Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Relocate the Phlx Series 8000 and 9000 Rules and Incorporate by Reference the Disciplinary Rules of The Nasdaq Stock Market LLC, 19203-19208 [2020-07075]
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Federal Register / Vol. 85, No. 66 / Monday, April 6, 2020 / Notices
Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
the most significant aspects of such
statements.
Electronic Comments
[Release No. 34–88519; File No. SR–Phlx–
2020–09]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
• 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–
CBOE–2020–024 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–CBOE–2020–024. 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–CBOE–2020–024, and
should be submitted on or before April
27, 2020.
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19203
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–07082 Filed 4–3–20; 8:45 am]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Relocate the Phlx
Series 8000 and 9000 Rules and
Incorporate by Reference the
Disciplinary Rules of The Nasdaq
Stock Market LLC
March 31, 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 20,
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 relocate the
Phlx Series 8000 and 9000 Rules from
its current rulebook (‘‘Rulebook’’) into
its new Rulebook shell. The Exchange is
also proposing to simultaneously
replace the text of the current Phlx
Series 8000 and 9000 Rules with
introductory paragraphs to each that
incorporate by reference The Nasdaq
Stock Market LLC’s (‘‘Nasdaq’’) Series
8000 and 9000 Rules located in Nasdaq
General 5 Discipline.
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
BILLING CODE 8011–01–P
1 15
17 17
CFR 200.30–3(a)(12).
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CFR 240.19b–4.
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1. Purpose
Rule Relocation
The Exchange proposes to relocate the
current Phlx Rule 8000 and 9000 Series
Rules into the new Rulebook shell. The
relocation and harmonization of these
rules is part of the Exchange’s continued
effort to promote efficiency and
conformity of its processes with those of
its Affiliated Exchanges.3 The Exchange
believes that the placement of these
Phlx Rules into their new location in the
shell will facilitate the use of the
Rulebook by members, member
organizations, persons associated with
member organizations, or other persons
subject to its jurisdiction. Specifically,
the Exchange proposes to relocate the
following rules into General 5
Discipline:
Proposed new
rule number
Current rule number
Section 1 ........
Rule 9110(d) Disciplinary Jurisdiction.
8000. Investigations and
Sanctions.
9000. Code of Procedure.
Section 2 ........
Section 3 ........
Incorporation by Reference
The Exchange also proposes to
simultaneously replace the current Phlx
Series 8000 and 9000 Rules with
introductory paragraphs to each that
incorporate by reference the Nasdaq
Series 8000 and 9000 Rules (located in
General 5 Discipline), respectively, and
state that such Nasdaq Rules shall be
applicable to Exchange Members,
Member Organizations, persons
associated with Member Organizations,
and other persons subject to the
Exchange’s jurisdiction.4
Except as noted below, the Nasdaq
Series 8000 and 9000 Rules are
substantially similar to the current Phlx
Series 8000 and 9000 Rules,
respectively. To account for any
3 The term ‘‘Affiliated Exchanges’’ refers to
Nasdaq; Nasdaq BX, Inc.; Nasdaq ISE, LLC; Nasdaq
GEMX, LLC; and Nasdaq MRX, LLC.
4 The Exchange notes that the proposed changes
will not become operative unless and until the
Commission approves the Exchange’s request,
which it has filed pursuant to Section 36 of the
Exchange Act and SEC Rule 0–12 thereunder, for
an exemption from the rule filing requirements of
Section 19(b) of the Exchange Act as to changes to
Phlx Series 8000 (New General 5, Section 2) and
9000 (New General 5, Section 3) Rules that are
effected solely by virtue of a change to the Nasdaq
Series 8000 or 9000 Rules.
