Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 3, Section 7 Related to Order Types and Times-in-Force Provisions, 12626-12629 [2020-04287]

Download as PDF 12626 Federal Register / Vol. 85, No. 42 / Tuesday, March 3, 2020 / Notices proposed percentage of industry volume tier requirements are no more stringent than the current ADV requirements, with the exception of the Tier 4 Priority Customer maker. With this proposal, Tier 4 Priority Customers will be required to submit a greater amount of order flow to qualify for the current Tier 4. Priority Customer orders bring valuable liquidity to the market which liquidity benefits other market participants. As to the remainder of the proposed tiers, the Exchange does not anticipate any impact to market participants as a result of replacing the ADV thresholds with total industry percentage thresholds. Finally, the maker/taker fees will remain the same for all Member orders 16 regardless of the tier achieved. For the foregoing reasons, the Exchange does not believe that its proposal will have an undue burden on intramarket competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,17 and Rule 19b–4(f)(2) 18 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. lotter on DSKBCFDHB2PROD with NOTICES IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: 16 The Exchange is not proposing to amend any GEMX maker or taker fees within Options 7, Section 3 for Penny and Non-Penny Symbols. 17 15 U.S.C. 78s(b)(3)(A)(ii). 18 17 CFR 240.19b–4(f)(2). VerDate Sep<11>2014 17:19 Mar 02, 2020 Jkt 250001 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– GEMX–2020–04 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–GEMX–2020–04. 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–GEMX–2020–04 and should be submitted on or before March 24, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–04291 Filed 3–2–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88286; File No. SR–Phlx– 2020–05] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 3, Section 7 Related to Order Types and Times-in-Force Provisions February 26, 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 14, 2020, Nasdaq PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Options 3, Section 7, ‘‘Electronic Acceptance of Quotes and Orders’’ and Options 8, Section 32, ‘‘Certain Types of Floor-Based (Non-System) Orders Defined,’’ to permit the Exchange to determine the availability of order types and time-in-force provisions. 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. 1 15 19 17 PO 00000 CFR 200.30–3(a)(12). Frm 00133 Fmt 4703 Sfmt 4703 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. E:\FR\FM\03MRN1.SGM 03MRN1 Federal Register / Vol. 85, No. 42 / Tuesday, March 3, 2020 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change lotter on DSKBCFDHB2PROD with NOTICES 1. Purpose The Exchange proposes to amend Options 3, Section 7, ‘‘Electronic Acceptance of Quotes and Orders’’ and Options 8, Section 32, ‘‘Certain Types of Floor-Based (Non-System) Orders Defined,’’ to provide that the Exchange may determine which order types and times-in-force provisions are available on a class or system basis. This proposed change is based on the rules of Cboe BZX Exchange, Inc. (‘‘BZX Options’’),3 Rule 21.1, Cboe EDGX Exchange, Inc. (‘‘EDGX Options’’) Rule 21.1,4 Cboe Exchange, Inc. (‘‘Cboe’’) Rule 5.6 5 and Cboe C2 Exchange, Inc. (‘‘C2’’) Rule 6.10(a).6 The Exchange proposes to also amend the title of Options 3, Section 7 from ‘‘Electronic Acceptance of Quotes and Orders’’ to ‘‘Types of Orders and Order and Quote Protocols’’ and the title of Options 8, Section 32 from ‘‘Certain Types of 3 BZX Options Rule 21.1(d), Definitions, provides ‘‘The term ‘‘Order Type’’ shall mean the unique processing prescribed for designated orders, subject to the restrictions set forth in paragraph (l) below with respect to orders and bulk messages submitted through bulk ports, that are eligible for entry into the System. Unless otherwise specified in the Rules or the context indicates otherwise, the Exchange determines which of the following Order Types are available on a class or system basis.’’ BZX Options Rule 21.1(f), Definitions, provides ‘‘The term ‘‘Time in Force’’ means the period of time that the System will hold an order, subject to the restrictions set forth in paragraph (j) below with respect to bulk messages submitted through bulk ports, for potential execution. Unless otherwise specified in the Rules or the context indicates otherwise, the Exchange determines which of the following Times-in-Force are available on a class, system, or trading session basis. Rule 21.20 sets forth the Times-in-Force the Exchange may make available for complex orders.’’ 4 EDGX Options Rule 21.1, Definitions, provides, ‘‘The term ‘‘Order Type’’ shall mean the unique processing prescribed for designated orders, subject to the restrictions set forth in paragraph (j) below with respect to orders and bulk messages submitted through bulk ports, that are eligible for entry into the System. Unless otherwise specified in the Rules or the context indicates otherwise, the Exchange determines which of the following Order Types are available on a class, system, or trading session basis. Rule 21.20 sets forth the Order Types the Exchange may make available for complex orders.’’ 5 Cboe Rule 5.6, Availability of Orders, provides, ‘‘Unless otherwise specified in the Rules or the context indicates otherwise, the Exchange determines which of the following order types are available on a class-by-class and system-by-system basis.’’ 6 C2 Rule 6.10(a), Availability of Orders, provides, ‘‘Availability. Unless otherwise specified in the Rules or the context indicates otherwise, the Exchange determines which of the following order types, Order Instructions, and Times-in-Force are available on a class, system, or trading session basis. Rule 6.13 sets forth the order types, Order Instructions, and Times-in-Force the Exchange may make available for complex orders.’’ VerDate Sep<11>2014 17:19 Mar 02, 2020 Jkt 250001 Floor-Based (Non-System) Orders Defined,’’ to ‘‘Types of Floor-Based (Non-System) Orders’’ to reflect the information in these rules. The Exchange proposes to add rule text at the beginning of Options 3, Section 7 and Options 8, Section 32 which states, ‘‘The Exchange may determine to make certain order types and time-in-force, respectively, available on a class or System basis.’’ The purpose of this rule change is to provide the Exchange with appropriate flexibility to address different trading characteristics, market models, and the investor base of each class, as well as to handle any System issues that may arise and require the Exchange to temporarily not accept certain order types. This rule is consistent with BZX Options Rule 21.1, EDGX Options Rules 21.1(d) and 21.1(f), Cboe Rule 5.6 and C2 Rule 6.10(a), each of which provides these exchanges with the same flexibility. The Exchange intends to file rule changes to adopt this rule across all Nasdaq affiliated markets. This rule change will not permit the Exchange to discriminate among market participants when determining which order types and times-in-force provisions are available on a class or system basis. The Exchange’s proposal allows the Exchange to make certain order types and time-in-force, respectively, available on a class or System basis uniformly for all market participants. For example, if the Exchange determined to make a certain order type unavailable, that order type would not be available for any market participant. The Exchange would issue an Options Trader Alert to provide notification to Participants that a change is being made to the availability or unavailability of a certain order type or time-in-force. The Exchange notes that in the event of System disruption, the Exchange would notify Participants of the unavailability of any order type and would also provide notification when that order type was available once the disruption was resolved. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,7 in general, and furthers the objectives of Section 6(b)(5) of the Act,8 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). Frm 00134 Fmt 4703 general to protect investors and the public interest. The proposed rule change would provide the Exchange with the flexibility to determine the availability of order types and times-inforce on a class and System basis. This flexibility would remove impediments to and perfect the mechanism of a free and open market and a national market system by allowing the Exchange to address the specific characteristics of different classes and different market conditions. The Exchange believes that this proposal serves to protect investors by ensuring that the appropriate order types and times-in-force are tailored to the different class characteristics and by mitigating risks associated with changing market conditions.9 The Exchange would issue a notification to Participants to provide them notice that a change is being made to the availability or unavailability of a certain order type or time-in-force before implementing the change. In the event of a System issue, the Exchange believes that it is consistent with the Act to temporarily not offer a certain order type to ensure the proper executions of transactions within the System thereby protecting investors and the public interest. The Exchange anticipates that exercising its ability to temporarily not offer order types would be infrequent. Adding this provision on all Nasdaq affiliated markets will ensure consistency between the Exchange rules and that of its affiliates and would remove impediments to and perfect the mechanism of a free and open market and promote just and equitable principles of trade, as well as foster cooperation and coordination with persons engaged in facilitating transactions in securities. The proposed rule change provides the Exchange with the same flexibility currently permitted on BZX Options, EDGX Options, Cboe and C2. The Exchange believes that this consistency promotes market participants’ understanding of the rules across the multiple affiliated exchanges and promotes a fair and orderly national options market system. The Exchange also notes that the proposed change is reasonable and does not affect investor protection because the proposed change does not present any novel or unique issues, as it has previously been filed with the Commission. The Exchange’s proposal is not unfairly discriminatory because the Exchange will not discriminate among market participants when determining which order types and times-in-force 9 The Exchange may also determine to temporarily not offer an order type or a time-inforce based on a System issue. 7 15 PO 00000 12627 Sfmt 4703 E:\FR\FM\03MRN1.SGM 03MRN1 12628 Federal Register / Vol. 85, No. 42 / Tuesday, March 3, 2020 / Notices provisions are available on a class or system basis. The Exchange’s proposal allows the Exchange to make certain order types and time-in-force, respectively, available on a class or System basis uniformly for all market participants. For example, if the Exchange determined to make a certain order type unavailable, that order type would not be available for any market participant. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe the proposed rule change will impose any burden on intra-market competition, as the proposed rule change will apply in the same manner to all order types and/or times-in-force, as the Exchange determines, for all Participants. The Exchange does not believe the proposed rule change will impose any burden on inter-market competition because the proposed change provides the Exchange with substantially the same flexibility as the rules of other exchanges.10 Therefore, the Exchange believes that the proposed rule change will allow it to make determinations regarding the availability of orders that will enable it to remain competitive as markets and market conditions evolve. The Exchange’s proposal does not impose an undue burden on competition because the Exchange’s proposal will uniformly make certain order types and time-in-force, respectively, available on a class or System basis for market participants. 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. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 11 and Rule 19b–4(f)(6) thereunder.12 Because the 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 10 See notes 4–6 above. U.S.C. 78s(b)(3)(A)(iii). 