Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Relocate Rules From Its Current Rulebook Into Its New Rulebook Shell, 9859-9869 [2020-03413]

Download as PDF Federal Register / Vol. 85, No. 34 / Thursday, February 20, 2020 / Notices competition, and the Exchange’s proposed fees do not do so here. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 76 of the Act and subparagraph (f)(2) of Rule 19b–4 77 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 78 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSENAT–2020–05 on the subject line. lotter on DSKBCFDHB2PROD with NOTICES 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–NYSENAT–2020–05. 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 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 78 15 U.S.C. 78s(b)(2)(B). 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–NYSENAT–2020–05, and should be submitted on or before March 12, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.79 Jill M. Peterson, Assistant Secretary. [FR Doc. 2020–03411 Filed 2–19–20; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88213; File No. SR–Phlx– 2020–03] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Relocate Rules From Its Current Rulebook Into Its New Rulebook Shell February 14, 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 February 3, 2020, Nasdaq PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule 79 17 77 17 1 15 VerDate Sep<11>2014 19:48 Feb 19, 2020 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. Jkt 250001 PO 00000 Frm 00139 Fmt 4703 change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to relocate rules from its current Rulebook into its new Rulebook shell. The text of the proposed rule change is available on the Exchange’s website at https://nasdaqphlx.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose BILLING CODE 8011–01–P 76 15 9859 Sfmt 4703 The purpose of this rule change is to relocate Phlx rules into the new Rulebook shell with some amendments to the shell.3 The Exchange has already relocated options rules of its Affiliated Exchanges so that it may harmonize its rules, where applicable, across Nasdaq markets. The relocation and harmonization of the Phlx options rules is part of the Exchange’s continued effort to promote efficiency and conformity of its processes with those of its Affiliated Exchanges. The Exchange believes that the placement of the Phlx Rules into their new location in the 3 Previously, the Exchange added a shell structure to its Rulebook with the purpose of improving efficiency and readability and to align its rules closer to those of its five sister exchanges, Nasdaq BX, Inc.; Nasdaq PHLX LLC; The Nasdaq Stock Market LLC; Nasdaq GEMX, LLC; and Nasdaq MRX, LLC (‘‘Affiliated Exchanges’’). The shell structure currently contains eight (8) Chapters which, once complete, will apply a common set of rules to the Affiliated Exchanges. See Securities Exchange Act Release No. 82169 (November 29, 2017), 82 FR 57508 (December 5, 2017) (SR–Phlx–2017–97). E:\FR\FM\20FEN1.SGM 20FEN1 9860 Federal Register / Vol. 85, No. 34 / Thursday, February 20, 2020 / Notices shell will facilitate the use of the Rulebook by members. Universal Changes The Exchange proposes to replace references to ‘‘Phlx XL’’, ‘‘Phlx XL II’’, ‘‘trading system’’ and ‘‘system’’ with the defined term ‘‘System’’ throughout the new rules. The Exchange proposes to replace the terms ‘‘specialist’’ and ‘‘Specialist’’ with the term ‘‘Lead Market Maker’’ to define this market participant throughout the Rulebook. The Exchange proposes to replace the terms ‘‘Remote Specialist’’ with the term ‘‘Remote Lead Market Maker’’ to define this market participant throughout the Rulebook. Any references to ‘‘Directed Specialist’’ shall be replaced with ‘‘Directed Lead Market Maker.’’ The Exchange proposes to replace the term ‘‘Registered Options Trader’’ with the term ‘‘Market Maker’’ to define this participant throughout the Rulebook. Any references to (‘‘ROTs’’) will be removed from the Rulebook. With respect to renaming the market participants, the Exchange notes that there are no changes to the roles and responsibilities of these market participants in connection with the name change. The Exchange proposes to change references to ‘‘Commentary’’ to ‘‘Supplementary Material’’ to conform the term throughout the Rulebook. The defined terms ‘‘Exchange Act’’ and ‘‘SEC’’ replaced the terms ‘‘Securities Exchange Act of 1934’’ and ‘‘Securities and Exchange Commission’’, respectively. The Exchange proposes to update all cross-references within the Rule to the new relocated rule cites. The Exchange proposes to replace internal rule references to simply state ‘‘this Rule’’ where the rule is citing itself without a more specific cite included in the Rule. For example, if Phlx Rule 1014 refers General 1 The Exchange proposes to relocate definitions from Rule 1 into proposed General 1, Section 1, except for the term ‘‘Options Exchange Official,’’ which will be relocated into proposed Options 1, Section 1. General 2 General 2 would be comprised of the following rules: Proposed new rule No. Current rule No. Section 1 ........................... Section 2 ........................... Reserved. Rule 52. Fees, Dues and Other Charges; Rule 924. Obligations of Members and Member Organizations to the Exchange; Rule 56. Effect of Suspension or Termination on Payment of Fees; and Rule 63. Effect of Suspension or Termination (re-titled ‘‘Fees, Dues and Other Charges’’). Rule 651. Exchange’s Cost of Defending Legal Proceedings. Rule 985. Affiliation of Ownership Restrictions. Reserved. Reserved. Reserved. Reserved. Reserved. Reserved. Reserved. Rule 926. The Exchange’s Business Continuity and Disaster Recovery Plan Testing Requirements for Member Organizations and PSX Participants Pursuant to Regulation SCI (re-titled ‘‘Business Continuity and Disaster Recovery’’). Reserved. Rule 990. Additional Requirements for Securities Listed on the Exchange Issued by Nasdaq or its Affiliates. Reserved. Reserved. Rule 1015. Accommodations. Rule 57. Members’ Contracts and Rule 58. Exchange Contracts (re-titled ‘‘Contracts’’). Rule 59. Deliveries through Registered Clearing Agencies. Rule 62. Disapproval of Business. Rule 64. Office Vacated by Suspension or Termination. Rule 1094. Sponsored Participants. Section Section Section Section Section Section Section Section Section Section 3 ........................... 4 ........................... 5 ........................... 6 ........................... 7 ........................... 8 ........................... 9 ........................... 10 ......................... 11 ......................... 12 ......................... Section Section Section Section Section Section Section Section Section Section 13 14 15 16 17 18 19 20 21 22 ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... The Exchange proposes to reserve those sections where Phlx does not have rules similar to other Nasdaq Affiliated Markets. General 3 The Exchange proposes to relocate the following rules into General 3, ‘‘Membership and Access.’’ Proposed new rule No. lotter on DSKBCFDHB2PROD with NOTICES currently to ‘‘Rule 1014’’ or ‘‘this Rule 1014’’ the Exchange will amend the phrase to simply ‘‘this Rule.’’ The Exchange proposes to conform numbering and lettering in certain rules to the remainder of the Rulebook. Finally, the Exchange proposes to delete any current Rules that are reserved in the Rulebook and add new reserved rules where other Nasdaq Affiliated Exchanges may have a rule in use and there is no comparable rule on Phlx. Section Section Section Section Section Section Section Section Section 1 2 3 4 5 6 7 8 9 ........................... ........................... ........................... ........................... ........................... ........................... ........................... ........................... ........................... VerDate Sep<11>2014 Current rule No. Rule 910. Qualification as Member Organization. Rule 901. Denial of and Conditions to Membership. Reserved. Reserved. Rule 900.2. Membership Applications. Reserved. Rule 600. Registration. Rule 602. Status Verification. Rule 900. Administration of Rules by Membership Department. 19:48 Feb 19, 2020 Jkt 250001 PO 00000 Frm 00140 Fmt 4703 Sfmt 4703 E:\FR\FM\20FEN1.SGM 20FEN1 Federal Register / Vol. 85, No. 34 / Thursday, February 20, 2020 / Notices Proposed new rule No. Section Section Section Section Section Section Section 10 11 12 13 14 15 16 ......................... ......................... ......................... ......................... ......................... ......................... ......................... Current rule No. Rule Rule Rule Rule Rule Rule Rule 900.1. General Powers and Duties of Membership Department. 908. Rights and Privileges of A–1 Permits. 911. Member and Member Organization Participation. 921. Qualification; Designation of Executive Representative. 912. Transfer of Accounts. 922. Certificate of Incorporation. 923. Review of Membership Department Decisions. The Exchange proposes to delete Rule 900 as unnecessary given the new Rulebook organization structure. The Exchange proposes to delete current Rule 900.2(e) within proposed General 3, Section 5, because Rule 798 is currently reserved and that provision is no longer applicable. General 9 The Exchange proposes to adopt a new General 9, titled ‘‘Regulation.’’ The Exchange proposes to relocate the following rules into General 9: Proposed new rule No. Current rule No. Section 1 ........................... Rule 765. Prohibition Against Trading Ahead of Customer Orders and Rule 782. Manipulative Operations (re-titled ‘‘General Standards’’). Rule 741. Customers’ Securities and Rule 771. Excessive Trading of Members (re-titled Customers’ Securities and Excessive Trading of Members’’). Reserved. Reserved. Reserved. Reserved. Rule 783. Report of Financial Arrangements. Reserved. Reserved. Rule 763. Recommendations to Customers (Suitability). Rule 764. Best Execution and Interpositioning. Reserved. Reserved. Reserved. Reserved. Reserved. Reserved. Reserved. Rule 754. Discretionary Power as to Customers’ Accounts. Rule 748. Supervision Rule. 761. Supervisory Procedures Relating to ITSFEA and to Prevention of Misuse of Material Nonpublic Information. Reserved. Reserved. Reserved. Rule 751. Accounts of Employees of Member Organizations. Reserved. Reserved. Reserved. Rule 749. Transactions for Employees of Exchange, etc. and Rule 750. Speculative Transactions for Employees of Certain Employers (re-titled ‘‘Transactions for Employees and Speculative Transactions for Employees of Certain Employers’’). Reserved. Reserved. Reserved. Reserved. Reserved. Rule 2040. Nonregistered Foreign Finders. Reserved. Reserved. Reserved. Rule 705. Fidelity Bonds. Reserved. Reserved. Reserved. Reserved. Reserved. Reserved. Reserved. Reserved. Reserved. Reserved. Reserved. Reserved. Section 2 ........................... lotter on DSKBCFDHB2PROD with NOTICES 9861 Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section 3 ........................... 4 ........................... 5 ........................... 6 ........................... 7 ........................... 8 ........................... 9 ........................... 10 ......................... 11 ......................... 12 ......................... 13 ......................... 14 ......................... 15 ......................... 16 ......................... 17 ......................... 18 ......................... 19 ......................... 20 ......................... 21 ......................... 22 ......................... 23 ......................... 24 ......................... 25 ......................... 26 ......................... 27 ......................... 28 ......................... 29 ......................... Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 50 51 52 ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... VerDate Sep<11>2014 19:48 Feb 19, 2020 Jkt 250001 PO 00000 Frm 00141 Fmt 4703 Sfmt 4703 E:\FR\FM\20FEN1.SGM 20FEN1 9862 Federal Register / Vol. 85, No. 34 / Thursday, February 20, 2020 / Notices Proposed new rule No. Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... Current rule No. Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule Rule 774. 777. 601. 602. 603. 605. 610. 625. 704. 745. 746. 747. 752. 753. 773. 784. 786. 796. Disruptive Quoting and Trading Activity Prohibited. Guarantees Not Permitted. Office, Other Than Main Offices. Status Verification. Control of Offices. Advertisements, Market Letters, Research Reports and Sales Literature. Notification of Changes in Business Operations. Training. Assignment of Interest of Partner. Partial Payments. Diligence as to Accounts. Approval of Accounts. Statements to Be Sent to Customers. Notwithstanding Power of Attorney. Participation in Joint Accounts. Report of Options. Periodic Reports. Underwriting of Securities by Member Organizations. Equities 7 The Exchange proposes to relocate Rule 607 titled ‘‘Covered Sales Fee’’ to Equities 7, Equity Pricing at new proposed Section 5.4 Also, Rule 2040, Nonregistered Foreign Finders, does not appear in PSX Rule 3202, this rule applies to equity products today. The Exchange believes its failure to be included within PSX Rule 3202 was an oversight and proposes to include this Rule within General 9. Options 1 The Exchange proposes to rename current Options 1 from ‘‘Options by referring to option series. The Exchange believes that replacing the term with the term ‘‘option series’’ will make the Rulebook clear. The Exchange also proposes to relocate the definition of ‘‘Option Exchange Official’’ which is currently located in General I, Section 1 into this section as this term relates to the trading of options. Options 2 The Exchange proposes to rename Options 2 from ‘‘Options Trading Rules’’ to ‘‘Options Market Participants’’ and relocate the following rules into this chapter: Proposed new rule No. Current rule No. Section 1 ........................... Section 2 ........................... Section 3 ........................... Rule 507. Application for Approval as an SQT, RSQT, or RSQTO and Assignment in Options. Reserved. Rule 506. Allocation Application, Allocation, Reallocation, and Transfer; Rule 508. Transfer Application; and Rule 513. Voluntary Resignation of Options Privileges (re-titled ‘‘Allocation Application, Allocation, Reallocation, Transfer and Voluntary Resignation’’. Rule 1014. Obligations of Market Makers (a–d). Rule 1081. Electronic Market Maker Obligations and Quoting Requirements. Rule 1014. Obligations of Market Makers, subparagraph (e) only. Rule 1022. Securities Accounts and Orders of Specialists and Registered Options Traders. Reserved. Rule 510. Good Standing for Specialist, SQT, and RSQT. Rule 1068. Directed Orders. Rule 501. Specialist Appointment. Rule 1020. Registration and Functions of Options Specialists. Rule 1036. Affiliated Persons Of Specialists. Rule 175. Limitations on Options Market Making. Section Section Section Section Section Section Section Section Section Section Section lotter on DSKBCFDHB2PROD with NOTICES Definitions’’ to ‘‘General Provisions.’’ The Exchange proposes to relocate definitions from Rule 1000, Applicability, Definitions and References, into proposed General 1, Section 1. The Exchange proposes not to relocate the terms ‘‘System Book Feed’’ and ‘‘System Securities’’ from Rule 1000 into Options 1, Section 1. The term ‘‘System Book Feed’’ is not utilized in the Rulebook currently. The term ‘‘System Securities’’ is only utilized within the definition of the term ‘‘System’’ at proposed Options 1, Section 1(a)(52) and within current Rule 911 which was relocated to General 2, Section 12. The term is simply replaced 4 ........................... 5 ........................... 6 ........................... 7 ........................... 8 ........................... 9 ........................... 10 ......................... 11 ......................... 12 ......................... 13 ......................... 14 ......................... The Exchange proposes to relocate a portion of a sentence from current Rule 1014(b) to Options 8, Section 11(b). The sentence provides, ‘‘. . . Exchange options transactions initiated by such Market Maker on the Trading Floor for any account in which he had an interest shall to the extent prescribed by the Exchange be in such assigned classes.’’ This sentence is being relocated into Options 8, Section 11 because it pertains to Floor Market Maker assignments. The remainder of current Rule 1014(b) was relocated to Options 3, Section 4(b). Rule 452, ‘‘Limitations on Members’ Trading Because of Customers’ Orders’’ is being relocated into Options 8, Section 17. 4 Rule 607 is both and options and equities rule and is therefore being replicated in both Equity 7 and Options 7. VerDate Sep<11>2014 19:48 Feb 19, 2020 Jkt 250001 PO 00000 Frm 00142 Fmt 4703 Sfmt 4703 E:\FR\FM\20FEN1.SGM 20FEN1 Federal Register / Vol. 85, No. 34 / Thursday, February 20, 2020 / Notices Options 2A Options 3 The Exchange proposes to reserve Options Section 2A. The Exchange proposes to rename Options 3 from ‘‘Options Market 9863 Participants’’ to ‘‘Options Trading Rules’’ and relocate the following rules into this chapter: Proposed new rule No. Current rule No. Section 1 ........................... Section 2 ........................... Rule 101. Hours of Business. Rule 1013. Units of Trading and Rule 1067. Precedence of Highest Bid and Lowest Offer (re-titled ‘‘Units of Trading’’). Rule 1034. Minimum Increments. Rule 1019. Entry and Display of Quotes. Rule 1096. Entry and Display of Orders. Rule 1082. Firm Quotations, except Rule 1082(a)(ii)(C). Rule 1080. Electronic Acceptance of Quotes and Orders. Rule 1017. Openings In Options. Rule 1047. Trading Halts. Rule 1089. Electronic Execution Priority and Processing in the System and Rule 1035. Zero-Bid Option Series (this rule will remain titled ‘‘Electronic Execution Priority and Processing in the System’’). Reserved. Rule 1088. Qualified Contingent Cross Order (re-titled ‘‘Electronic Qualified Contingent Cross Order’’). Rule 1087. Price Improvement XL (‘‘PIXL’’). Rule 1098(a)–(f) Complex Orders on the System (re-titled ‘‘Complex Orders’’). Rule 1099. Risk Protections (re-titled ‘‘Simple Risk Protections). Rule 1098(g)–(j) to be titled ‘‘Complex Orders Risk Protections’’. Rule 1073. Kill Switch. Rule 1074. Detection of Loss of Communication. Rule 1090. Mass Cancellation of Trading Interest. Rule 1092. Nullification and Adjustment of Options Transactions including Obvious Errors. Rule 1016. Exchange Sharing of Phlx XL Participant-Designated Risk Settings (re-titled as ‘‘Access to and Conduct on Phlx’’). Rule 1097. Limitations on Order Entry. Rule 1070. Data Feeds and Trade Information. Rule 128. Price of Execution Binding. Reserved. Rule 1082(a)(ii)(C) to be titled ‘‘Message Traffic Mitigation’’. Rule 652. Limitation of Exchange Liability and Reimbursement of Certain Expenses. Reserved. Section Section Section Section Section Section Section Section 3 ........................... 4 ........................... 5 ........................... 6 ........................... 7 ........................... 8 ........................... 9 ........................... 10 ......................... Section Section Section Section Section Section Section Section Section Section Section 11 12 13 14 15 16 17 18 19 20 21 ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... Section Section Section Section Section Section Section 22 23 24 25 26 27 28 ......................... ......................... ......................... ......................... ......................... ......................... ......................... Options 4 The Exchange proposes to relocate rules within Options 4 Options Listing Rules as follows: Proposed new rule No. lotter on DSKBCFDHB2PROD with NOTICES Section Section Section Section Section Section Section Section Section Section Section 1 ........................... 2 ........................... 3 ........................... 4 ........................... 5 ........................... 6 ........................... 7 ........................... 8 ........................... 9 ........................... 10 ......................... 11 ......................... Current rule No. Rule 1007. Designation Of Securities. Rule 1008. Rights And Obligations Of Holders And Writers. Rule 1009. Criteria for Underlying Securities/Rule 1011. Option Contracts To Be Traded. Rule 1010. Withdrawal of Approval of Underlying Securities or Options. Rule [sic]. Series of Options Open for Trading. Reserved. Reserved. Reserved. Reserved. Rule 99. Backup Trading Arrangements. Rule 1057. U.S. Dollar-Settled Foreign Currency Option Closing Settlement Value. Rule text within current Commentary .01(6) of Rule 1010, which provides, ‘‘. . . provided, however, that in the case of a Restructure Security approved for options listing and trading under paragraph (d) of Commentary .05 under VerDate Sep<11>2014 19:48 Feb 19, 2020 Jkt 250001 Rule 1009, such trading volume requirements must be satisfied based on the trading volume history of the Restructure Security.’’ PO 00000 Frm 00143 Fmt 4703 Sfmt 4703 Options 4A The Exchange proposes to relocate rules within new proposed Options 4A, which is proposed to be titled ‘‘Options Index Rules’’ as follows: E:\FR\FM\20FEN1.SGM 20FEN1 9864 Federal Register / Vol. 85, No. 34 / Thursday, February 20, 2020 / Notices Proposed new rule No. Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section 1 ........................... 2 ........................... 3 ........................... 4 ........................... 5 ........................... 6 ........................... 7 ........................... 8 ........................... 9 ........................... 10 ......................... 11 ......................... 12 ......................... 13 ......................... 14 ......................... 15 ......................... 16 ......................... 17 ......................... 18 ......................... 19 ......................... 20 ......................... 21 ......................... Current rule No. Rule 1000A. Rule 1000A. Rule 1009A. Reserved. Rule 1100A. Rule 1001A. Reserved. Reserved. Reserved. Rule 1002A. Reserved. Rule 1101A. Reserved. Reserved. Rule 1042A. Reserved. Rule 1006A. Rule 1047A. Rule 1102A. Rule 1105A. Rule 1107A. Applicability and Definitions (paragraph (a)). Applicability and Definitions (paragraph (b)). Designation of the Index. Dissemination of Information. Position Limits. Exercise Limits. Terms of Option Contracts. Exercise of Option Contracts. Other Restrictions on Options Transactions and Exercises. Trading Rotations, Halts or Reopenings. Limitation of Exchange Liability. Standard & Poor’s® Index. Nasdaq, Inc. Indexes. The Exchange proposes to amend the rule text within Options 4A, Section 18(b) to remove the word ‘‘Specialist’’ and replace that word with ‘‘Exchange’’ and cite to the manual authority within current Rule 1047(b). The Exchange previously removed any functionality which permitted executions to be manually handled by a specialist.5 An Options Exchange Official determines a manual trading halt. Proposed new rule No. Section Section Section Section Section Section Section Section Section Section Section Section Section 1 ........................... 2 ........................... 3 ........................... 4 ........................... 5 ........................... 6 ........................... 7 ........................... 8 ........................... 9 ........................... 10 ......................... 11 ......................... 12 ......................... 13 ......................... Section 14 ......................... Section 15 ......................... Section Section Section Section Section Section Section Section Section Section 16 17 18 19 20 21 22 23 24 25 ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... ......................... lotter on DSKBCFDHB2PROD with NOTICES The Exchange proposes a new Options 4B, titled ‘‘Options on Treasury Securities.’’ Current rule No. Rule 1000D. Applicability of 1000D Series—Treasury Securities Options. Rule 1001D. Definitions—Treasury Securities Options. Rule 1002D. Position Limits—Treasury Securities Options. Rule 1003D. Exercise Limits—Treasury Securities Options. Rule 1004D. Reports Related to Position Limits and Liquidation of Positions—Treasury Securities Options. Rule 1005D. Reports Related to Position Limits and Liquidation of Positions—Treasury Securities Options. Rule 1006D. Criteria for Securities Underlying Treasury Securities Options. Rule 1007D. Withdrawal of Approval of Underlying Treasury Securities or Options. Rule 1008D. Terms of Treasury Securities Options. Rule 1009D. Series of Treasury Securities Options Open for Trading. Rule 1010D. Days and Hours of Business of Treasury Securities Options. Rule 1011D. Trading Rotations—Treasury Securities Options. Rule 1012D. Trading Halts and Suspension of Trading, Obvious and Catastrophic Errors—Treasury Securities Options. Rule 1013D. Minimum Increment and Meaning of Premium Bids and Offers for Treasury Securities Options. Rule 1014D. Specialist and Registered Option Trader Obligations and Electronic Trading—Treasury Securities Options. Rule 1015D. Accommodation Trading—Treasury Securities Options. Rule 1016D. Reconciliation of Unmatched Trades—Treasury Securities Options. Rule 1018D. Limit Book for Treasury Securities Options. Rule 1019D. Bid/Ask Differentials—Treasury Securities Options. Rule 1020D. Allocation of Exercise Assignment Notices—Treasury Securities Options. Rule 1021D. Delivery and Payment—Treasury Securities Options. Rule 1022D. Margin Requirements—Treasury Securities Options. Rule 1023D. Furnishing of Books, Records and Other Information—Treasury Securities Options. Rule 1024D. Communication Links—Treasury Securities Options. Rule 1025D. Doing Business With the Public—Treasury Securities Options. Options 5 The Exchange proposes to rename Options 5 from ‘‘Options Trade 5 Manual execution by a specialist could previously occur in AUTOM, a prior exchange system. Specialist manual handling is obsolete. VerDate Sep<11>2014 Options 4B 19:48 Feb 19, 2020 Jkt 250001 Administration’’ to ‘‘Order Protection and Locked and Crossed Markets’’ and relocate rules within Options 5 as follows: AUTOM and AUTO–X were replaced by Phlx XL, which is now defined as ‘‘System’’. See Securities Exchange Act Release No. 50100 (July 27, 2004), 69 FR 46612 (August 3, 2004) (SR–Phlx–2003–59). PO 00000 Frm 00144 Fmt 4703 Sfmt 4703 E:\FR\FM\20FEN1.SGM 20FEN1 Federal Register / Vol. 85, No. 34 / Thursday, February 20, 2020 / Notices Proposed new rule No. Section Section Section Section Section 1 2 3 4 5 ........................... ........................... ........................... ........................... ........................... Current rule No. Rule Rule Rule Rule Rule 1083. 1084. 1086. 1093. 1091. Order Protection; Locked and Crossed Markets. Order Protection. Locked and Crossed Markets. Away Markets and Order Routing (re-titled ‘‘Order Routing’’). Cancellation of Orders and Error Account. Options 6 Locked and Cross Markets’’ to ‘‘Options Trade Administration’’ and relocate rules within Options 6 as follows: The Exchange proposes rename Options 6 from ‘‘Order Protection and Proposed new rule No. Section Section Section Section Section Section Section Section Section Section Section Section Section 1 ........................... 2 ........................... 3 ........................... 4 ........................... 5 ........................... 6 ........................... 7 ........................... 8 ........................... 9 ........................... 10 ......................... 11 ......................... 12 ......................... 13 ......................... Current rule No. Rule 1037. Rule 1052. Rule 1051. Reserved. Rule 1058. Rule 1045. Rule 1059. Rule 1046. Rule 1048. Rule 1053. Rule 1054. Rule 1055. Rule 1056. Authorization to Give Up. Responsibility Of Clearing Members For Exchange Options Transactions. General Comparison And Clearance Rule. Transfer of Positions. Off-Exchange RWA Transfers. In-Kind Exchange of Options Positions and ETF Shares. Clearing Arrangements. Stock Transfer Tax. Filing Of Trade Information. Verification Of Trades And Reconciliation Of Uncompared Trades. Reporting Of Compared Trades To Options Clearing Corporation. Maintaining Office And Filing Signatures. Options 6A The Exchange proposes to relocate rules within new proposed Options 6A titled ‘‘Closing Transactions’’ as follows: Proposed new rule No. Section 1 ........................... Section 2 ........................... Current rule No. Rule 1041. Options Contracts Of Suspended Members. Rule 1040. Failure To Pay Premium. Options 6B The Exchange proposes to relocate rules within new proposed Options 6B titled ‘‘Exercises and Deliveries’’ as follows: Proposed new rule No. Section 1 ........................... Section 2 ........................... Section 3 ........................... Current rule No. Rule 1042. Exercise Of Equity Option Contracts. Rule 1043. Allocation of Exercise Notices. Rule 1044. Delivery and Payment. Options 6C The Exchange proposes to relocate rules within new proposed Options 6C titled ‘‘Margins’’ as follows: lotter on DSKBCFDHB2PROD with NOTICES Proposed new rule No. Section Section Section Section Section Section Section 1 2 3 4 5 6 7 ........................... ........................... ........................... ........................... ........................... ........................... ........................... VerDate Sep<11>2014 Current rule No. Reserved. Reserved. Rule 721. Proper and Adequate Margin. Reserved. Reserved. Reserved. Rule 723. Prohibition on Free-Riding in Cash Accounts. 19:48 Feb 19, 2020 Jkt 250001 PO 00000 Frm 00145 Fmt 4703 Sfmt 4703 E:\FR\FM\20FEN1.SGM 20FEN1 9865 9866 Federal Register / Vol. 85, No. 34 / Thursday, February 20, 2020 / Notices Options 6D The Exchange proposes to relocate rules within new proposed Options 6D titled ‘‘Net Capital Requirements’’ as follows: Proposed new rule No. Section Section Section Section 1 2 3 4 ........................... ........................... ........................... ........................... Current rule No. Rule 703. Financial Responsibility and Reporting. Reserved. Reserved. Reserved. Options 6E The Exchange proposes to relocate rules within new proposed Options 6E titled ‘‘Records, Reports and Audits’’ as follows: Proposed new rule No. Section Section Section Section Section Section Section Section Section 1 2 3 4 5 6 7 8 9 ........................... ........................... ........................... ........................... ........................... ........................... ........................... ........................... ........................... Current rule No. Rule 760. Maintenance, Retention and Furnishing of Books, Records and Other Information. Rule 1003. Reporting Of Options Positions. Reserved. Rule 712. Independent Audit. Rule 785. Automated Submission of Trading Data. Reserved. Rule 980. Regulatory Services Agreements. Reserved. Reserved. The commentary section in Rule 760 has been relocated to Options 6E, Section 1(b). Options 7 The Exchange proposes to relocate Rule 607 titled ‘‘Covered Sales Fee to Options 7, Options Pricing, at new proposed Section 12.6 lotter on DSKBCFDHB2PROD with NOTICES 6 Rule 607 is both and options and equities rule and is therefore being replicated in both Equity 7 and Options 7. VerDate Sep<11>2014 19:48 Feb 19, 2020 Jkt 250001 Options 8 Rule 110, ‘‘Bids and Offers— Manners,’’ Rule 119, ‘‘Precedence of Highest Bid’’ and Rule 120, ‘‘Precedence of Offers at Same Price’’ are being relocated within the Supplementary Material to Options 8, Section 24, ‘‘Bids and Offers—Premium’’. The Exchange proposes to remove references to Rule 723 as this rule no longer exists. The Exchange also proposes to remove obsolete rule text at the end of Options 8, Section 39 at C– 2, Options Floor Based Management System, which provides, ‘‘The Exchange PO 00000 Frm 00146 Fmt 4703 Sfmt 4703 anticipates that it will implement the Snapshot feature referenced herein and described further in Options 8, Section 28(e) during the Fourth Quarter of 2017. The Exchange will notify members via an Options Trader Alert, to be posted on the Exchange’s website, at least seven calendar days prior to the date when Snapshot will be available for use.’’ Options 9 The Exchange proposes to relocate rules within new proposed Options 9 titled ‘‘Business Conduct’’ as follows: E:\FR\FM\20FEN1.SGM 20FEN1 Federal Register / Vol. 85, No. 34 / Thursday, February 20, 2020 / Notices Proposed new rule No. Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section 1 ........................... 2 ........................... 3 ........................... 4 ........................... 5 ........................... 6 ........................... 7 ........................... 8 ........................... 9 ........................... 10 ......................... 11 ......................... 12 ......................... 13 ......................... 14 ......................... 15 ......................... 16 ......................... 17 ......................... 18 ......................... 19 ......................... 20 ......................... 21 ......................... 22 ......................... 23 ......................... 24 ......................... Current rule No. Rule 707. Conduct Inconsistent with Just and Equitable Principles of Trade. Reserved. Reserved. Reserved. Rule 708. Acts Detrimental to the Interest or Welfare of the Exchange. Reserved. Reserved. Reserved. Reserved. Reserved. Reserved. Reserved. Rule 1001. Position Limits. Reserved. Rule 1002. Exercise Limits. Reserved. Rule 1004. Liquidation Of Positions. Rule 1005. Limit On Uncovered Short Positions. Rule 1006. Other Restrictions on Exchange Options Transactions and Exercises. Reserved. Rule 757. Anti-Money Laundering Compliance Program. Reserved. Reserved. Rule 1050. Violation Of By-Laws And Rules Of Options Clearing Corporation. Options 10 The Exchange proposes to relocate rules within new proposed Options 10 titled ‘‘Doing Business with the Public’’ as follows: Proposed new rule No. Current rule No. Section 1 ........................... Section 2 ........................... Reserved. Rule 1024. Conduct of Accounts for Options Trading subparagraph (a) (re-titled ‘‘Registration of Options Principals’’). Reserved. Reserved. Reserved. Rule 1024. Conduct of Accounts for Options Trading subparagraph (b) (re-titled ‘‘Opening of Accounts’’). Rule 1025. Supervision of Accounts. Rule 1026. Suitability. Rule 1027. Discretionary Accounts. Rule 1028. Confirmations and Complaints subparagraph (a) (re-titled ‘‘Confirmations to Customers’’). Rule 1032. Statements of Accounts. Reserved. Rule 1029. Delivery of Options Disclosure Documents. Rule 742. Restrictions on Pledge of Customers’ Securities. Reserved. Reserved. Reserved. Reserved. Reserved. Rule 1049. Options Communications. Reserved. Rule 1028. Confirmations and Complaints subparagraph (b) (re-titled ‘‘Customer Complaints’’). Rule 762. Telemarketing. Rule 1030. Transactions With Issuers. Rule 1031. Restricted Stocks. Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section Section lotter on DSKBCFDHB2PROD with NOTICES 9867 3 ........................... 4 ........................... 5 ........................... 6 ........................... 7 ........................... 8 ........................... 9 ........................... 10 ......................... 11 ......................... 12 ......................... 13 ......................... 14 ......................... 15 ......................... 16 ......................... 17 ......................... 18 ......................... 