Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 3, Section 8, Openings in Options, 17932-17934 [2020-06612]

Download as PDF 17932 Federal Register / Vol. 85, No. 62 / Tuesday, March 31, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES proposed change is consistent with Rule 17Ad–22(e)(4)(i).28 C. Consistency With Rule 17Ad– 22(e)(6)(i) and (v) Rule 17Ad–22(e)(6)(i) under the Act requires that each covered clearing agency that provides central counterparty services establish, implement, maintain and enforce written policies and procedures reasonably designed to cover its credit exposures to its participants by establishing a risk-based margin system that, at a minimum, considers, and produces margin levels commensurate with, the risks and particular attributes of each relevant product, portfolio, and market.29 Rule 17Ad–22(e)(6)(v) under the Act requires that each covered clearing agency that provides central counterparty services establish, implement, maintain and enforce written policies and procedures reasonably designed to cover its credit exposures to its participants by establishing a risk-based margin system that, at a minimum, uses an appropriate method for measuring credit exposure that accounts for relevant product risk factors and portfolio effects across products.30 As described above, NSCC faces SWWR in jump-to-default scenarios where it acts as central counterparty to Member transactions in Family-Issued Securities. This risk is present regardless of a Member’s rating on the CRRM. However, the current methodology assumes that Members with a higher rating on the CRRM present a heightened credit risk to NSCC and applies a higher Haircut Rate to such Members. This distinction does not take into account the SWWR that would manifest in a jump-to-default scenario. As such, NSCC proposes to apply the same higher Haircut Rate to all Members. This proposal would improve NSCC’s ability to mitigate its exposure to SWWR in a jump-to-default scenario, thereby helping NSCC to maintain a risk-based margin system that considers, and produces margin levels commensurate with, the risks and particular attributes of net unsettled long positions in Family-Issued Securities. Therefore, the Commission believes that the proposal would be consistent with Rule 17Ad–22(e)(6)(i).31 Additionally, because the enhanced FIS Charge would be a component of the margin that NSCC collects from its Members to help cover NSCC credit exposure to the Members, and because the charge would be based on different product risk factors with respect to equity and fixed-income securities, it would be part of an appropriate method for measuring credit exposure that accounts for relevant product risk factors and portfolio effects across products, as described above. Therefore, the Commission believes the proposed change is consistent with Rule 17Ad– 22(e)(6)(v).32 III. Conclusion It is therefore noticed, pursuant to Section 806(e)(1)(I) of the Clearing Supervision Act, that the Commission does not object to Advance Notice (SR– NSCC–2020–801) and that NSCC is authorized to implement the proposal as of the date of this notice or the date of an order by the Commission approving proposed rule change SR–NSCC–2020– 002, whichever is later. By the Commission. J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–06598 Filed 3–30–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88473; File No. SR–Phlx– 92020–14] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 3, Section 8, Openings in Options March 25, 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 March 24, 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Phlx Rules at Options 3, Section 8, titled ‘‘Openings in Options.’’ 28 Id. 29 17 32 17 30 17 CFR 240.17Ad–22(e)(6)(i). CFR 240.17Ad–22(e)(6)(v). 31 17 CFR 240.17Ad–22(e)(6)(i). 1 15 VerDate Sep<11>2014 19:01 Mar 30, 2020 CFR 240.17Ad–22(e)(6)(v). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. Jkt 250001 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 The text of the proposed rule change is available on the Exchange’s website at http://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 Exchange proposes to amend Phlx Rules at Options 3, Section 8, titled ‘‘Openings in Options.’’ The Exchange proposes to rename this rule ‘‘Options Opening Process.’’ Specifically, the Exchange is proposing to amend the definition of ‘‘market for the underlying security’’ within Options 3, Section 8(a)(ii). Today Options 3, Section 8(a)(ii) describes ‘‘market for the underlying security’’ as ‘‘. . .either the primary listing market or the primary volume market (defined as the market with the most liquidity in that underlying security for the previous two calendar months), as determined by the Exchange by underlying and announced to the membership on the Exchange’s website.’’ The Exchange proposes to amend this definition by replacing the term ‘‘primary volume market’’ with ‘‘an alternative market designated by the primary market.’’ The Exchange anticipates that an alternative market would be necessary if the primary listing market were impaired.3 In the event that a primary market is impaired and utilizes its designated alternative market, the Exchange would utilize that market as the underlying.4 The 3 The Exchange notes that the primary listing market and the primary volume market as defined in Phlx’s Rules could be the same market and therefore an alternative market is not available under the current Rule. 4 For example, in the event that the New York Stock Exchange LLC was unable to open because of an issue with its market and it designated NYSE E:\FR\FM\31MRN1.SGM 31MRN1 Federal Register / Vol. 85, No. 62 / Tuesday, March 31, 2020 / Notices Exchange further proposes an additional contingency. In the event that the primary market is unable to open, and an alternative market is not designated (and/or the designated alternative market does not open), the Exchange may utilize a non-primary market to open all underlying securities from the primary market. The Exchange will select the non-primary market with the most liquidity in the aggregate for all underlying securities that trade on the primary market for the previous two calendar months, excluding the primary and alternate markets. The Exchange notes that in order to open an option series it would require an equity market’s underlying quote. If another equity market displays opening prices for the underlying security, the Exchange proposes to utilize those quotes. This proposed change to the current System would allow the Exchange to open in situations where the primary market is experiencing an issue and also where an alternative market designated by the primary market may not be designated by the primary market or is unable to open. The Exchange believes that this proposal would effectively provide the Exchange with additional opportunities to open the market and provide its members with a venue in which to transact options trading. The Exchange notes that utilizing a non-primary market with the most liquidity in the aggregate for all underlying securities for the previous two calendar months will ensure that the Exchange opens with quotes which are representative of the volume on that primary market. The Exchange believes that this proposal will enable it to open in the event that there are issues with the primary market or the alternate market assigned by the primary. The Exchange also proposes to make a corresponding amendment to Options 3, Section 8(d)(ii) to replace the reference to ‘‘primary market’’ with the defined term ‘‘market for the underlying security.’’ jbell on DSKJLSW7X2PROD with NOTICES 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,5 in general, and furthers the objectives of Section 6(b)(5) of the Act,6 in particular, in that it is designed to promote just and equitable principles of trade and to protect investors and the public interest by providing for Arca, Inc. (‘‘NYSE Arca’’) as its alternative market, then PHLX would utilize NYSE Arca as the market for the underlying. 5 15 U.S.C. 78f(b). 6 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 19:44 Mar 30, 2020 Jkt 250001 alternative processes to determine the market for the underlying. The Exchange’s proposal to amend the definition of ‘‘market for the underlying security’’ within Options 3, Section 8(a)(ii) is consistent with the Act. First, the Exchange’s proposal would remove the concept of a primary volume market and replace that concept with an alternative market designated by the primary market. The Exchange notes that it is most likely the case that the primary market is the primary volume market, so this term offers no contingency in most cases. The primary market has the ability to designate an alternate primary market when the primary market is experiencing difficulties. In those situations, the Exchange proposes to utilize the alternate primary market to open its market. For example, in the event that the New York Stock Exchange LLC was unable to open because of an issue with its market and it designated NYSE Arca as its alternative market, then Phlx would utilize NYSE Arca as the market for the underlying security. Second, the Exchange proposes another alternative in the event that the primary market does not open and an alternate primary market is not designated and/or is also unable to open. In this situation, the Exchange proposes to utilize a non-primary market to open its market. The Exchange will select the non-primary market with the most liquidity in the aggregate for all underlying securities from the primary market for the previous two calendar months, excluding the primary and alternate markets. For example, in the event that the New York Stock Exchange LLC was unable to open because of an issue with its market and it designated NYSE Arca as its alternative market, and the alternate primary was unable to open or NYSE was unable to designate an alternate market because of system difficulties, then Phlx would determine which non-primary market had the most liquidity in the aggregate for all underlying securities for the previous two calendar months, excluding the primary and alternate markets. The Exchange would utilize that market to open all underlying securities from the primary market. The Exchange notes that in order to open an option series it would require an equity market’s underlying quote. The Exchange notes that utilizing a non-primary market with the most liquidity in the aggregate for all underlying securities for the previous two calendar months will ensure that the Exchange opens based on the next best alternative to the primary market given the circumstances. This PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 17933 contingency will provide the Exchange with the ability to open in situations where the primary market is experiencing an issue and also where an alternative primary market may also be impacted. The Exchange believes that this proposal would protect investors and the general public by providing additional venues for Phlx to utilize as part of its Opening Process and thereby allow investors to transact on its market. The Exchange desires to open its market despite any issues that may arise with the underlying market. The Exchange is proposing alternate methods to open its market to account for situations which may arise if the primary market is unable to open, and if the proposed alternate designated market is unable to open. The Exchange notes that once the market opens with an underlying price, the options market may continue to trade for the remainder of the trading day. The Exchange believes it benefits investors and the general public to have the options market available to enter new positions, or close open positions. 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. Amending the definition of ‘‘market for the underlying security’’ within Options 3, Section 8(a)(ii) does not burden competition. The Exchange’s proposal offers alternative paths to open Phlx in the event that the primary market or even a designated alternate primary market experiences an issue. The Exchange’s proposal is intended to create additional certainty that in the event of an issue with the primary market, the Exchange would have other equity markets to look to with respect to underlying prices on which to open Phlx. This proposal also does not impact the ability of other options markets to open. 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 E:\FR\FM\31MRN1.SGM 31MRN1 17934 Federal Register / Vol. 85, No. 62 / Tuesday, March 31, 2020 / Notices 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 7 and Rule 19b– 4(f)(6) thereunder.8 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 9 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 10 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the Exchange may amend its rules to permit the Exchange to utilize additional venues to open its market if the primary market and any designated alternate market for the underlying security are experiencing an issue and unable to open, thereby allowing investors to transact on its market in such a situation. The Exchange believes that having its options market available to enter new positions or close open positions would benefit investors and the general public. 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. Therefore, the Commission hereby waives the operative delay and designates the proposal as operative upon filing.11 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 should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and 7 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. 9 17 CFR 240.19b–4(f)(6). 10 17 CFR 240.19b–4(f)(6)(iii). 11 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). jbell on DSKJLSW7X2PROD with NOTICES 8 17 VerDate Sep<11>2014 19:01 Mar 30, 2020 Jkt 250001 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: [FR Doc. 2020–06612 Filed 3–30–20; 8:45 am] Electronic Comments BILLING CODE 8011–01–P • Use the Commission’s internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– Phlx–2020–14 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–2020–14. 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for 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–2020–14 and should be submitted on or before April 21, 2020. PO 00000 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 J. Matthew DeLesDernier, Assistant Secretary. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88471; File No. SR–MRX– 2020–08] Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 3, Section 8, Opening March 25, 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 March 24, 2020, Nasdaq MRX, LLC (‘‘MRX’’ 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend MRX Rules at Options 3, Section 8, titled ‘‘Opening.’’ The text of the proposed rule change is available on the Exchange’s website at http://nasdaqmrx.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. 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 Frm 00087 Fmt 4703 Sfmt 4703 E:\FR\FM\31MRN1.SGM 31MRN1