12 17 CFR 240.19b–4(f)(6). 11 15 VerDate Sep<11>2014 17:19 Mar 02, 2020 Jkt 250001 for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and Rule 19b–4(f)(6) thereunder.14 A proposed rule change filed under Rule 19b–4(f)(6)15 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),16 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposed rule change may become operative immediately. The Exchange notes that waiver of the operative delay will allow Phlx to exercise immediately the same flexibility to make certain order types available or unavailable as BZX Options, EDGX Options, Cboe, and C2. The Exchange states that this flexibility would serve to protect investors and the public interest by mitigating risks associated with changing market conditions. Based on the foregoing, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest, and the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.17 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. 13 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange’s 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. 15 17 CFR 240.19b–4(f)(6). 16 17 CFR 240.19b–4(f)(6)(iii). 17 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 14 17 PO 00000 Frm 00135 Fmt 4703 Sfmt 4703 IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– Phlx–2020–05 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–2020–05. 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 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 offices 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–2020–05, and should be submitted on or before March 24, 2020. 18 17 E:\FR\FM\03MRN1.SGM CFR 200.30–3(a)(12). 03MRN1 Federal Register / Vol. 85, No. 42 / Tuesday, March 3, 2020 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–04287 Filed 3–2–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270–180, OMB Control No. 3235–0247] Proposed Collection; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736. lotter on DSKBCFDHB2PROD with NOTICES Extension: Form N–8B–4. Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) is soliciting comments on the collection of information summarized below. The Commission plans to submit this existing collection of information to the Office of Management and Budget (‘‘OMB’’) for extension and approval. Form N–8B–4 (17 CFR 274.14) is the form used by face-amount certificate companies to comply with the filing and disclosure requirements imposed by Section 8(b) of the Investment Company Act of 1940 (15 U.S.C. 80a–8(b)). Among other items, Form N–8B–4 requires disclosure of the following information about the face-amount certificate company: Date and form of organization; controlling persons; current business and contemplated changes to the company’s business; investment, borrowing, and lending policies, as well as other fundamental policies; securities issued by the company; investment adviser; depositaries; management personnel; compensation paid to directors, officers, and certain employees; and financial statements. The Commission uses the information provided in the collection of information to determine compliance with Section 8(b) of the Investment Company Act of 1940. Form N–8B–4 and the burden of compliance have not changed since the last approval. Each registrant files Form N–8B–4 for its initial filing and does not file post-effective amendments to Form N–8B–4.1 Commission staff estimates 1 Pursuant to Section 30(b)(1) of the Act (15 U.S.C. 80a–29), each respondent keeps its VerDate Sep<11>2014 17:19 Mar 02, 2020 Jkt 250001 that no respondents will file Form N– 8B–4 each year. There is currently only one existing face-amount certificate company, and no face-amount certificate companies have filed a Form N–8B–4 in many years. No new faceamount certificate companies have been established since the last OMB information collection approval for this form, which occurred in 2017. Accordingly, the staff estimates that, each year, no face-amount certificate companies will file Form N–8B–4, and that the total burden for the information collection is zero hours. Although Commission staff estimates that there is no hour burden associated with Form N–8B–4, the staff is requesting a burden of one hour for administrative purposes. Estimates of the burden hours are made solely for the purposes of the PRA and are not derived from a comprehensive or even a representative survey or study of the costs of SEC rules and forms. The information provided on Form N–8B–4 is mandatory. The information provided on Form N–8B–4 will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency’s estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Please direct your written comments to David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, C/O Cynthia Roscoe, 100 F Street NE, Washington, DC 20549; or send an email to: PRA_ Mailbox@sec.gov. registration statement current through the filing of periodic reports as required by Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) and the rules thereunder. Post-effective amendments are filed with the Commission on the face-amount certificate company’s Form S–1. Hence, respondents only file Form N–8B–4 for their initial registration statement and not for posteffective amendments. PO 00000 Frm 00136 Fmt 4703 Sfmt 4703 12629 Dated: February 27, 2020. J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–04348 Filed 3–2–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88294; File No. SR–ISE– 2020–07] Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 3, Section 7 Related to Order Types and Times-in-Force Provisions February 26, 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 14, 2020, Nasdaq ISE, LLC (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Options 3, Section 7, ‘‘Types of Orders’’ to permit the Exchange to determine the availability of order types and time-inforce provisions. The text of the proposed rule change is available on the Exchange’s website at https://ise.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. 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. E:\FR\FM\03MRN1.SGM 03MRN1