19 ......................... 20 ......................... 21 ......................... 22 ......................... 23 ......................... 24 ......................... 25 ......................... The Exchange proposes to reserve Options 10, Sections 24 and 25. The Commentary section in Phlx Rules 1027 is being relocated to Section (f) within Options 10, Section 9. The Commentary section in Phlx Rules 1028 is being relocated to Section (f) within Options 10, Section 22. Proposed new rule No. Section 1 ........................... Section 2 ........................... VerDate Sep<11>2014 Options 11 Finally, the Exchange proposes to relocate the Options Minor Rule Violations into Options 11 titled ‘‘Minor Rule Plan Violations’’ as follows: Current rule No. A–1 Specialist as ROT. F–1 Option Quote Parameters. 19:48 Feb 19, 2020 Jkt 250001 PO 00000 Frm 00147 Fmt 4703 Sfmt 4703 E:\FR\FM\20FEN1.SGM 20FEN1 9868 Federal Register / Vol. 85, No. 34 / Thursday, February 20, 2020 / Notices Proposed new rule No. Section Section Section Section Section Section Section Section Section Section Section 3 ........................... 4 ........................... 5 ........................... 6 ........................... 7 ........................... 8 ........................... 9 ........................... 10 ......................... 11 ......................... 12 ......................... 13 ......................... Current rule No. F–2 Failure to Comply with an Exchange Inquiry. F–3 Affiliations. F–4 Unusual Market Conditions. F–5 Supervisory Procedures Relating to ITSFEA. F–6 Minor Infractions of Position/Exercise Limits and Hedge Exemptions. F–7 Clearing Agents’ Responsibility for Carrying Positions in Market Maker Accounts. F–8 Options Exchange Official Rulings. F–9 Failure to Provide Notification of Changes in Business Operations. F–10 Failure to Timely Submit Amendments to Form U4, Form U5 and Form BD. F–11 Violations of Exercise and Exercise Advice Rules for Noncash-Settled Equity Option Contracts. G–1 Index Option Exercise Advices. lotter on DSKBCFDHB2PROD with NOTICES PSX Rules 7 Rule 133, ‘‘Trading Halts Due to Extraordinary Market Volatility’’ is being relocated to new PSX Rule 3101 as this rule is solely an equities rule. Rule 652, ‘‘Limitation of Exchange Liability and Reimbursement of Certain Expenses’’ is being relocated into new PSX Rule 3102.8 Rule 103, ‘‘Dealings on the Exchange—Securities’’ is being relocated to new PSX Rule 3400. Rule 112, ‘‘Bids and Offers—‘‘When Issued’’ ’’ is being relocated to new PSX Rule 3401. Rule 128, ‘‘Price of Execution Binding’’ is being relocated to new PSX Rule 3402.9 Rule 274, ‘‘Payment on Delivery—Collect on Delivery’’ is being relocated to new PSX Rule 3403.10 Rule 279, ‘‘Book-Entry Settlement’’ is being relocated to new PSX Rule 3404. Rule 431, ‘‘Ex-dividend, Ex-rights’’ is being relocated into new PSX Rule 3405. Rule 432, ‘‘Ex-warrants’’ is being relocated into new PSX Rule 3406. Rule 433, ‘‘Buyer Entitled to Dividend, etc.’’ is being relocated into new PSX Rule 3407. Rule 434, ‘‘Claims for Dividend, etc.’’ is being relocated into new PSX Rule 3408. Rule 451, ‘‘Taking or Supplying Securities Named in Order’’ is being relocated into new PSX Rule 3409. Rule 452, ‘‘Limitations on Members’ Trading Because of Customers’ Orders’’ is being relocated into new PSX Rule 3410.11 Rule 453, ‘‘Successive Transactions by Members’’ is being relocated into new PSX Rule 7 PSX Rule 3202 currently notes rules which are incorporated by reference into PSX Rules. The rules within this section which are being relocated are currently part of the PSX Rules today. 8 Rule 652 is also being replicated into Options 3, Section 27 as this rule applies to both equities and options. 9 Rule 128 is being replicated within Options 3, Section 24 and also within the PSX Rules as this rule applies to both equities and options. 10 The Exchange is eliminating rule text related to the effective date of the rule. This language is obsolete. The Supplementary Material is being relocated to the main body of the Rule. 11 Rule 452, ‘‘Limitations on Members’ Trading Because of Customers’ Orders’’ is also being relocated into Options 8, Section 17. The Supplementary Material is being relocated to the main body of the Rule. VerDate Sep<11>2014 19:48 Feb 19, 2020 Jkt 250001 3411. Rule 455, ‘‘Short Sales’’ is being relocated into new PSX Rule 3412. Rule 721, ‘‘Proper and Adequate Margin’’ is being relocated into new PSX Rule 3413.12 Rule 723, ‘‘Prohibition on FreeRiding in Cash Accounts’’ is being relocated into new PSX Rule 3414.13 Rule 703, ‘‘Financial Responsibility and Reporting’’ is being relocated into new PSX Rule 3500.14 Rule 712, ‘‘Independent Audit’’ is being relocated into new PSX Rule 3501.15 Rule 785, ‘‘Automated Submission of Trading Data’’ is being relocated into new PSX Rule 3502.16 Rule 707, ‘‘Conduct Inconsistent with Just and Equitable Principles of Trade’’ is being relocated into Rule 3503.17 Rule 708, ‘‘Acts Detrimental to the Interest or Welfare of the Exchange’’ is being relocated into Rule 3504.18 Rule 742, ‘‘Restrictions on Pledge of Customers’ Securities’’ is being relocated into new PSX Rule 3505.19 Rule 757, ‘‘Anti-Money Laundering Compliance Program’’ is being relocated into new PSX Rule 3506.20 Rule 762, ‘‘Telemarketing’’ is being relocated into new PSX Rule 12 Rule 721 is being replicated within Options 6C, Section 3 and also within the PSX Rules as this rule applies to both equities and options. 13 Rule 723 is being replicated within Options 6C, Section 7 and also within the PSX Rules as this rule applies to both equities and options. 14 Rule 703 is being replicated within Options 6D, Section 1 and also within the PSX Rules as this rule applies to both equities and options. 15 Rule 712 is being replicated within Options 6E, Section 4 and also within the PSX Rules as this rule applies to both equities and options. 16 Rule 785 is being replicated within Options 6E, Section 5 and also within the PSX Rules as this rule applies to both equities and options. 17 Rule 707 is being replicated within Options 9, Section 1 and also within the PSX Rules as this rule applies to both equities and options. 18 Rule 708 is being replicated within Options 9, Section 5 and also within the PSX Rules as this rule applies to both equities and options. 19 Rule 742 is being replicated within Options 10, Section 14 and also within the PSX Rules as this rule applies to both equities and options. 20 Rule 757 is being replicated within Options 9, Section 21 and also within the PSX Rules as this rule applies to both equities and options. PO 00000 Frm 00148 Fmt 4703 Sfmt 4703 3507.21 Rule 980, ‘‘Regulatory Services Agreements’’ is being relocated into new PSX Rule 3600.22 The Exchange also proposes to amend PSX Rule 3202 to remove rules that: (1) Have been relocated into a general section and are therefore applicable to equities; (2) have been relocated into the PSX Rules or Equity 7; (3) which are reserved rules; and (4) remove references to Rule 623 (Fingerprinting), Rule 722 (Miscellaneous Securities Margin Accounts) and Rule 772 (Trading for Joint Account) as these rules do not exist in the Phlx Rulebook. Equity Titles The Exchange proposes to amend the current titles of Equity 2, 3, 4 and 7. The Exchange proposes to rename Equity 2, from ‘‘Equity Trading Rules’’ to ‘‘Equity Market Participants.’’ The Exchange proposes to rename Equity 3 from ‘‘Equity Market Participants’’ to ‘‘Equity Trading Rules.’’ The Exchange proposes to rename Equity 4 from ‘‘Equity Listing Rules’’ to ‘‘Limit Up-Limit Down’’. Finally, the Exchange proposes to reserve Equity 6 which is currently titled ‘‘Limit Up-Limit Down.’’ 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,23 in general, and furthers the objectives of Section 6(b)(5) of the Act,24 in particular, in that it is designed to promote just and equitable principles of trade and to protect investors and the public interest by bringing greater transparency to its rules by relocating its Rules into the new Rulebook shell together with other rules which have already been relocated. The Exchange’s proposal is consistent with the Act and will protect investors and the public interest by harmonizing its rules, where 21 Rule 762 is being replicated within Options 10, Section 23 and also within the PSX Rules as this rule applies to both equities and options. 22 Rule 980 is being replicated within Options 6E, Section 7 and also within the PSX Rules as this rule applies to both equities and options. 23 15 U.S.C. 78f(b). 24 15 U.S.C. 78f(b)(5). E:\FR\FM\20FEN1.SGM 20FEN1 Federal Register / Vol. 85, No. 34 / Thursday, February 20, 2020 / Notices applicable, across Nasdaq markets so that members can readily locate rules which cover similar topics. The relocation and harmonization of the Phlx Rules is part of the Exchange’s continued effort to promote efficiency and conformity of its processes with those of its Affiliated Exchanges. The Exchange believes that the placement of the Phlx Rules into their new location in the shell will facilitate the use of the Rulebook by members. Specifically, the Exchange believes that market participants that are members of more than one Nasdaq market will benefit from the ability to compare Rulebooks. The Exchange is not substantively amending rule text unless noted otherwise within this rule change. The renumbering, re-lettering, deleting reserved rules, amending crossreferences and other minor technical changes will bring greater transparency to Phlx’s Rules. The Exchange intends to file other rule change to relocate Affiliated Exchange Rulebooks to relocate corresponding rules into the same location in each Rulebook for ease of reference. The Exchange believes its proposal will benefit investors and the general public by increasing the transparency of its Rulebook and promoting easy comparisons among the various Nasdaq Rulebooks. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the proposed amendments do not impose an undue burden on competition because the amendments to relocate the Rules are non-substantive. This rule change is intended to bring greater clarity to the Exchange’s Rules. Renumbering, relettering, deleting reserved rules and amending cross-references will bring greater transparency to Phlx’s Rules. lotter on DSKBCFDHB2PROD with NOTICES 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. 19:48 Feb 19, 2020 Jkt 250001 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: 25 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 27 17 CFR 240.19b–4(f)(6). 28 17 CFR 240.19b–4(f)(6)(iii). 29 For purposes only of waiving the 30-day operative delay, the Commission also has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 26 17 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on VerDate Sep<11>2014 which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 25 and Rule 19b– 4(f)(6) thereunder.26 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 27 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 28 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay so that the Exchange could immediately relocate its rules. According to the Exchange, the proposal is intended to make it easier for members to locate the various Exchange rules, and is part of a larger effort to reorganize the Exchange’s rules and those of its Affiliated Exchanges. For these reasons, the Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.29 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved. PO 00000 Frm 00149 Fmt 4703 Sfmt 9990 9869 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–2020–03 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–2020–03. 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–2020–03, and should be submitted on or before March 12, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.30 Jill M. Peterson, Assistant Secretary. [FR Doc. 2020–03413 Filed 2–19–20; 8:45 am] BILLING CODE 8011–01–P 30 17 E:\FR\FM\20FEN1.SGM CFR 200.30–3(a)(12). 20FEN1