Agencies

[Federal Register Volume 85, Number 62 (Tuesday, March 31, 2020)]
[Notices]
[Pages 17932-17934]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06612]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88473; File No. SR-Phlx-92020-14]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Options 3, 
Section 8, Openings in Options

March 25, 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 March 24, 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.
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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 Phlx Rules at Options 3, Section 8, 
titled ``Openings in Options.''
    The text of the proposed rule change is available on the Exchange's 
website at http://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 Exchange proposes to amend Phlx Rules at Options 3, Section 8, 
titled ``Openings in Options.'' The Exchange proposes to rename this 
rule ``Options Opening Process.'' Specifically, the Exchange is 
proposing to amend the definition of ``market for the underlying 
security'' within Options 3, Section 8(a)(ii).
    Today Options 3, Section 8(a)(ii) describes ``market for the 
underlying security'' as ``. . .either the primary listing market or 
the primary volume market (defined as the market with the most 
liquidity in that underlying security for the previous two calendar 
months), as determined by the Exchange by underlying and announced to 
the membership on the Exchange's website.''
    The Exchange proposes to amend this definition by replacing the 
term ``primary volume market'' with ``an alternative market designated 
by the primary market.'' The Exchange anticipates that an alternative 
market would be necessary if the primary listing market were 
impaired.\3\ In the event that a primary market is impaired and 
utilizes its designated alternative market, the Exchange would utilize 
that market as the underlying.\4\ The

[[Page 17933]]

Exchange further proposes an additional contingency. In the event that 
the primary market is unable to open, and an alternative market is not 
designated (and/or the designated alternative market does not open), 
the Exchange may utilize a non-primary market to open all underlying 
securities from the primary market. The Exchange will select the non-
primary market with the most liquidity in the aggregate for all 
underlying securities that trade on the primary market for the previous 
two calendar months, excluding the primary and alternate markets. The 
Exchange notes that in order to open an option series it would require 
an equity market's underlying quote. If another equity market displays 
opening prices for the underlying security, the Exchange proposes to 
utilize those quotes. This proposed change to the current System would 
allow the Exchange to open in situations where the primary market is 
experiencing an issue and also where an alternative market designated 
by the primary market may not be designated by the primary market or is 
unable to open. The Exchange believes that this proposal would 
effectively provide the Exchange with additional opportunities to open 
the market and provide its members with a venue in which to transact 
options trading. The Exchange notes that utilizing a non-primary market 
with the most liquidity in the aggregate for all underlying securities 
for the previous two calendar months will ensure that the Exchange 
opens with quotes which are representative of the volume on that 
primary market. The Exchange believes that this proposal will enable it 
to open in the event that there are issues with the primary market or 
the alternate market assigned by the primary.
---------------------------------------------------------------------------