Agencies

[Federal Register Volume 85, Number 42 (Tuesday, March 3, 2020)]
[Notices]
[Pages 12626-12629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04287]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88286; File No. SR-Phlx-2020-05]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Options 3, 
Section 7 Related to Order Types and Times-in-Force Provisions

February 26, 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 14, 2020, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Options 3, Section 7, ``Electronic 
Acceptance of Quotes and Orders'' and Options 8, Section 32, ``Certain 
Types of Floor-Based (Non-System) Orders Defined,'' to permit the 
Exchange to determine the availability of order types and time-in-force 
provisions.
    The text of the proposed rule change is available on the Exchange's 
website at https://nasdaqphlx.cchwallstreet.com/, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

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

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

[[Page 12627]]

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

1. Purpose
    The Exchange proposes to amend Options 3, Section 7, ``Electronic 
Acceptance of Quotes and Orders'' and Options 8, Section 32, ``Certain 
Types of Floor-Based (Non-System) Orders Defined,'' to provide that the 
Exchange may determine which order types and times-in-force provisions 
are available on a class or system basis. This proposed change is based 
on the rules of Cboe BZX Exchange, Inc. (``BZX Options''),\3\ Rule 
21.1, Cboe EDGX Exchange, Inc. (``EDGX Options'') Rule 21.1,\4\ Cboe 
Exchange, Inc. (``Cboe'') Rule 5.6 \5\ and Cboe C2 Exchange, Inc. 
(``C2'') Rule 6.10(a).\6\ The Exchange proposes to also amend the title 
of Options 3, Section 7 from ``Electronic Acceptance of Quotes and 
Orders'' to ``Types of Orders and Order and Quote Protocols'' and the 
title of Options 8, Section 32 from ``Certain Types of Floor-Based 
(Non-System) Orders Defined,'' to ``Types of Floor-Based (Non-System) 
Orders'' to reflect the information in these rules.
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    \3\ BZX Options Rule 21.1(d), Definitions, provides ``The term 
``Order Type'' shall mean the unique processing prescribed for 
designated orders, subject to the restrictions set forth in 
paragraph (l) below with respect to orders and bulk messages 
submitted through bulk ports, that are eligible for entry into the 
System. Unless otherwise specified in the Rules or the context 
indicates otherwise, the Exchange determines which of the following 
Order Types are available on a class or system basis.''
     BZX Options Rule 21.1(f), Definitions, provides ``The term 
``Time in Force'' means the period of time that the System will hold 
an order, subject to the restrictions set forth in paragraph (j) 
below with respect to bulk messages submitted through bulk ports, 
for potential execution. Unless otherwise specified in the Rules or 
the context indicates otherwise, the Exchange determines which of 
the following Times-in-Force are available on a class, system, or 
trading session basis. Rule 21.20 sets forth the Times-in-Force the 
Exchange may make available for complex orders.''
    \4\ EDGX Options Rule 21.1, Definitions, provides, ``The term 
``Order Type'' shall mean the unique processing prescribed for 
designated orders, subject to the restrictions set forth in 
paragraph (j) below with respect to orders and bulk messages 
submitted through bulk ports, that are eligible for entry into the 
System. Unless otherwise specified in the Rules or the context 
indicates otherwise, the Exchange determines which of the following 
Order Types are available on a class, system, or trading session 
basis. Rule 21.20 sets forth the Order Types the Exchange may make 
available for complex orders.''
    \5\ Cboe Rule 5.6, Availability of Orders, provides, ``Unless 
otherwise specified in the Rules or the context indicates otherwise, 
the Exchange determines which of the following order types are 
available on a class-by-class and system-by-system basis.''
