume 85, Number 20 (Thursday, January 30, 2020)]
[Notices]
[Pages 5525-5531]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01647]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88036; File No. SR-Phlx-2020-02]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Phlx's
Pricing Schedule
January 24, 2020.
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 January 14, 2020, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III, below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Phlx's Pricing Schedule.
Specifically, the Exchange proposes to amend Options 7, Section 4,
titled ``Multiply Listed Options Fees (Includes options overlying
equities, ETFs, ETNs and indexes which are Multiply Listed).''
The Exchange originally filed the proposed pricing changes on
January 2, 2020 (SR-Phlx-2020-01). On January 14, 2020, the Exchange
withdrew that filing and submitted this filing.
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.
[[Page 5526]]
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
Phlx proposes to amend its Pricing Schedule at Options 7, Section
4, titled ``Multiply Listed Options Fees (Includes options overlying
equities, ETFs, ETNs and indexes which are Multiply Listed).'' The
Exchange proposes to amend pricing for certain strategy caps. The
Exchange believes the proposed amendments will incentivize market
participants to transact various options strategies on Phlx to take
advantage of the opportunity to cap floor option transaction charges
and lower their costs.
Today, to qualify for a strategy cap, the buy and sell side of a
transaction must originate from the Exchange floor.\3\ Today, the
Exchange offers the following strategy caps:
---------------------------------------------------------------------------
\3\ See Phlx's Pricing Schedule at Options 7, Section 4.
----------------------------------------------------------------------------------------------------------------
Floor Options Transactions--Multiply
Listed Options Strategy Qualification Cap
----------------------------------------------------------------------------------------------------------------
Specialist, Market Maker, Professional, dividend, merger and short executed on the same $1,500
Firm and Broker-Dealer. stock interest strategies. trading day in the same
options class when such
members are trading in
their own proprietary
accounts..
Specialist, Market Maker, Professional, reversal and conversion executed on the same 700
Firm and Broker-Dealer. strategies. trading day in the same
options class.
Specialist, Market Maker, Professional, jelly rolls............... executed on the same 700
Firm and Broker-Dealer. trading day in the same
options class.
Specialist, Market Maker, Professional, box spreads............... executed on the same 700
Firm and Broker-Dealer. trading day in the same
options class.
Per member organization................. dividend, merger, short combined executions in a 65,000
stock interest, reversal month when trading in own
and conversion, jelly proprietary accounts.
roll and box spread
strategies (``Monthly
Strategy Cap'').
----------------------------------------------------------------------------------------------------------------
NDX and NDXP Options Transactions are excluded from Strategy Cap
pricing.\4\
---------------------------------------------------------------------------
\4\ Today, reversal and conversion, jelly roll and box spread
strategy executions are not included in the Monthly Strategy Cap for
a Firm. Also, all dividend, merger, short stock interest, reversal
and conversion, jelly roll and box spread strategy executions are
excluded from the Monthly Market Maker Cap. Specialists and Market
Makers are subject to a ``Monthly Market Maker Cap'' of $500,000
which is explained in greater detail within Options 7, Section 4.
---------------------------------------------------------------------------
The Exchange proposes to amend the strategy caps applicable to
Specialists,\5\ Market Makers,\6\ Professionals,\7\ Firms \8\ and
Broker-Dealers \9\ with respect to dividend,\10\ merger \11\ and short
stock interest \12\ strategies.
---------------------------------------------------------------------------
\5\ The term ``Specialist'' applies to transactions for the
account of a Specialist (as defined in Exchange Rule 1020(a)). A
Specialist is an Exchange member who is registered as an options
specialist pursuant to Rule 1020(a). An options Specialist includes
a Remote Specialist which is defined as an options specialist in one
or more classes that does not have a physical presence on an
Exchange floor and is approved by the Exchange pursuant to Rule 501.
\6\ The term ``Market Maker'' will be utilized to describe fees
and rebates applicable to Registered Options Traders, Streaming
Quote Traders (``SQTs'') and Remote Streaming Quote Traders
(``RSQTs''). RSQTs may also be referred to as Remote Market Markers
(``RMMs''). The term ``Registered Option Trader'' or ``ROT'' is
defined in Exchange Rule 1000(b)(57). A ROT includes SQTs and RSQTs
as well as on and off-floor ROTS. The term ``Streaming Quote
Trader'' is defined in Exchange Rule 1000(b)(59). The term ``Remote
Streaming Quote Trader'' is defined in Exchange Rule in 1000(b)(60).