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differences that do exist, the proposed
introductory paragraphs list instances in
which cross references in the Nasdaq
Series 8000 and 9000 Rules to other
Nasdaq rules shall be read to refer
instead to the Exchange Rules, and
references to Nasdaq terms (whether or
not defined) shall be read to refer to the
Exchange-related meanings of those
terms. For example, references in both
the Nasdaq Series 8000 and 9000 Rules
to the following terms shall be read to
refer to the Exchange-specific meanings
of those terms: the terms ‘‘Exchange’’ or
‘‘Nasdaq’’ shall be read to refer to the
Phlx Exchange; the terms ‘‘Rule’’ or
‘‘Rules of Nasdaq’’ shall be read to refer
to the Phlx Rules; the terms ‘‘Board’’ or
‘‘Nasdaq Board’’ shall be read to refer to
the Phlx Board of Directors; the terms
‘‘member’’ or ‘‘member firm’’ shall be
read to refer to a Phlx member
organization, except that with respect to
Rules 9268(e)(2), 9269(d)(2), 9312(a)(3),
9351(a), 9524(a)(10), 9524(b)(3), and
9559(q)(1), the term ‘‘member’’ shall be
read also to apply to a Phlx member; the
term ‘‘Associated Person’’ shall be read
to refer to a Phlx Member or person
associated with a Phlx member
organization; the term ‘‘person
associated with a member’’ shall be read
to refer to a Phlx member or a person
associated with a Phlx member
organization; 5 the terms ‘‘Nasdaq
Regulation’’ or ‘‘Nasdaq Regulation
Department’’ shall be read to refer to the
Phlx Regulation Department; and the
term ‘‘Chief Regulatory Officer’’ shall be
read to refer to the Chief Regulatory
Officer of Phlx.
Additionally, the proposed
introduction to the Phlx Series 8000
Rules (New General 5, Section 2) states
that references in the Nasdaq Series
8000 Rules to ‘‘Rule 0120’’ 6 shall be
read to refer to Phlx Rule General 1,
Section 1 and references in the Nasdaq
Series 8000 Rules to ‘‘Rule 1015’’ shall
be read to refer to Phlx Rule General 3,
Section 16(a).
The proposed introduction to the Phlx
Series 8000 Rules (New General 5,
Section 2) also indicates how certain of
5 The Exchange notes that the term ‘‘member’’
under Nasdaq’s rules is synonymous with the
Exchange’s definition of ‘‘member organization,’’
whereas the definition of a ‘‘member’’ of the
Exchange relates to the permit holder. Nasdaq does
not have such a concept. Under the Phlx rules, a
‘‘member’’ is a natural person, where as a ‘‘member
organization’’ is an entity and not a person.
6 The definitions in Nasdaq Rule 0120 are now
located under the General 1 title (‘‘General
Provisions’’) in the Nasdaq rulebook. See Securities
Exchange Act Release No. 34–87778 (December 17,
2019), 84 FR 70590 (December 23, 2019) (SR–
NASDAQ–2019–098). The Exchange plans to
submit a subsequent filing for the Nasdaq rulebook
to address references to rules in the Nasdaq
Rulebook that have since been changed.
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the Nasdaq Series 8000 Rules should be
read to apply to Exchange members,
member organizations, persons
associated with member organizations,
or other persons subject to its
jurisdiction. Specifically, when applied
to a Phlx member, Nasdaq Rule
8310(a)(3) shall also permit the
suspension of the permit of a Phlx
member and 8310(a)(4) shall also permit
the revocation or cancellation of the
permit of a Phlx member, or expulsion
of a Phlx member. In addition, IM–
8310–3(c)(1) shall also permit the Phlx
Regulation Department to release to the
public information with respect to any
disciplinary decision issued pursuant to
the Phlx Series 9000 Rules (New
General 5, Section 3) imposing a
suspension, cancellation or expulsion of
a Phlx member, or suspension or
revocation of a Phlx member’s permit or
any decision issued pursuant to the
Rule 9550 Series imposing a suspension
or cancellation of the Phlx member, or
a suspension or bar of the association of
a Phlx member with a Phlx member
organization. Moreover, IM–8310–3(g)
and (h) also shall be read to apply to a
Phlx member with respect to decisions
of the Exchange that impose upon him
or her a monetary sanction of $10,000 or
more or a penalty of expulsion,
revocation, suspension, or bar; and IM–
8310(i) also shall be read to apply to a
Phlx member with respect to any order
issued by the Commission of
suspension, expulsion, bar, or the
imposition of monetary sanctions of
$10,000 or more. The inclusion of these
provisions in the introductory
paragraph ensures that there is no
change in the way current Phlx Rules
8310 and IM–8310–3 are applied to Phlx
Members who are sanctioned for
violation of the Phlx Rules.