Agencies

[Federal Register Volume 85, Number 34 (Thursday, February 20, 2020)]
[Notices]
[Pages 9859-9869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03413]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88213; File No. SR-Phlx-2020-03]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Relocate Rules 
From Its Current Rulebook Into Its New Rulebook Shell

February 14, 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 February 3, 2020, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \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 relocate rules from its current Rulebook 
into its new Rulebook shell.
    The text of the proposed rule change is available on the Exchange's 
website at https://nasdaqphlx.cchwallstreet.com/, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this rule change is to relocate Phlx rules into the 
new Rulebook shell with some amendments to the shell.\3\ The Exchange 
has already relocated options rules of its Affiliated Exchanges so that 
it may harmonize its rules, where applicable, across Nasdaq markets. 
The relocation and harmonization of the Phlx options rules is part of 
the Exchange's continued effort to promote efficiency and conformity of 
its processes with those of its Affiliated Exchanges. The Exchange 
believes that the placement of the Phlx Rules into their new location 
in the

[[Page 9860]]

shell will facilitate the use of the Rulebook by members.
---------------------------------------------------------------------------

    \3\ Previously, the Exchange added a shell structure to its 
Rulebook with the purpose of improving efficiency and readability 
and to align its rules closer to those of its five sister exchanges, 
Nasdaq BX, Inc.; Nasdaq PHLX LLC; The Nasdaq Stock Market LLC; 
Nasdaq GEMX, LLC; and Nasdaq MRX, LLC (``Affiliated Exchanges''). 
The shell structure currently contains eight (8) Chapters which, 
once complete, will apply a common set of rules to the Affiliated 
Exchanges. See Securities Exchange Act Release No. 82169 (November 
29, 2017), 82 FR 57508 (December 5, 2017) (SR-Phlx-2017-97).
---------------------------------------------------------------------------

Universal Changes
    The Exchange proposes to replace references to ``Phlx XL'', ``Phlx 
XL II'', ``trading system'' and ``system'' with the defined term 
``System'' throughout the new rules. The Exchange proposes to replace 
the terms ``specialist'' and ``Specialist'' with the term ``Lead Market 
Maker'' to define this market participant throughout the Rulebook. The 
Exchange proposes to replace the terms ``Remote Specialist'' with the 
term ``Remote Lead Market Maker'' to define this market participant 
throughout the Rulebook. Any references to ``Directed Specialist'' 
shall be replaced with ``Directed Lead Market Maker.'' The Exchange 
proposes to replace the term ``Registered Options Trader'' with the 
term ``Market Maker'' to define this participant throughout the 
Rulebook. Any references to (``ROTs'') will be removed from the 
Rulebook. With respect to renaming the market participants, the 
Exchange notes that there are no changes to the roles and 
responsibilities of these market participants in connection with the 
name change.
    The Exchange proposes to change references to ``Commentary'' to 
``Supplementary Material'' to conform the term throughout the Rulebook. 
The defined terms ``Exchange Act'' and ``SEC'' replaced the terms 
``Securities Exchange Act of 1934'' and ``Securities and Exchange 
Commission'', respectively.
    The Exchange proposes to update all cross-references within the 
Rule to the new relocated rule cites. The Exchange proposes to replace 
internal rule references to simply state ``this Rule'' where the rule 
is citing itself without a more specific cite included in the Rule. For 
example, if Phlx Rule 1014 refers currently to ``Rule 1014'' or ``this 
Rule 1014'' the Exchange will amend the phrase to simply ``this Rule.'' 
The Exchange proposes to conform numbering and lettering in certain 
rules to the remainder of the Rulebook. Finally, the Exchange proposes 
to delete any current Rules that are reserved in the Rulebook and add 
new reserved rules where other Nasdaq Affiliated Exchanges may have a 
rule in use and there is no comparable rule on Phlx.
General 1
    The Exchange proposes to relocate definitions from Rule 1 into 
proposed General 1, Section 1, except for the term ``Options Exchange 
Official,'' which will be relocated into proposed Options 1, Section 1.
General 2
    General 2 would be comprised of the following rules:

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Reserved.
Section 2..........................................  Rule 52. Fees, Dues and Other Charges; Rule 924.
                                                      Obligations of Members and Member Organizations to the
                                                      Exchange; Rule 56. Effect of Suspension or Termination on
                                                      Payment of Fees; and Rule 63. Effect of Suspension or
                                                      Termination (re-titled ``Fees, Dues and Other Charges'').
Section 3..........................................  Rule 651. Exchange's Cost of Defending Legal Proceedings.
Section 4..........................................  Rule 985. Affiliation of Ownership Restrictions.
Section 5..........................................  Reserved.
Section 6..........................................  Reserved.
Section 7..........................................  Reserved.
Section 8..........................................  Reserved.
Section 9..........................................  Reserved.
Section 10.........................................  Reserved.
Section 11.........................................  Reserved.
Section 12.........................................  Rule 926. The Exchange's Business Continuity and Disaster
                                                      Recovery Plan Testing Requirements for Member
                                                      Organizations and PSX Participants Pursuant to Regulation
                                                      SCI (re-titled ``Business Continuity and Disaster
                                                      Recovery'').
Section 13.........................................  Reserved.
Section 14.........................................  Rule 990. Additional Requirements for Securities Listed on
                                                      the Exchange Issued by Nasdaq or its Affiliates.
Section 15.........................................  Reserved.
Section 16.........................................  Reserved.
Section 17.........................................  Rule 1015. Accommodations.
Section 18.........................................  Rule 57. Members' Contracts and Rule 58. Exchange Contracts
                                                      (re-titled ``Contracts'').
Section 19.........................................  Rule 59. Deliveries through Registered Clearing Agencies.
Section 20.........................................  Rule 62. Disapproval of Business.
Section 21.........................................  Rule 64. Office Vacated by Suspension or Termination.
Section 22.........................................  Rule 1094. Sponsored Participants.
----------------------------------------------------------------------------------------------------------------

    The Exchange proposes to reserve those sections where Phlx does not 
have rules similar to other Nasdaq Affiliated Markets.
General 3
    The Exchange proposes to relocate the following rules into General 
3, ``Membership and Access.''

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 910. Qualification as Member Organization.
Section 2..........................................  Rule 901. Denial of and Conditions to Membership.
Section 3..........................................  Reserved.
Section 4..........................................  Reserved.
Section 5..........................................  Rule 900.2. Membership Applications.
Section 6..........................................  Reserved.
Section 7..........................................  Rule 600. Registration.
Section 8..........................................  Rule 602. Status Verification.
Section 9..........................................  Rule 900. Administration of Rules by Membership Department.

[[Page 9861]]

 
Section 10.........................................  Rule 900.1. General Powers and Duties of Membership
                                                      Department.
Section 11.........................................  Rule 908. Rights and Privileges of A-1 Permits.
Section 12.........................................  Rule 911. Member and Member Organization Participation.
Section 13.........................................  Rule 921. Qualification; Designation of Executive
                                                      Representative.
Section 14.........................................  Rule 912. Transfer of Accounts.
Section 15.........................................  Rule 922. Certificate of Incorporation.
Section 16.........................................  Rule 923. Review of Membership Department Decisions.
----------------------------------------------------------------------------------------------------------------

    The Exchange proposes to delete Rule 900 as unnecessary given the 
new Rulebook organization structure. The Exchange proposes to delete 
current Rule 900.2(e) within proposed General 3, Section 5, because 
Rule 798 is currently reserved and that provision is no longer 
applicable.
General 9
    The Exchange proposes to adopt a new General 9, titled 
``Regulation.'' The Exchange proposes to relocate the following rules 
into General 9:

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 765. Prohibition Against Trading Ahead of Customer
                                                      Orders and Rule 782. Manipulative Operations (re-titled
                                                      ``General Standards'').
Section 2..........................................  Rule 741. Customers' Securities and Rule 771. Excessive
                                                      Trading of Members (re-titled Customers' Securities and
                                                      Excessive Trading of Members'').
Section 3..........................................  Reserved.
Section 4..........................................  Reserved.
Section 5..........................................  Reserved.
Section 6..........................................  Reserved.
Section 7..........................................  Rule 783. Report of Financial Arrangements.
Section 8..........................................  Reserved.
Section 9..........................................  Reserved.
Section 10.........................................  Rule 763. Recommendations to Customers (Suitability).
Section 11.........................................  Rule 764. Best Execution and Interpositioning.
Section 12.........................................  Reserved.
Section 13.........................................  Reserved.
Section 14.........................................  Reserved.
Section 15.........................................  Reserved.
Section 16.........................................  Reserved.
Section 17.........................................  Reserved.
Section 18.........................................  Reserved.
Section 19.........................................  Rule 754. Discretionary Power as to Customers' Accounts.
Section 20.........................................  Rule 748. Supervision Rule.
Section 21.........................................  761. Supervisory Procedures Relating to ITSFEA and to
                                                      Prevention of Misuse of Material Nonpublic Information.
Section 22.........................................  Reserved.
Section 23.........................................  Reserved.
Section 24.........................................  Reserved.
Section 25.........................................  Rule 751. Accounts of Employees of Member Organizations.
Section 26.........................................  Reserved.
Section 27.........................................  Reserved.
Section 28.........................................  Reserved.
Section 29.........................................  Rule 749. Transactions for Employees of Exchange, etc. and
                                                      Rule 750. Speculative Transactions for Employees of
                                                      Certain Employers (re-titled ``Transactions for Employees
                                                      and Speculative Transactions for Employees of Certain
                                                      Employers'').
Section 30.........................................  Reserved.
Section 31.........................................  Reserved.
Section 32.........................................  Reserved.
Section 33.........................................  Reserved.
Section 34.........................................  Reserved.
Section 35.........................................  Rule 2040. Nonregistered Foreign Finders.
Section 36.........................................  Reserved.
Section 37.........................................  Reserved.
Section 38.........................................  Reserved.
Section 39.........................................  Rule 705. Fidelity Bonds.
Section 40.........................................  Reserved.
Section 41.........................................  Reserved.
Section 42.........................................  Reserved.
Section 43.........................................  Reserved.
Section 44.........................................  Reserved.
Section 45.........................................  Reserved.
Section 46.........................................  Reserved.
Section 47.........................................  Reserved.
Section 48.........................................  Reserved.
Section 50.........................................  Reserved.
Section 51.........................................  Reserved.
Section 52.........................................  Reserved.