A Remote Streaming Quote Trader Organization or ``RSQTO,'' which may
also be referred to as a Remote Market Making Organization
(``RMO''), is a member organization in good standing that satisfies
the RSQTO readiness requirements in Rule 507(a).
\7\ The term ``Professional'' applies to transactions for the
accounts of Professionals, as defined in Exchange Rule 1000(b)(14)
means any person or entity that (i) is not a broker or dealer in
securities, and (ii) places more than 390 orders in listed options
per day on average during a calendar month for its own beneficial
account(s).
\8\ The term ``Firm'' applies to any transaction that is
identified by a member or member organization for clearing in the
Firm range at The Options Clearing Corporation. See Options 7,
Section 1.
\9\ The term ``Broker-Dealer'' applies to any transaction which
is not subject to any of the other transaction fees applicable
within a particular category. See Options 7, Section 1.
\10\ A dividend strategy is defined as transactions done to
achieve a dividend arbitrage involving the purchase, sale and
exercise of in-the-money options of the same class, executed the
first business day prior to the date on which the underlying stock
goes ex-dividend. See Options 7, Section 4.
\11\ A merger strategy is defined as transactions done to
achieve a merger arbitrage involving the purchase, sale and exercise
of options of the same class and expiration date, executed the first
business day prior to the date on which shareholders of record are
required to elect their respective form of consideration, i.e., cash
or stock. See Options 7, Section 4.
\12\ A short stock interest strategy is defined as transactions
done to achieve a short stock interest arbitrage involving the
purchase, sale and exercise of in-the-money options of the same
class. See Options 7, Section 4.
---------------------------------------------------------------------------
Dividend Strategy
Today, to qualify for a dividend cap, a Specialist, Market Maker,
Professional, Firm or Broker-Dealer must execute on the same trading
day in the same options class when such members are trading in their
own proprietary accounts. If the qualification is met, Specialists,
Market Makers, Professionals, Firms and Broker-Dealers floor option
transaction charges are capped at $1,500. The Exchange proposes to
amend the qualification for Specialists, Market Makers, Professionals,
Firms and Broker-Dealers dividend strategies by lowering the cap from
$1,500 to $1,100 and also amending the qualification for dividend
strategies. The proposed qualification would be expanded to allow
Specialists, Market Makers, Professionals, Firms and Broker-Dealers to
qualify for the cap by executing on the same trading in the same
options class when (1) such members are trading in their own
proprietary account, as is the case today, or (2) when transacted on an
agency basis. If transacted on an agency basis, the daily cap will
apply per beneficial account. For example, if Firm A transacted $600 of
qualifying dividend strategies for customer A, $1,500 qualifying
dividend strategies for customer B and $2,000 qualifying dividend
strategies for customer C, then customer A would not qualify for a
[[Page 5527]]
dividend strategy cap and customers B and C would each separately cap
at $1,100 for qualifying dividend strategies pursuant to this proposal.
The Exchange believes that its proposal will incentivize members to
transact a greater number of dividend strategies because the cap is
being lowered from $1,500 to $1,100 and the Exchange is permitting
members to qualify for the cap by transacting dividend strategies
either in their proprietary account or on an agency basis.
Merger and Short Stock Interest Strategies
The Exchange proposes to amend the current merger and short stock
interest strategy cap which require the strategies to be executed on
the same trading day in the same options class when such members are
trading in their own proprietary accounts, to qualify for a $1,500 cap.
The Exchange proposes to instead require Specialists, Market Makers,
Professionals, Firms and Broker-Dealers that transact merger and short
stock interest strategies, along with reversal, conversion, jelly roll
and box spread strategies, to execute these strategies on the same
trading day for all options classes in the aggregate when such members
are trading (1) in their own proprietary accounts, as is the case
today, or (2) on an agency basis. If transacted on an agency basis, the
daily cap will apply per beneficial account. The Exchange would offer a
cap of $1,100 to Specialists, Market Makers, Professionals, Firms and
Broker-Dealers who qualify for the merger, short stock interest,
reversal, conversion, jelly roll and box spread strategies,
collectively. The Exchange believes that its proposal will incentivize
members to transact a greater number of merger and short stock interest
strategies because the cap for merger and short stock interest
strategies is being lowered from $1,500 to $1,100 and the Exchange is
permitting members to aggregate all options classes to qualify for the
cap and also permitting members to transact merger, short stock
interest, reversal, conversion, jelly roll and box spread strategies
either in their proprietary account or on an agency basis.