    \6\ C2 Rule 6.10(a), Availability of Orders, provides, 
``Availability. Unless otherwise specified in the Rules or the 
context indicates otherwise, the Exchange determines which of the 
following order types, Order Instructions, and Times-in-Force are 
available on a class, system, or trading session basis. Rule 6.13 
sets forth the order types, Order Instructions, and Times-in-Force 
the Exchange may make available for complex orders.''
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    The Exchange proposes to add rule text at the beginning of Options 
3, Section 7 and Options 8, Section 32 which states, ``The Exchange may 
determine to make certain order types and time-in-force, respectively, 
available on a class or System basis.'' The purpose of this rule change 
is to provide the Exchange with appropriate flexibility to address 
different trading characteristics, market models, and the investor base 
of each class, as well as to handle any System issues that may arise 
and require the Exchange to temporarily not accept certain order types. 
This rule is consistent with BZX Options Rule 21.1, EDGX Options Rules 
21.1(d) and 21.1(f), Cboe Rule 5.6 and C2 Rule 6.10(a), each of which 
provides these exchanges with the same flexibility. The Exchange 
intends to file rule changes to adopt this rule across all Nasdaq 
affiliated markets.
    This rule change will not permit the Exchange to discriminate among 
market participants when determining which order types and times-in-
force provisions are available on a class or system basis. The 
Exchange's proposal allows the Exchange to make certain order types and 
time-in-force, respectively, available on a class or System basis 
uniformly for all market participants. For example, if the Exchange 
determined to make a certain order type unavailable, that order type 
would not be available for any market participant.
    The Exchange would issue an Options Trader Alert to provide 
notification to Participants that a change is being made to the 
availability or unavailability of a certain order type or time-in-
force. The Exchange notes that in the event of System disruption, the 
Exchange would notify Participants of the unavailability of any order 
type and would also provide notification when that order type was 
available once the disruption was resolved.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\8\ in particular, in that it 
is designed to promote just and equitable principles of trade, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general to protect 
investors and the public interest. The proposed rule change would 
provide the Exchange with the flexibility to determine the availability 
of order types and times-in-force on a class and System basis. This 
flexibility would remove impediments to and perfect the mechanism of a 
free and open market and a national market system by allowing the 
Exchange to address the specific characteristics of different classes 
and different market conditions. The Exchange believes that this 
proposal serves to protect investors by ensuring that the appropriate 
order types and times-in-force are tailored to the different class 
characteristics and by mitigating risks associated with changing market 
conditions.\9\ The Exchange would issue a notification to Participants 
to provide them notice that a change is being made to the availability 
or unavailability of a certain order type or time-in-force before 
implementing the change. In the event of a System issue, the Exchange 
believes that it is consistent with the Act to temporarily not offer a 
certain order type to ensure the proper executions of transactions 
within the System thereby protecting investors and the public interest. 
The Exchange anticipates that exercising its ability to temporarily not 
offer order types would be infrequent.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ The Exchange may also determine to temporarily not offer an 
order type or a time-in-force based on a System issue.
---------------------------------------------------------------------------