[[Page 9862]]

 
Section 53.........................................  Rule 774. Disruptive Quoting and Trading Activity
                                                      Prohibited.
Section 54.........................................  Rule 777. Guarantees Not Permitted.
Section 55.........................................  Rule 601. Office, Other Than Main Offices.
Section 56.........................................  Rule 602. Status Verification.
Section 57.........................................  Rule 603. Control of Offices.
Section 58.........................................  Rule 605. Advertisements, Market Letters, Research Reports
                                                      and Sales Literature.
Section 59.........................................  Rule 610. Notification of Changes in Business Operations.
Section 60.........................................  Rule 625. Training.
Section 61.........................................  Rule 704. Assignment of Interest of Partner.
Section 62.........................................  Rule 745. Partial Payments.
Section 63.........................................  Rule 746. Diligence as to Accounts.
Section 64.........................................  Rule 747. Approval of Accounts.
Section 65.........................................  Rule 752. Statements to Be Sent to Customers.
Section 66.........................................  Rule 753. Notwithstanding Power of Attorney.
Section 67.........................................  Rule 773. Participation in Joint Accounts.
Section 68.........................................  Rule 784. Report of Options.
Section 69.........................................  Rule 786. Periodic Reports.
Section 70.........................................  Rule 796. Underwriting of Securities by Member
                                                      Organizations.
----------------------------------------------------------------------------------------------------------------

Equities 7
    The Exchange proposes to relocate Rule 607 titled ``Covered Sales 
Fee'' to Equities 7, Equity Pricing at new proposed Section 5.\4\ Also, 
Rule 2040, Nonregistered Foreign Finders, does not appear in PSX Rule 
3202, this rule applies to equity products today. The Exchange believes 
its failure to be included within PSX Rule 3202 was an oversight and 
proposes to include this Rule within General 9.
---------------------------------------------------------------------------

    \4\ Rule 607 is both and options and equities rule and is 
therefore being replicated in both Equity 7 and Options 7.
---------------------------------------------------------------------------

Options 1
    The Exchange proposes to rename current Options 1 from ``Options 
Definitions'' to ``General Provisions.'' The Exchange proposes to 
relocate definitions from Rule 1000, Applicability, Definitions and 
References, into proposed General 1, Section 1. The Exchange proposes 
not to relocate the terms ``System Book Feed'' and ``System 
Securities'' from Rule 1000 into Options 1, Section 1. The term 
``System Book Feed'' is not utilized in the Rulebook currently. The 
term ``System Securities'' is only utilized within the definition of 
the term ``System'' at proposed Options 1, Section 1(a)(52) and within 
current Rule 911 which was relocated to General 2, Section 12. The term 
is simply replaced by referring to option series. The Exchange believes 
that replacing the term with the term ``option series'' will make the 
Rulebook clear. The Exchange also proposes to relocate the definition 
of ``Option Exchange Official'' which is currently located in General 
I, Section 1 into this section as this term relates to the trading of 
options.
Options 2
    The Exchange proposes to rename Options 2 from ``Options Trading 
Rules'' to ``Options Market Participants'' and relocate the following 
rules into this chapter:

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 507. Application for Approval as an SQT, RSQT, or
                                                      RSQTO and Assignment in Options.
Section 2..........................................  Reserved.
Section 3..........................................  Rule 506. Allocation Application, Allocation, Reallocation,
                                                      and Transfer; Rule 508. Transfer Application; and Rule
                                                      513. Voluntary Resignation of Options Privileges (re-
                                                      titled ``Allocation Application, Allocation, Reallocation,
                                                      Transfer and Voluntary Resignation''.
Section 4..........................................  Rule 1014. Obligations of Market Makers (a-d).
Section 5..........................................  Rule 1081. Electronic Market Maker Obligations and Quoting
                                                      Requirements.
Section 6..........................................  Rule 1014. Obligations of Market Makers, subparagraph (e)
                                                      only.
Section 7..........................................  Rule 1022. Securities Accounts and Orders of Specialists
                                                      and Registered Options Traders.
Section 8..........................................  Reserved.
Section 9..........................................  Rule 510. Good Standing for Specialist, SQT, and RSQT.
Section 10.........................................  Rule 1068. Directed Orders.
Section 11.........................................  Rule 501. Specialist Appointment.
Section 12.........................................  Rule 1020. Registration and Functions of Options
                                                      Specialists.
Section 13.........................................  Rule 1036. Affiliated Persons Of Specialists.
Section 14.........................................  Rule 175. Limitations on Options Market Making.
----------------------------------------------------------------------------------------------------------------

    The Exchange proposes to relocate a portion of a sentence from 
current Rule 1014(b) to Options 8, Section 11(b). The sentence 
provides, ``. . . Exchange options transactions initiated by such 
Market Maker on the Trading Floor for any account in which he had an 
interest shall to the extent prescribed by the Exchange be in such 
assigned classes.'' This sentence is being relocated into Options 8, 
Section 11 because it pertains to Floor Market Maker assignments. The 
remainder of current Rule 1014(b) was relocated to Options 3, Section 
4(b).
    Rule 452, ``Limitations on Members' Trading Because of Customers' 
Orders'' is being relocated into Options 8, Section 17.

[[Page 9863]]

Options 2A
    The Exchange proposes to reserve Options Section 2A.
Options 3
    The Exchange proposes to rename Options 3 from ``Options Market 
Participants'' to ``Options Trading Rules'' and relocate the following 
rules into this chapter:

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 101. Hours of Business.
Section 2..........................................  Rule 1013. Units of Trading and Rule 1067. Precedence of
                                                      Highest Bid and Lowest Offer (re-titled ``Units of
                                                      Trading'').
Section 3..........................................  Rule 1034. Minimum Increments.
Section 4..........................................  Rule 1019. Entry and Display of Quotes.
Section 5..........................................  Rule 1096. Entry and Display of Orders.
Section 6..........................................  Rule 1082. Firm Quotations, except Rule 1082(a)(ii)(C).
Section 7..........................................  Rule 1080. Electronic Acceptance of Quotes and Orders.
Section 8..........................................  Rule 1017. Openings In Options.
Section 9..........................................  Rule 1047. Trading Halts.
Section 10.........................................  Rule 1089. Electronic Execution Priority and Processing in
                                                      the System and Rule 1035. Zero-Bid Option Series (this
                                                      rule will remain titled ``Electronic Execution Priority
                                                      and Processing in the System'').
Section 11.........................................  Reserved.
Section 12.........................................  Rule 1088. Qualified Contingent Cross Order (re-titled
                                                      ``Electronic Qualified Contingent Cross Order'').
Section 13.........................................  Rule 1087. Price Improvement XL (``PIXL'').
Section 14.........................................  Rule 1098(a)-(f) Complex Orders on the System (re-titled
                                                      ``Complex Orders'').
Section 15.........................................  Rule 1099. Risk Protections (re-titled ``Simple Risk
                                                      Protections).
Section 16.........................................  Rule 1098(g)-(j) to be titled ``Complex Orders Risk
                                                      Protections''.
Section 17.........................................  Rule 1073. Kill Switch.
Section 18.........................................  Rule 1074. Detection of Loss of Communication.
Section 19.........................................  Rule 1090. Mass Cancellation of Trading Interest.
Section 20.........................................  Rule 1092. Nullification and Adjustment of Options
                                                      Transactions including Obvious Errors.
Section 21.........................................  Rule 1016. Exchange Sharing of Phlx XL Participant-
                                                      Designated Risk Settings (re-titled as ``Access to and
                                                      Conduct on Phlx'').
Section 22.........................................  Rule 1097. Limitations on Order Entry.
Section 23.........................................  Rule 1070. Data Feeds and Trade Information.
Section 24.........................................  Rule 128. Price of Execution Binding.
Section 25.........................................  Reserved.
Section 26.........................................  Rule 1082(a)(ii)(C) to be titled ``Message Traffic
                                                      Mitigation''.
Section 27.........................................  Rule 652. Limitation of Exchange Liability and
                                                      Reimbursement of Certain Expenses.
Section 28.........................................  Reserved.
----------------------------------------------------------------------------------------------------------------

Options 4
    The Exchange proposes to relocate rules within Options 4 Options 
Listing Rules as follows:

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 1007. Designation Of Securities.
Section 2..........................................  Rule 1008. Rights And Obligations Of Holders And Writers.
Section 3..........................................  Rule 1009. Criteria for Underlying Securities/Rule 1011.
                                                      Option Contracts To Be Traded.
Section 4..........................................  Rule 1010. Withdrawal of Approval of Underlying Securities
                                                      or Options.
Section 5..........................................  Rule [sic]. Series of Options Open for Trading.
Section 6..........................................  Reserved.
Section 7..........................................  Reserved.
Section 8..........................................  Reserved.
Section 9..........................................  Reserved.
Section 10.........................................  Rule 99. Backup Trading Arrangements.
Section 11.........................................  Rule 1057. U.S. Dollar-Settled Foreign Currency Option
                                                      Closing Settlement Value.
----------------------------------------------------------------------------------------------------------------

    Rule text within current Commentary .01(6) of Rule 1010, which 
provides, ``. . . provided, however, that in the case of a Restructure 
Security approved for options listing and trading under paragraph (d) 
of Commentary .05 under Rule 1009, such trading volume requirements 
must be satisfied based on the trading volume history of the 
Restructure Security.''
Options 4A
    The Exchange proposes to relocate rules within new proposed Options 
4A, which is proposed to be titled ``Options Index Rules'' as follows:

[[Page 9864]]



----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 1000A. Applicability and Definitions (paragraph (a)).
Section 2..........................................  Rule 1000A. Applicability and Definitions (paragraph (b)).
Section 3..........................................  Rule 1009A. Designation of the Index.
Section 4..........................................  Reserved.
Section 5..........................................  Rule 1100A. Dissemination of Information.
Section 6..........................................  Rule 1001A. Position Limits.
Section 7..........................................  Reserved.
Section 8..........................................  Reserved.
Section 9..........................................  Reserved.
Section 10.........................................  Rule 1002A. Exercise Limits.
Section 11.........................................  Reserved.
Section 12.........................................  Rule 1101A. Terms of Option Contracts.
Section 13.........................................  Reserved.
Section 14.........................................  Reserved.
Section 15.........................................  Rule 1042A. Exercise of Option Contracts.
Section 16.........................................  Reserved.
Section 17.........................................  Rule 1006A. Other Restrictions on Options Transactions and
                                                      Exercises.
Section 18.........................................  Rule 1047A. Trading Rotations, Halts or Reopenings.
Section 19.........................................  Rule 1102A. Limitation of Exchange Liability.
Section 20.........................................  Rule 1105A. Standard & Poor's[supreg] Index.
Section 21.........................................  Rule 1107A. Nasdaq, Inc. Indexes.
----------------------------------------------------------------------------------------------------------------

    The Exchange proposes to amend the rule text within Options 4A, 
Section 18(b) to remove the word ``Specialist'' and replace that word 
with ``Exchange'' and cite to the manual authority within current Rule 
1047(b). The Exchange previously removed any functionality which 
permitted executions to be manually handled by a specialist.\5\ An 
Options Exchange Official determines a manual trading halt.
---------------------------------------------------------------------------

    \5\ Manual execution by a specialist could previously occur in 
AUTOM, a prior exchange system. Specialist manual handling is 
obsolete. AUTOM and AUTO-X were replaced by Phlx XL, which is now 
defined as ``System''. See Securities Exchange Act Release No. 50100 
(July 27, 2004), 69 FR 46612 (August 3, 2004) (SR-Phlx-2003-59).
---------------------------------------------------------------------------

Options 4B
    The Exchange proposes a new Options 4B, titled ``Options on 
Treasury Securities.''