Reversal and Conversion, Jelly Roll and Box Spread Strategies
The Exchange proposes to eliminate the current reversal and
conversion,\13\ jelly roll \14\ and box spread\15\ strategy caps for
Specialists, Market Makers, Professionals, Firms and Broker-Dealers
which require the strategies to be executed on the same trading day in
the same options class for a cap of $700, respectively, for each
strategy and adopt strategy caps similar to those proposed for the
merger and short stock interest strategies. Specifically, Phlx proposes
to adopt a new strategy cap for Specialists, Market Makers,
Professionals, Firms and Broker-Dealers for merger, short stock
interest, reversal and conversion, jelly roll and box spread
strategies, collectively, which requires that these strategies be
executed on the same trading day for all options classes in the
aggregate. Today, members are not limited as to the manner in which
they may transact reversal and conversion, jelly roll or box spread
strategies. For clarity, the Exchange proposes to state within the rule
text that members may transact these strategies in their own
proprietary accounts or on an agency basis to qualify for the merger,
short stock interest, reversal and conversion, jelly roll and box
spread strategy cap. The Exchange proposes to limit members who
transact merger, short stock interest, reversal and conversion, jelly
roll or box spread strategies on an agency basis by applying the cap
per beneficial account similar to the dividend strategy cap. The
Exchange would offer a cap of $1,100 for qualifying merger, short stock
interest, reversal and conversion, jelly roll or box spread strategies.
The Exchange believes that its proposal will incentivize members to
transact a greater number of reversal and conversion, jelly roll and
box spread strategies despite the increase in the cap from $700 to
$1,100 because members may aggregate all options classes and
collectively aggregate merger, short stock interest, reversal and
conversion, jelly roll or box spread strategies to qualify for the cap.
---------------------------------------------------------------------------
\13\ Reversal and conversion strategies are transactions that
employ calls and puts of the same strike price and the underlying
stock. Reversals are established by combining a short stock position
with a short put and a long call position that shares the same
strike and expiration. Conversions employ long positions in the
underlying stock that accompany long puts and short calls sharing
the same strike and expiration. See Options 7, Section 4.
\14\ A jelly roll strategy is defined as transactions created by
entering into two separate positions simultaneously. One position
involves buying a put and selling a call with the same strike price
and expiration. The second position involves selling a put and
buying a call, with the same strike price, but with a different
expiration from the first position. See Options 7, Section 4.
\15\ A box spread strategy is a strategy that synthesizes long
and short stock positions to create a profit. Specifically, a long
call and short put at one strike is combined with a short call and
long put at a different strike to create synthetic long and
synthetic short stock positions, respectively. See Options 7,
Section 4.
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For purposes of the Exhibit 5 rule text, the dividend strategy cap
will have its own qualification and cap and the remainder of the
strategies, merger, short stock interest, reversal and conversion,
jelly roll and box spread, will be grouped into a second category with
a collective qualification and cap applicable to those strategies. The
Exchange proposes the below rule text:
----------------------------------------------------------------------------------------------------------------
Floor Options Transactions--Multiply
Listed Options Strategy Qualification Cap
----------------------------------------------------------------------------------------------------------------
Specialist, Market Maker, Professional, dividend.................. executed on the same $1,100
Firm and Broker-Dealer. trading day in the same
options class when such
members are trading: (1)
In their own proprietary
accounts; or (2) on an
agency basis. If
transacted on an agency
basis, the daily cap will
apply per beneficial
account.
Specialist, Market Maker, Professional, reversal and conversion, executed on the same 1,100
Firm and Broker-Dealer. merger, short stock trading day for all
interest, jelly roll, and options classes in the
box spread strategies. aggregate when such
members are trading. (1)
In their own proprietary
accounts; or (2) on an
agency basis. If
transacted on an agency
basis, the daily cap will
apply per beneficial
account.