The proposed introduction to the Phlx
Series 8000 Rules (New General 5,
Section 2) clarifies that, while Rules
8320(a)(2), (b), and (c) in the Nasdaq
Series 8000 Rules shall also apply to
Phlx members, subsection (a)(1) shall
have no application to the Exchange or
its members, member organizations,
persons associated with member
organizations, and other persons subject
to the Exchange’s jurisdiction. The
inclusion of this in the introductory
paragraph is needed because that
subsection relates specifically to Nasdaq
Options Market members, and there is
no analogous rule in the Phlx Series
8000 Rules (New General 5, Section 2).
Finally, the introductory paragraph to
the Phlx Series 8000 Rules (New
General 5, Section 2) explains that
Nasdaq Rule IM–8310–1 shall have no
application to the Phlx Exchange or its
members, member organizations,
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persons associated with member
organizations, or other persons subject
to its jurisdiction. Instead, current Phlx
Rule IM–8310–1 shall continue to
apply. While the language of Nasdaq
Rule IM–8310–1 and current Phlx Rule
IM–8310–1 is substantially similar,
certain differences exist given the
existence of member organizations on
the Exchange such that maintaining the
current Phlx Rule language is necessary.
With respect to the Phlx Series 9000
Rules (New General 5, Section 3), the
proposed introduction states that crossreferences in the Nasdaq Series 9000
Rules to the following rules shall be
read to refer to the following Exchange
Rules:
Nasdaq rule 7
Corresponding exchange
rule
0120 ...............
1013 ...............
General 1, Section 1.
General 3, Section 5 or General 3, Section 2.
General 3, Section 16(a).
General 3, Section 7(d).
Options 9, Section 1.
General 2, Section 4.
General 9, Section 53.
Options 6D, Section 1.
Options 6D, Section 1.
General 9, Section 53.
1015 ...............
1160 ...............
2010A .............
2160 ...............
2170 ...............
4110A .............
4120A .............
Options 9,
Section 4.
Inaddition, when applied to a Phlx
member organization, Rule 9558(a)(2)
and any other applicable rules in the
Nasdaq Rule 9000 series shall also allow
the summary suspension of the
associated permit(s) of a Phlx member
organization. This language is necessary
to make it clear that if the Chief
Regulatory Officer provides written
authorization to the Financial Industry
Regulatory Authority (‘‘FINRA’’) staff to
issue on a case-by-case basis a written
notice that summarily suspends a Phlx
member organization, the Phlx member
organization’s associated permit(s) may
also be suspended.
Moreover, as with the current Phlx
Series 8000 Rules, the proposed
introduction to the Phlx Series 9000
Rules (New General 5, Section 3)
indicates how certain of the Nasdaq
Series 9000 Rules should be read to
apply to Exchange members, member
organizations, persons associated with
member organizations, or other persons
subject to its jurisdiction 8 and indicates
7 The Exchange plans to submit a subsequent
filing for the Nasdaq Series 8000 and 9000 Rules
to replace references to the following rules with the
new rule cites: Rules 0120 (now General 1), 1160
(now General 2, Section 11), 2010A (now General
9, Section 1), 2160 (now General 2, Section 14),
4110A (now General 9, Section 40), and 4120A
(now General 9, Section 41).
8 Rule 9270(c)(5) in the current Phlx Rule 9000
Series refers to the ‘‘Exchange Enforcement
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Sanctions User’s Guide,’’ whereas Rule 9270(c)(5)
in the Nasdaq Rule 9000 Series refers to ‘‘sanction
guidelines.’’ The Exchange is not preserving the
reference to the Exchange Enforcement Sanctions
User’s Guide (the ‘‘Sanctions User Guide’’) because
the Exchange, like Nasdaq, consults FINRA’s
sanction guidelines when determining appropriate
remedial sanctions. The Exchange notes that,
pursuant to a September 11, 2000, settlement with
the Commission (the ‘‘Settlement’’), see Release No.