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 1000D. Applicability of 1000D Series--Treasury
                                                      Securities Options.
Section 2..........................................  Rule 1001D. Definitions--Treasury Securities Options.
Section 3..........................................  Rule 1002D. Position Limits--Treasury Securities Options.
Section 4..........................................  Rule 1003D. Exercise Limits--Treasury Securities Options.
Section 5..........................................  Rule 1004D. Reports Related to Position Limits and
                                                      Liquidation of Positions--Treasury Securities Options.
Section 6..........................................  Rule 1005D. Reports Related to Position Limits and
                                                      Liquidation of Positions--Treasury Securities Options.
Section 7..........................................  Rule 1006D. Criteria for Securities Underlying Treasury
                                                      Securities Options.
Section 8..........................................  Rule 1007D. Withdrawal of Approval of Underlying Treasury
                                                      Securities or Options.
Section 9..........................................  Rule 1008D. Terms of Treasury Securities Options.
Section 10.........................................  Rule 1009D. Series of Treasury Securities Options Open for
                                                      Trading.
Section 11.........................................  Rule 1010D. Days and Hours of Business of Treasury
                                                      Securities Options.
Section 12.........................................  Rule 1011D. Trading Rotations--Treasury Securities Options.
Section 13.........................................  Rule 1012D. Trading Halts and Suspension of Trading,
                                                      Obvious and Catastrophic Errors--Treasury Securities
                                                      Options.
Section 14.........................................  Rule 1013D. Minimum Increment and Meaning of Premium Bids
                                                      and Offers for Treasury Securities Options.
Section 15.........................................  Rule 1014D. Specialist and Registered Option Trader
                                                      Obligations and Electronic Trading--Treasury Securities
                                                      Options.
Section 16.........................................  Rule 1015D. Accommodation Trading--Treasury Securities
                                                      Options.
Section 17.........................................  Rule 1016D. Reconciliation of Unmatched Trades--Treasury
                                                      Securities Options.
Section 18.........................................  Rule 1018D. Limit Book for Treasury Securities Options.
Section 19.........................................  Rule 1019D. Bid/Ask Differentials--Treasury Securities
                                                      Options.
Section 20.........................................  Rule 1020D. Allocation of Exercise Assignment Notices--
                                                      Treasury Securities Options.
Section 21.........................................  Rule 1021D. Delivery and Payment--Treasury Securities
                                                      Options.
Section 22.........................................  Rule 1022D. Margin Requirements--Treasury Securities
                                                      Options.
Section 23.........................................  Rule 1023D. Furnishing of Books, Records and Other
                                                      Information--Treasury Securities Options.
Section 24.........................................  Rule 1024D. Communication Links--Treasury Securities
                                                      Options.
Section 25.........................................  Rule 1025D. Doing Business With the Public--Treasury
                                                      Securities Options.
----------------------------------------------------------------------------------------------------------------

Options 5
    The Exchange proposes to rename Options 5 from ``Options Trade 
Administration'' to ``Order Protection and Locked and Crossed Markets'' 
and relocate rules within Options 5 as follows:

[[Page 9865]]



----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 1083. Order Protection; Locked and Crossed Markets.
Section 2..........................................  Rule 1084. Order Protection.
Section 3..........................................  Rule 1086. Locked and Crossed Markets.
Section 4..........................................  Rule 1093. Away Markets and Order Routing (re-titled
                                                      ``Order Routing'').
Section 5..........................................  Rule 1091. Cancellation of Orders and Error Account.
----------------------------------------------------------------------------------------------------------------

Options 6
    The Exchange proposes rename Options 6 from ``Order Protection and 
Locked and Cross Markets'' to ``Options Trade Administration'' and 
relocate rules within Options 6 as follows:

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 1037. Authorization to Give Up.
Section 2..........................................  Rule 1052. Responsibility Of Clearing Members For Exchange
                                                      Options Transactions.
Section 3..........................................  Rule 1051. General Comparison And Clearance Rule.
Section 4..........................................  Reserved.
Section 5..........................................  Rule 1058. Transfer of Positions.
Section 6..........................................  Rule 1045. Off-Exchange RWA Transfers.
Section 7..........................................  Rule 1059. In-Kind Exchange of Options Positions and ETF
                                                      Shares.
Section 8..........................................  Rule 1046. Clearing Arrangements.
Section 9..........................................  Rule 1048. Stock Transfer Tax.
Section 10.........................................  Rule 1053. Filing Of Trade Information.
Section 11.........................................  Rule 1054. Verification Of Trades And Reconciliation Of
                                                      Uncompared Trades.
Section 12.........................................  Rule 1055. Reporting Of Compared Trades To Options Clearing
                                                      Corporation.
Section 13.........................................  Rule 1056. Maintaining Office And Filing Signatures.
----------------------------------------------------------------------------------------------------------------

Options 6A
    The Exchange proposes to relocate rules within new proposed Options 
6A titled ``Closing Transactions'' as follows:

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 1041. Options Contracts Of Suspended Members.
Section 2..........................................  Rule 1040. Failure To Pay Premium.
----------------------------------------------------------------------------------------------------------------

Options 6B
    The Exchange proposes to relocate rules within new proposed Options 
6B titled ``Exercises and Deliveries'' as follows:

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 1042. Exercise Of Equity Option Contracts.
Section 2..........................................  Rule 1043. Allocation of Exercise Notices.
Section 3..........................................  Rule 1044. Delivery and Payment.
----------------------------------------------------------------------------------------------------------------

Options 6C
    The Exchange proposes to relocate rules within new proposed Options 
6C titled ``Margins'' as follows:

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Reserved.
Section 2..........................................  Reserved.
Section 3..........................................  Rule 721. Proper and Adequate Margin.
Section 4..........................................  Reserved.
Section 5..........................................  Reserved.
Section 6..........................................  Reserved.
Section 7..........................................  Rule 723. Prohibition on Free-Riding in Cash Accounts.
----------------------------------------------------------------------------------------------------------------


[[Page 9866]]

Options 6D
    The Exchange proposes to relocate rules within new proposed Options 
6D titled ``Net Capital Requirements'' as follows:

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 703. Financial Responsibility and Reporting.
Section 2..........................................  Reserved.
Section 3..........................................  Reserved.
Section 4..........................................  Reserved.
----------------------------------------------------------------------------------------------------------------

Options 6E
    The Exchange proposes to relocate rules within new proposed Options 
6E titled ``Records, Reports and Audits'' as follows:

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 760. Maintenance, Retention and Furnishing of Books,
                                                      Records and Other Information.
Section 2..........................................  Rule 1003. Reporting Of Options Positions.
Section 3..........................................  Reserved.
Section 4..........................................  Rule 712. Independent Audit.
Section 5..........................................  Rule 785. Automated Submission of Trading Data.
Section 6..........................................  Reserved.
Section 7..........................................  Rule 980. Regulatory Services Agreements.
Section 8..........................................  Reserved.
Section 9..........................................  Reserved.
----------------------------------------------------------------------------------------------------------------

    The commentary section in Rule 760 has been relocated to Options 
6E, Section 1(b).
Options 7
    The Exchange proposes to relocate Rule 607 titled ``Covered Sales 
Fee to Options 7, Options Pricing, at new proposed Section 12.\6\
---------------------------------------------------------------------------

    \6\ Rule 607 is both and options and equities rule and is 
therefore being replicated in both Equity 7 and Options 7.
---------------------------------------------------------------------------

Options 8
    Rule 110, ``Bids and Offers--Manners,'' Rule 119, ``Precedence of 
Highest Bid'' and Rule 120, ``Precedence of Offers at Same Price'' are 
being relocated within the Supplementary Material to Options 8, Section 
24, ``Bids and Offers--Premium''.
    The Exchange proposes to remove references to Rule 723 as this rule 
no longer exists. The Exchange also proposes to remove obsolete rule 
text at the end of Options 8, Section 39 at C-2, Options Floor Based 
Management System, which provides, ``The Exchange anticipates that it 
will implement the Snapshot feature referenced herein and described 
further in Options 8, Section 28(e) during the Fourth Quarter of 2017. 
The Exchange will notify members via an Options Trader Alert, to be 
posted on the Exchange's website, at least seven calendar days prior to 
the date when Snapshot will be available for use.''
Options 9
    The Exchange proposes to relocate rules within new proposed Options 
9 titled ``Business Conduct'' as follows:

[[Page 9867]]



----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Rule 707. Conduct Inconsistent with Just and Equitable
                                                      Principles of Trade.
Section 2..........................................  Reserved.
Section 3..........................................  Reserved.
Section 4..........................................  Reserved.
Section 5..........................................  Rule 708. Acts Detrimental to the Interest or Welfare of
                                                      the Exchange.
Section 6..........................................  Reserved.
Section 7..........................................  Reserved.
Section 8..........................................  Reserved.
Section 9..........................................  Reserved.
Section 10.........................................  Reserved.
Section 11.........................................  Reserved.
Section 12.........................................  Reserved.
Section 13.........................................  Rule 1001. Position Limits.
Section 14.........................................  Reserved.
Section 15.........................................  Rule 1002. Exercise Limits.
Section 16.........................................  Reserved.
Section 17.........................................  Rule 1004. Liquidation Of Positions.
Section 18.........................................  Rule 1005. Limit On Uncovered Short Positions.
Section 19.........................................  Rule 1006. Other Restrictions on Exchange Options
                                                      Transactions and Exercises.
Section 20.........................................  Reserved.
Section 21.........................................  Rule 757. Anti-Money Laundering Compliance Program.
Section 22.........................................  Reserved.
Section 23.........................................  Reserved.
Section 24.........................................  Rule 1050. Violation Of By-Laws And Rules Of Options
                                                      Clearing Corporation.
----------------------------------------------------------------------------------------------------------------

Options 10
    The Exchange proposes to relocate rules within new proposed Options 
10 titled ``Doing Business with the Public'' as follows:

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  Reserved.
Section 2..........................................  Rule 1024. Conduct of Accounts for Options Trading
                                                      subparagraph (a) (re-titled ``Registration of Options
                                                      Principals'').
Section 3..........................................  Reserved.
Section 4..........................................  Reserved.
Section 5..........................................  Reserved.
Section 6..........................................  Rule 1024. Conduct of Accounts for Options Trading
                                                      subparagraph (b) (re-titled ``Opening of Accounts'').
Section 7..........................................  Rule 1025. Supervision of Accounts.
Section 8..........................................  Rule 1026. Suitability.
Section 9..........................................  Rule 1027. Discretionary Accounts.
Section 10.........................................  Rule 1028. Confirmations and Complaints subparagraph (a)
                                                      (re-titled ``Confirmations to Customers'').
Section 11.........................................  Rule 1032. Statements of Accounts.
Section 12.........................................  Reserved.
Section 13.........................................  Rule 1029. Delivery of Options Disclosure Documents.
Section 14.........................................  Rule 742. Restrictions on Pledge of Customers' Securities.
Section 15.........................................  Reserved.
Section 16.........................................  Reserved.
Section 17.........................................  Reserved.
Section 18.........................................  Reserved.
Section 19.........................................  Reserved.
Section 20.........................................  Rule 1049. Options Communications.
Section 21.........................................  Reserved.
Section 22.........................................  Rule 1028. Confirmations and Complaints subparagraph (b)
                                                      (re-titled ``Customer Complaints'').
Section 23.........................................  Rule 762. Telemarketing.
Section 24.........................................  Rule 1030. Transactions With Issuers.
Section 25.........................................  Rule 1031. Restricted Stocks.
----------------------------------------------------------------------------------------------------------------

    The Exchange proposes to reserve Options 10, Sections 24 and 25. 
The Commentary section in Phlx Rules 1027 is being relocated to Section 
(f) within Options 10, Section 9. The Commentary section in Phlx Rules 
1028 is being relocated to Section (f) within Options 10, Section 22.
Options 11
    Finally, the Exchange proposes to relocate the Options Minor Rule 
Violations into Options 11 titled ``Minor Rule Plan Violations'' as 
follows:

----------------------------------------------------------------------------------------------------------------
               Proposed new rule No.                                       Current rule No.
----------------------------------------------------------------------------------------------------------------
Section 1..........................................  A-1 Specialist as ROT.
Section 2..........................................  F-1 Option Quote Parameters.