[[Page 5528]]
Per member organization................. dividend, merger, short combined executions in a 65,000
stock interest, reversal month when trading in its
and conversion, jelly own proprietary accounts.
roll and box spread
strategies (``Monthly
Strategy Cap'').
----------------------------------------------------------------------------------------------------------------
The Exchange is not proposing to amend the $65,000 cap per member
organization which is currently offered.\16\ The Exchange is proposing
a technical amendment to add the word ``its'' for the qualifying
language for a member organization. The amended phrase would state
``combined executions in a month when trading in its own proprietary
account.''
---------------------------------------------------------------------------
\16\ Member organization that qualify for a Monthly Strategy Cap
for a dividend, merger, short stock interest, reversal and
conversion, jelly roll and box spread strategy by combining
executions in a month when trading in their own proprietary accounts
are capped at $65,000 for the month.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\17\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\18\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \19\
---------------------------------------------------------------------------
\19\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
Likewise, in NetCoalition v. Securities and Exchange Commission
\20\ (``NetCoalition'') the D.C. Circuit upheld the Commission's use of
a market-based approach in evaluating the fairness of market data fees
against a challenge claiming that Congress mandated a cost-based
approach.\21\ As the court emphasized, the Commission ``intended in
Regulation NMS that `market forces, rather than regulatory
requirements' play a role in determining the market data . . . to be
made available to investors and at what cost.'' \22\
---------------------------------------------------------------------------
\20\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\21\ See NetCoalition, at 534-535.
\22\ Id. at 537.
---------------------------------------------------------------------------
Further, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers'. . . .'' \23\ Although the court and
the SEC were discussing the cash equities markets, the Exchange
believes that these views apply with equal force to the options
markets.
---------------------------------------------------------------------------
\23\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008)
(SR-NYSEArca-2006-21)).
---------------------------------------------------------------------------
Dividend Strategy
The Exchange's proposal to amend the Specialist, Market Maker,
Professional, Firm and Broker-Dealer qualification and cap for dividend
strategies cap is reasonable. The Exchange is lowering the cap from
$1,500 to $1,100. Also, the proposed qualification would be expanded to
allow Specialists, Market Makers, Professionals, Firms and Broker-
Dealers to qualify for the cap by executing on the same trading in the
same options class when such members are trading: (1) In their own
proprietary account, as is the case today; or (2) on an agency
basis.\24\ This expanded qualification would allow additional options
transactions to qualify for the dividend strategy cap. The combination
of the expansion of the qualification and lowering of the dividend cap
should encourage members to transact additional dividend strategies on
Phlx. Finally, the proposal to permit the dividend strategy cap to
apply to each beneficial account is reasonable. As explained herein,
members would be permitted to transact dividend strategies in their own
proprietary account or on an agency basis. To the extent that a member
is transacting a dividend strategy on an agency basis, the benefit of
the dividend cap would apply separately to each beneficial account on
whose behalf the member is executing the dividend strategy. The
Exchange believes that it is reasonable to apply the cap to each
beneficial account when the dividend strategy was transacted on an
agency basis, as compared to the member that transacts a dividend
strategy for his own proprietary account and therefore may capture the
benefit of the dividend strategy for all qualifying transactions in
their proprietary account. When the member transacts the dividend
strategy on an agency basis, it is for the benefit of a customer. The
Exchange believes that applying the dividend cap to each of those
customer accounts separately is reasonable as the dividend cap is
intended to encourage each member to execute a greater amount of
dividend strategies. The Exchange believes applying the dividend cap
per beneficial account when transacted on an agency basis would allow
the Exchange to incentivize dividend strategies in accordance with the
order flow that each member executes on the Exchange.
---------------------------------------------------------------------------
\24\ If transacted on an agency basis, the daily cap will apply
per beneficial account.