    \3\ The Exchange notes that the primary listing market and the 
primary volume market as defined in Phlx's Rules could be the same 
market and therefore an alternative market is not available under 
the current Rule.
    \4\ For example, in the event that the New York Stock Exchange 
LLC was unable to open because of an issue with its market and it 
designated NYSE Arca, Inc. (``NYSE Arca'') as its alternative 
market, then PHLX would utilize NYSE Arca as the market for the 
underlying.
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    The Exchange also proposes to make a corresponding amendment to 
Options 3, Section 8(d)(ii) to replace the reference to ``primary 
market'' with the defined term ``market for the underlying security.''
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\6\ in particular, in that it is designed to promote 
just and equitable principles of trade and to protect investors and the 
public interest by providing for alternative processes to determine the 
market for the underlying. The Exchange's proposal to amend the 
definition of ``market for the underlying security'' within Options 3, 
Section 8(a)(ii) is consistent with the Act.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    First, the Exchange's proposal would remove the concept of a 
primary volume market and replace that concept with an alternative 
market designated by the primary market. The Exchange notes that it is 
most likely the case that the primary market is the primary volume 
market, so this term offers no contingency in most cases. The primary 
market has the ability to designate an alternate primary market when 
the primary market is experiencing difficulties. In those situations, 
the Exchange proposes to utilize the alternate primary market to open 
its market. For example, in the event that the New York Stock Exchange 
LLC was unable to open because of an issue with its market and it 
designated NYSE Arca as its alternative market, then Phlx would utilize 
NYSE Arca as the market for the underlying security.
    Second, the Exchange proposes another alternative in the event that 
the primary market does not open and an alternate primary market is not 
designated and/or is also unable to open. In this situation, the 
Exchange proposes to utilize a non-primary market to open its market. 
The Exchange will select the non-primary market with the most liquidity 
in the aggregate for all underlying securities from the primary market 
for the previous two calendar months, excluding the primary and 
alternate markets. For example, in the event that the New York Stock 
Exchange LLC was unable to open because of an issue with its market and 
it designated NYSE Arca as its alternative market, and the alternate 
primary was unable to open or NYSE was unable to designate an alternate 
market because of system difficulties, then Phlx would determine which 
non-primary market had the most liquidity in the aggregate for all 
underlying securities for the previous two calendar months, excluding 
the primary and alternate markets. The Exchange would utilize that 
market to open all underlying securities from the primary market. The 
Exchange notes that in order to open an option series it would require 
an equity market's underlying quote. The Exchange notes that utilizing 
a non-primary market with the most liquidity in the aggregate for all 
underlying securities for the previous two calendar months will ensure 
that the Exchange opens based on the next best alternative to the 
primary market given the circumstances. This contingency will provide 
the Exchange with the ability to open in situations where the primary 
market is experiencing an issue and also where an alternative primary 
market may also be impacted.
    The Exchange believes that this proposal would protect investors 
and the general public by providing additional venues for Phlx to 
utilize as part of its Opening Process and thereby allow investors to 
transact on its market. The Exchange desires to open its market despite 
any issues that may arise with the underlying market. The Exchange is 
proposing alternate methods to open its market to account for 
situations which may arise if the primary market is unable to open, and 
if the proposed alternate designated market is unable to open. The 
Exchange notes that once the market opens with an underlying price, the 
options market may continue to trade for the remainder of the trading 
day. The Exchange believes it benefits investors and the general public 
to have the options market available to enter new positions, or close 
open positions.

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. Amending the definition of 
``market for the underlying security'' within Options 3, Section 
8(a)(ii) does not burden competition. The Exchange's proposal offers 
alternative paths to open Phlx in the event that the primary market or 
even a designated alternate primary market experiences an issue. The 
Exchange's proposal is intended to create additional certainty that in 
the event of an issue with the primary market, the Exchange would have 
other equity markets to look to with respect to underlying prices on 
which to open Phlx. This proposal also does not impact the ability of 
other options markets to open.

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

[[Page 17934]]

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 \7\ and Rule 19b-4(f)(6) 
thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \9\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \10\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the Exchange may amend its rules to permit the Exchange to utilize 
additional venues to open its market if the primary market and any 
designated alternate market for the underlying security are 
experiencing an issue and unable to open, thereby allowing investors to 
transact on its market in such a situation. The Exchange believes that 
having its options market available to enter new positions or close 
open positions would benefit investors and the general public. 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. Therefore, the Commission hereby waives the operative 
delay and designates the proposal as operative upon filing.\11\
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    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ 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).
---------------------------------------------------------------------------

    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 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-Phlx-2020-14 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-2020-14. 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 (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for 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-2020-14 and should be submitted on 
or before April 21, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-06612 Filed 3-30-20; 8:45 am]
BILLING CODE 8011-01-P