[[Page 9868]]

 
Section 3..........................................  F-2 Failure to Comply with an Exchange Inquiry.
Section 4..........................................  F-3 Affiliations.
Section 5..........................................  F-4 Unusual Market Conditions.
Section 6..........................................  F-5 Supervisory Procedures Relating to ITSFEA.
Section 7..........................................  F-6 Minor Infractions of Position/Exercise Limits and Hedge
                                                      Exemptions.
Section 8..........................................  F-7 Clearing Agents' Responsibility for Carrying Positions
                                                      in Market Maker Accounts.
Section 9..........................................  F-8 Options Exchange Official Rulings.
Section 10.........................................  F-9 Failure to Provide Notification of Changes in Business
                                                      Operations.
Section 11.........................................  F-10 Failure to Timely Submit Amendments to Form U4, Form
                                                      U5 and Form BD.
Section 12.........................................  F-11 Violations of Exercise and Exercise Advice Rules for
                                                      Noncash-Settled Equity Option Contracts.
Section 13.........................................  G-1 Index Option Exercise Advices.
----------------------------------------------------------------------------------------------------------------

PSX Rules \7\
---------------------------------------------------------------------------

    \7\ PSX Rule 3202 currently notes rules which are incorporated 
by reference into PSX Rules. The rules within this section which are 
being relocated are currently part of the PSX Rules today.
---------------------------------------------------------------------------

    Rule 133, ``Trading Halts Due to Extraordinary Market Volatility'' 
is being relocated to new PSX Rule 3101 as this rule is solely an 
equities rule. Rule 652, ``Limitation of Exchange Liability and 
Reimbursement of Certain Expenses'' is being relocated into new PSX 
Rule 3102.\8\ Rule 103, ``Dealings on the Exchange--Securities'' is 
being relocated to new PSX Rule 3400. Rule 112, ``Bids and Offers--
``When Issued'' '' is being relocated to new PSX Rule 3401. Rule 128, 
``Price of Execution Binding'' is being relocated to new PSX Rule 
3402.\9\ Rule 274, ``Payment on Delivery--Collect on Delivery'' is 
being relocated to new PSX Rule 3403.\10\ Rule 279, ``Book-Entry 
Settlement'' is being relocated to new PSX Rule 3404. Rule 431, ``Ex-
dividend, Ex-rights'' is being relocated into new PSX Rule 3405. Rule 
432, ``Ex-warrants'' is being relocated into new PSX Rule 3406. Rule 
433, ``Buyer Entitled to Dividend, etc.'' is being relocated into new 
PSX Rule 3407. Rule 434, ``Claims for Dividend, etc.'' is being 
relocated into new PSX Rule 3408. Rule 451, ``Taking or Supplying 
Securities Named in Order'' is being relocated into new PSX Rule 3409. 
Rule 452, ``Limitations on Members' Trading Because of Customers' 
Orders'' is being relocated into new PSX Rule 3410.\11\ Rule 453, 
``Successive Transactions by Members'' is being relocated into new PSX 
Rule 3411. Rule 455, ``Short Sales'' is being relocated into new PSX 
Rule 3412. Rule 721, ``Proper and Adequate Margin'' is being relocated 
into new PSX Rule 3413.\12\ Rule 723, ``Prohibition on Free-Riding in 
Cash Accounts'' is being relocated into new PSX Rule 3414.\13\ Rule 
703, ``Financial Responsibility and Reporting'' is being relocated into 
new PSX Rule 3500.\14\ Rule 712, ``Independent Audit'' is being 
relocated into new PSX Rule 3501.\15\ Rule 785, ``Automated Submission 
of Trading Data'' is being relocated into new PSX Rule 3502.\16\ Rule 
707, ``Conduct Inconsistent with Just and Equitable Principles of 
Trade'' is being relocated into Rule 3503.\17\ Rule 708, ``Acts 
Detrimental to the Interest or Welfare of the Exchange'' is being 
relocated into Rule 3504.\18\ Rule 742, ``Restrictions on Pledge of 
Customers' Securities'' is being relocated into new PSX Rule 3505.\19\ 
Rule 757, ``Anti-Money Laundering Compliance Program'' is being 
relocated into new PSX Rule 3506.\20\ Rule 762, ``Telemarketing'' is 
being relocated into new PSX Rule 3507.\21\ Rule 980, ``Regulatory 
Services Agreements'' is being relocated into new PSX Rule 3600.\22\
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    \8\ Rule 652 is also being replicated into Options 3, Section 27 
as this rule applies to both equities and options.
    \9\ Rule 128 is being replicated within Options 3, Section 24 
and also within the PSX Rules as this rule applies to both equities 
and options.
    \10\ The Exchange is eliminating rule text related to the 
effective date of the rule. This language is obsolete. The 
Supplementary Material is being relocated to the main body of the 
Rule.
    \11\ Rule 452, ``Limitations on Members' Trading Because of 
Customers' Orders'' is also being relocated into Options 8, Section 
17. The Supplementary Material is being relocated to the main body 
of the Rule.
    \12\ Rule 721 is being replicated within Options 6C, Section 3 
and also within the PSX Rules as this rule applies to both equities 
and options.
    \13\ Rule 723 is being replicated within Options 6C, Section 7 
and also within the PSX Rules as this rule applies to both equities 
and options.
    \14\ Rule 703 is being replicated within Options 6D, Section 1 
and also within the PSX Rules as this rule applies to both equities 
and options.
    \15\ Rule 712 is being replicated within Options 6E, Section 4 
and also within the PSX Rules as this rule applies to both equities 
and options.
    \16\ Rule 785 is being replicated within Options 6E, Section 5 
and also within the PSX Rules as this rule applies to both equities 
and options.
    \17\ Rule 707 is being replicated within Options 9, Section 1 
and also within the PSX Rules as this rule applies to both equities 
and options.
    \18\ Rule 708 is being replicated within Options 9, Section 5 
and also within the PSX Rules as this rule applies to both equities 
and options.
    \19\ Rule 742 is being replicated within Options 10, Section 14 
and also within the PSX Rules as this rule applies to both equities 
and options.
    \20\ Rule 757 is being replicated within Options 9, Section 21 
and also within the PSX Rules as this rule applies to both equities 
and options.
    \21\ Rule 762 is being replicated within Options 10, Section 23 
and also within the PSX Rules as this rule applies to both equities 
and options.
    \22\ Rule 980 is being replicated within Options 6E, Section 7 
and also within the PSX Rules as this rule applies to both equities 
and options.
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    The Exchange also proposes to amend PSX Rule 3202 to remove rules 
that: (1) Have been relocated into a general section and are therefore 
applicable to equities; (2) have been relocated into the PSX Rules or 
Equity 7; (3) which are reserved rules; and (4) remove references to 
Rule 623 (Fingerprinting), Rule 722 (Miscellaneous Securities Margin 
Accounts) and Rule 772 (Trading for Joint Account) as these rules do 
not exist in the Phlx Rulebook.
Equity Titles
    The Exchange proposes to amend the current titles of Equity 2, 3, 4 
and 7. The Exchange proposes to rename Equity 2, from ``Equity Trading 
Rules'' to ``Equity Market Participants.'' The Exchange proposes to 
rename Equity 3 from ``Equity Market Participants'' to ``Equity Trading 
Rules.'' The Exchange proposes to rename Equity 4 from ``Equity Listing 
Rules'' to ``Limit Up-Limit Down''. Finally, the Exchange proposes to 
reserve Equity 6 which is currently titled ``Limit Up-Limit Down.''
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\23\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\24\ in particular, in that it is designed to 
promote just and equitable principles of trade and to protect investors 
and the public interest by bringing greater transparency to its rules 
by relocating its Rules into the new Rulebook shell together with other 
rules which have already been relocated. The Exchange's proposal is 
consistent with the Act and will protect investors and the public 
interest by harmonizing its rules, where

[[Page 9869]]

applicable, across Nasdaq markets so that members can readily locate 
rules which cover similar topics. The relocation and harmonization of 
the Phlx Rules is part of the Exchange's continued effort to promote 
efficiency and conformity of its processes with those of its Affiliated 
Exchanges. The Exchange believes that the placement of the Phlx Rules 
into their new location in the shell will facilitate the use of the 
Rulebook by members. Specifically, the Exchange believes that market 
participants that are members of more than one Nasdaq market will 
benefit from the ability to compare Rulebooks.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78f(b).
    \24\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange is not substantively amending rule text unless noted 
otherwise within this rule change. The renumbering, re-lettering, 
deleting reserved rules, amending cross-references and other minor 
technical changes will bring greater transparency to Phlx's Rules. The 
Exchange intends to file other rule change to relocate Affiliated 
Exchange Rulebooks to relocate corresponding rules into the same 
location in each Rulebook for ease of reference. The Exchange believes 
its proposal will benefit investors and the general public by 
increasing the transparency of its Rulebook and promoting easy 
comparisons among the various Nasdaq Rulebooks.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes that the 
proposed amendments do not impose an undue burden on competition 
because the amendments to relocate the Rules are non-substantive. This 
rule change is intended to bring greater clarity to the Exchange's 
Rules. Renumbering, re-lettering, deleting reserved rules and amending 
cross-references will bring greater transparency to Phlx's Rules.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \25\ and Rule 19b-
4(f)(6) thereunder.\26\
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    \25\ 15 U.S.C. 78s(b)(3)(A).
    \26\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \27\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \28\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay so 
that the Exchange could immediately relocate its rules. According to 
the Exchange, the proposal is intended to make it easier for members to 
locate the various Exchange rules, and is part of a larger effort to 
reorganize the Exchange's rules and those of its Affiliated Exchanges. 
For these reasons, the Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Accordingly, the Commission hereby waives the 
operative delay and designates the proposed rule change operative upon 
filing.\29\
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    \27\ 17 CFR 240.19b-4(f)(6).
    \28\ 17 CFR 240.19b-4(f)(6)(iii).
    \29\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change 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-2020-03 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-2020-03. 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-2020-03, and should be submitted on 
or before March 12, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020-03413 Filed 2-19-20; 8:45 am]
 BILLING CODE 8011-01-P
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