---------------------------------------------------------------------------
The Exchange's proposal to amend the qualification for Specialists,
Market Makers, Professionals, Firms and Broker-Dealers dividend
strategies by lowering the cap from $1,500 to $1,100 and also amending
the qualification for dividend strategies is equitable and not unfairly
discriminatory because all members may qualify for the dividend
strategy cap provided they transact the requisite amount of dividend
strategies wherein the buy and sell side of a transaction originated
from the Exchange floor. The Exchange also believes that it is
equitable and not unfairly discriminatory to permit a dividend strategy
cap to apply to each beneficial account when transacted on an agency
basis. To the extent that a member is transacting a dividend strategy
on an agency basis, the Exchange would uniformly apply the benefit of
the dividend cap separately to each beneficial account on whose behalf
the member is executing the dividend strategy because the transaction
is for
[[Page 5529]]
the benefit of a customer and not the member.
Merger and Short Stock Strategies
The Exchange's proposal to amend the current merger and short stock
interest strategy cap, which requires that the strategies be executed
on the same trading day in the same options class when such members are
trading in their own proprietary accounts, to qualify for a $1,500 cap
is reasonable. The Exchange proposes to expand the current requirement
to permit Specialists, Market Makers, Professionals, Firms and Broker-
Dealers that transact merger and short stock interest strategies, along
with reversal, conversion, jelly roll and box spread strategies, to
execute these strategies on the same trading day for all options
classes in the aggregate when such members are trading in their own
proprietary accounts or on an agency basis to qualify. Today, members
may transact merger and short stock interest strategies in their own
proprietary account. Adding the ability to transact merger and short
stock interest on an agency basis to qualify for the cap is proposed
herein. To the extent that a member is transacting merger or short
stock interest strategies on an agency basis, or a reversal,
conversion, jelly roll and box spread strategy, the benefit of the cap
would apply separately to each beneficial account on whose behalf the
member is executing the merger, short stock interest, reversal,
conversion, jelly roll and box spread strategy. The Exchange believes
that it is reasonable to apply the cap to each beneficial account when
the merger or short stock interest strategy, along with the reversal,
conversion, jelly roll and box spread strategy, was transacted on an
agency basis, as compared to the member that transacts a merger or
short stock interest strategy, or reversal, conversion, jelly roll and
box spread strategy, for his own proprietary account and therefore may
capture the benefit of the merger or short stock interest strategy, or
reversal, conversion, jelly roll and box spread strategy, for all
qualifying transactions in their proprietary account. When the member
transacts the merger or short stock interest strategy on an agency
basis, or reversal, conversion, jelly roll and box spread strategy, it
is for the benefit of a customer. The Exchange believes that applying
the merger, short stock interest, reversal, conversion, jelly roll and
box spread strategy cap to each of those customer accounts separately
is reasonable as the merger, short stock interest, reversal,
conversion, jelly roll and box spread strategy cap is intended to
encourage each member to execute a greater amount of these strategies.
The Exchange believes applying the merger, short stock interest,
reversal, conversion, jelly roll and box spread strategy cap per
beneficial account when transacted on an agency basis would allow the
Exchange to incentivize merger and short stock interest strategies in
accordance with the order flow that each member executes on the
Exchange.
The Exchange would also lower the current merger and short stock
interest cap from $1,500 to $1,100. The Exchange believes that the
combination of expanding the qualifications to permit members to
aggregate all options classes and transact on an agency basis, in
addition to also continuing to trade in their own proprietary account,
as well as lowering the cap will encourage members to transact a
greater number of merger and short stock interest strategies.
The Exchange's proposal to amend the qualification for Specialists,
Market Makers, Professionals, Firms and Broker-Dealers merger and short
stock interest strategies by lowering the cap from $1,500 to $1,100 and
also amending the qualification for these strategies is equitable and
not unfairly discriminatory because all members may qualify for the
merger, short stock interest, reversal, conversion, jelly roll and box
spread strategy cap provided they transact the requisite amount of
merger, short stock interest, reversal, conversion, jelly roll and box
spread strategies wherein the buy and sell side of a transaction
originated from the Exchange floor. The Exchange also believes that it
is equitable and not unfairly discriminatory to permit a merger, short
stock interest, reversal, conversion, jelly roll and box spread
strategy cap to apply to each beneficial account when transacted on an
agency basis. To the extent that a member is transacting a merger,
short stock interest, reversal, conversion, jelly roll and box spread
strategy on an agency basis, the benefit of the merger or short stock
interest cap would apply separately to each beneficial account on whose
behalf the member is executing the merger, short stock interest,
reversal, conversion, jelly roll and box spread strategy because the
transaction is for the benefit of a customer and not the member.