    Adding this provision on all Nasdaq affiliated markets will ensure 
consistency between the Exchange rules and that of its affiliates and 
would remove impediments to and perfect the mechanism of a free and 
open market and promote just and equitable principles of trade, as well 
as foster cooperation and coordination with persons engaged in 
facilitating transactions in securities. The proposed rule change 
provides the Exchange with the same flexibility currently permitted on 
BZX Options, EDGX Options, Cboe and C2. The Exchange believes that this 
consistency promotes market participants' understanding of the rules 
across the multiple affiliated exchanges and promotes a fair and 
orderly national options market system. The Exchange also notes that 
the proposed change is reasonable and does not affect investor 
protection because the proposed change does not present any novel or 
unique issues, as it has previously been filed with the Commission.
    The Exchange's proposal is not unfairly discriminatory because the 
Exchange will not discriminate among market participants when 
determining which order types and times-in-force

[[Page 12628]]

provisions are available on a class or system basis. The Exchange's 
proposal allows the Exchange to make certain order types and time-in-
force, respectively, available on a class or System basis uniformly for 
all market participants. For example, if the Exchange determined to 
make a certain order type unavailable, that order type would not be 
available for any market participant.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange does not 
believe the proposed rule change will impose any burden on intra-market 
competition, as the proposed rule change will apply in the same manner 
to all order types and/or times-in-force, as the Exchange determines, 
for all Participants. The Exchange does not believe the proposed rule 
change will impose any burden on inter-market competition because the 
proposed change provides the Exchange with substantially the same 
flexibility as the rules of other exchanges.\10\ Therefore, the 
Exchange believes that the proposed rule change will allow it to make 
determinations regarding the availability of orders that will enable it 
to remain competitive as markets and market conditions evolve.
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    \10\ See notes 4-6 above.
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    The Exchange's proposal does not impose an undue burden on 
competition because the Exchange's proposal will uniformly make certain 
order types and time-in-force, respectively, available on a class or 
System basis for market participants.

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

    No written comments were either solicited or received.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
Because the 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, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 under Rule 19b-4(f)(6)\15\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative immediately. The Exchange notes that 
waiver of the operative delay will allow Phlx to exercise immediately 
the same flexibility to make certain order types available or 
unavailable as BZX Options, EDGX Options, Cboe, and C2. The Exchange 
states that this flexibility would serve to protect investors and the 
public interest by mitigating risks associated with changing market 
conditions. Based on the foregoing, the Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest, and the Commission hereby waives the 
30-day operative delay and designates the proposal operative upon 
filing.\17\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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-2020-05 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-2020-05. 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 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 offices 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-2020-05, and should be submitted on 
or before March 24, 2020.
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    \18\ 17 CFR 200.30-3(a)(12).


[[Page 12629]]


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-04287 Filed 3-2-20; 8:45 am]
 BILLING CODE 8011-01-P
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