Reversal and Conversion, Jelly Roll and Box Spread Strategies
The Exchange's proposal to eliminate the current reversal and
conversion, jelly roll and box spread strategy caps for Specialists,
Market Makers, Professionals, Firms and Broker-Dealers and adopt a new
strategy cap for these strategies, along with the merger and short
stock interest strategies, which requires that these strategies be
executed on the same trading day for all options classes in the
aggregate when such members are trading in their own proprietary
accounts or transacted on an agency basis to qualify is reasonable.
Unlike the current qualification for reversal and conversion, jelly
roll and box spread strategies which requires that these strategies be
executed on the same trading day in the same options class, the
proposed qualification would permit the strategies to be executed on
the same trading day for all options classes in the aggregate, along
with the merger and short stock interest strategies. Further, the
Exchange will continue to not limit the manner in which the
transactions may be executed, either in a member's proprietary account
or on an agency basis, for the reversal and conversion, jelly roll and
box spread strategies. Today, there is no limitation as to whether
reversal and conversion, jelly roll and box spread strategy caps must
be executed on a proprietary or agency basis. For clarity, the Exchange
is noting within the rule text that members may transact reversal and
conversion, jelly roll and box spread strategy caps either in their own
proprietary accounts or on an agency basis, in conjunction with merger
and short stock interest strategies. To the extent that a member is
transacting merger, short stock interest, reversal and conversion,
jelly roll and box spread strategies on an agency basis, the benefit of
the cap would apply separately to each beneficial account on whose
behalf the member is executing the merger, short stock interest,
reversal and conversion, jelly roll and box spread strategy. The
Exchange believes that it is reasonable to apply the cap to each
beneficial account when the merger, short stock interest, reversal and
conversion, jelly roll and box spread strategies were transacted on an
agency basis, as compared to the member that transacts a merger, short
stock interest, reversal and conversion, jelly roll and box spread
strategy for his own proprietary account and therefore may capture the
benefit of these strategies for all qualifying transactions in their
proprietary account. When the member transacts a merger, short stock
interest, reversal and conversion, jelly roll and box spread strategy
on an agency basis, it is for the benefit of a customer. The Exchange
believes that applying the merger, short stock interest, reversal and
conversion, jelly roll and box spread strategy cap to each of those
customer
[[Page 5530]]
accounts separately is reasonable as the merger, short stock interest,
reversal and conversion, jelly roll and box spread strategy cap is
intended to encourage each member to execute a greater amount of these
strategies. The Exchange believes applying the merger, short stock
interest, reversal and conversion, jelly roll and box spread strategy
cap per beneficial account when transacted on an agency basis would
allow the Exchange to incentivize reversal and conversion, jelly roll
and box spread strategies in accordance with the order flow that each
member executes on the Exchange. Despite the increase in the cap from
$700 to $1,100 for the reversal and conversion, jelly roll and box
spread strategies, the Exchange believes that members will be able to
meet the new qualification because members will be able to aggregate
all options classes to qualify for the increased cap.
The Exchange's proposal to eliminate the current reversal and
conversion, jelly roll and box spread strategy caps for Specialists,
Market Makers, Professionals, Firms and Broker-Dealers and adopt a new
strategy cap for these strategies which requires that these strategies
be executed on the same trading day for all options classes in the
aggregate, when such members are trading in their own proprietary
accounts or on an agency basis, in conjunction with the merger and
short stock interest strategies, is equitable and not unfairly
discriminatory. All members may qualify for the merger, short stock
interest, reversal and conversion, jelly roll and box spread strategy
caps provided they transact the requisite amount of merger, short stock
interest, reversal and conversion, jelly roll and box spread strategies
wherein the buy and sell side of a transaction originated from the
Exchange floor. The Exchange also believes that it is equitable and not
unfairly discriminatory to permit a merger, short stock interest,
reversal and conversion, jelly roll and box spread strategy cap to
apply to each beneficial account when transacted on an agency basis. To
the extent that a member is transacting a merger, short stock interest,
reversal and conversion, jelly roll and box spread strategy on an
agency basis, the benefit of the merger, short stock interest, reversal
and conversion, jelly roll and box spread cap would apply separately to
each beneficial account on whose behalf the member is executing these
strategies because the transaction is for the benefit of a customer and
not the member.
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.
Inter-market Competition
The proposal does not impose an undue burden on inter-market
competition. The Exchange believes its proposal remains competitive
with other options markets and will offer market participants with
another choice of where to transact options. The Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
exchanges that have been exempted from compliance with the statutory
standards applicable to exchanges. Because competitors are free to
modify their own fees in response, and because market participants may
readily adjust their order routing practices, the Exchange believes
that the degree to which fee changes in this market may impose any
burden on competition is extremely limited.
Intra-market Competition
The proposed amendments do not impose an undue burden on intra-
market competition. The Exchange's proposal to amend the qualification
for Specialists, Market Makers, Professionals, Firms and Broker-Dealers
dividend strategies by lowering the cap from $1,500 to $1,100 and also
amending the qualification for dividend strategies does not impose an
undue burden on intra-market competition because all members may
qualify for the dividend strategy cap provided they transact the
requisite amount of dividend strategies wherein the buy and sell side
of a transaction originated from the Exchange floor. The Exchange also
believes that it does not impose an undue burden on competition to
permit a dividend cap to apply to each beneficial account when
transacted on an agency basis. To the extent that a member is
transacting a dividend strategy on an agency basis, the benefit of the
dividend cap would apply separately to each beneficial account on whose
behalf the member is executing the dividend strategy because the
transaction is for the benefit of a customer and not the member.
The Exchange's proposal to amend the qualification for Specialists,
Market Makers, Professionals, Firms and Broker-Dealers merger and short
stock interest strategies by lowering the cap from $1,500 to $1,100 and
also amending the qualification for these strategies to allow these
strategies to be in the aggregate for all options classes and on an
agency basis, along with reversal and conversion, jelly roll and box
spread strategies, while continuing to permit members to trade in their
own proprietary accounts, in conjunction with the reversal and
conversion, jelly roll and box spread strategies, does not impose an
undue burden on competition because all members may qualify for the
merger and short stock interest strategy caps provided they transact
the requisite amount of merger, short stock interest, reversal and
conversion, jelly roll and box spread strategies wherein the buy and
sell side of a transaction originated from the Exchange floor. The
Exchange also believes that it does not impose an undue burden on
competition to permit a merger, short stock interest, reversal and
conversion, jelly roll and box spread cap to apply to each beneficial
account when transacted on an agency basis. To the extent that a member
is transacting a merger, short stock interest, reversal and conversion,
jelly roll and box spread strategy on an agency basis, the benefit of
the merger, short stock interest, reversal and conversion, jelly roll
and box spread would apply separately to each beneficial account on
whose behalf the member is executing these strategies because the
transaction is for the benefit of a customer and not the member.
The Exchange's proposal to eliminate the current reversal and
conversion, jelly roll and box spread strategy caps for Specialists,
Market Makers, Professionals, Firms and Broker-Dealers and adopt a new
strategy increased cap of $1,100 for these strategies which requires
that these strategies be executed on the same trading day for all
options classes in the aggregate, when such members are trading in
their own proprietary accounts or on an agency basis, in conjunction
with merger and short stock interest strategies, does not impose an
undue burden on competition. All members may qualify for the merger,
short stock interest, reversal and conversion, jelly roll and box
spread strategy caps provided they transact the requisite amount of
merger, short stock interest, reversal and conversion, jelly roll and
box spread strategies wherein the buy and sell side
[[Page 5531]]
of a transaction originated from the Exchange floor. Further,
increasing the cap from $700 to $1,100 for the reversal and conversion,
jelly roll and box spread strategies does not impose an undue burden on
competition because all members may qualify for the new qualification
by aggregating all options classes to qualify for the increased cap in
the merger and short stock interest, reversal and conversion, jelly
roll and box spread strategies
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\25\
---------------------------------------------------------------------------
\25\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-Phlx-2020-02 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-2020-02. 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. 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-2020-02 and should be submitted on
or before February 20, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
---------------------------------------------------------------------------
\26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-01647 Filed 1-29-20; 8:45 am]
BILLING CODE 8011-01-P