43268, September 11, 2000, the Exchange was
required to ‘‘adopt rules establishing, or modifying
existing, sanctioning guidelines such that they are
reasonably designed to effectively enforce
compliance with such exchange’s options order
handling rules, including, the duty of best
execution with respect to the handling of orders
after the broker-dealer routes the order to such
respondent exchange, limit order display, priority,
firm quote, and trade reporting rules.’’ The
Exchange thereafter sought Commission approval to
adopt new sanctioning guidelines to assist the
Exchange in enforcing compliance with its options
order handling rules. See Securities Exchange Act
Release No. 45415 (February 7, 2002), 67 FR 6781
(February 13, 2002). The Exchange received
Commission approval on March 15, 2002. See
Securities Exchange Act Release No. 45569 (March
15, 2002), 67 FR 13397 (March 22. 2002). In
approving the Sanctions User Guide, the
Commission noted that ‘‘the Commission expects
the Exchange to continue to evaluate the adequacy
of the proposed sanctioning guidelines to determine
whether they do, in fact, effectively enforce
compliance with the options order handling rules.’’
See Securities Exchange Act Release No. 45569
(March 15, 2002), 67 FR 13397, 13398 (March 22,
2002).
After Nasdaq acquired Phlx in 2008, Phlx
contracted with FINRA in 2010 through a regulatory
services agreement to perform certain of the
investigation and enforcement functions on its
behalf that the Exchange’s enforcement department
had previously performed. Over time, with the
support of the Exchange, FINRA began consulting
FINRA’s sanction guidelines when determining
appropriate remedial sanctions for Members,
Member Organizations, persons associated with
Member Organizations, and other persons subject to
the Exchange’s jurisdiction. The National
Adjudicatory Council (‘‘NAC’’) (formerly the
National Business Conduct Committee) developed
the sanctions guidelines. The NAC is an
independent committee of FINRA comprised of
professionals who also review initial decisions
rendered in FINRA disciplinary and membership
proceedings. FINRA’s guidelines include guidance
on sanctioning a member for failing to comply with
best execution obligations, limit order display rules,
and trade reporting rules. For those rules not
specifically covered by FINRA’s sanctions
guidelines, such as priority and firm quote rules,
FINRA and/or the Exchange, as applicable, consults
the guidelines for analogous violations when
determining the appropriate sanction. For each rule
covered, the guidelines set forth factors that may be
taken into account when determining the
appropriate sanction, and the recommended
sanction or sanction range (which are higher than
the Sanctions User Guide recommends). The
guidelines do not prescribe specific sanctions for
particular violations. Instead, the objective is to
provide recommended sanctions based on a number
of factors that may be considered pertinent in
determining what sanction should be levied.
FINRA’s guidelines also provide direction on when
to consider a suspension, bar or other sanctions.
The Exchange believes the higher sanction ranges
and guidance on when to suspend or bar a member
lead to better deterrence of misconduct. In addition,
FINRA’s sanctions guidelines are available publicly
(see https://www.finra.org/sites/default/files/
Sanctions_Guidelines.pdf). The Exchange believes
that public access to guidelines that the Exchange
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that certain of the language in particular
rules of the Current Phlx Series 8000
and 9000 Rules will be maintained.
Specifically:
1. Rule 9110(d) (‘‘Jurisdiction’’) in the
Nasdaq Series 9000 Rules shall not
apply to the Exchange or its members,
member organizations, persons
associated with member organizations,
or other persons subject to its
jurisdiction. Instead, current Phlx Rule
9110(d) shall apply. While the language
of Nasdaq Rule 9110(d) and current
Phlx Rule 9110(d) is substantially
similar, certain differences exist given
the existence of member organizations
and members on the Phlx Exchange
such that maintaining the current Phlx
Rule language is necessary.9 Moreover,
as noted above, current Phlx Rule
9110(d) will be relocated to New
General 5, Section 1.
2. The Waiver of Ex Parte Prohibition
set forth in Nasdaq Rule 9143(e)(3) and
Separation of Functions set forth in
Nasdaq Rule 9144(c)(3) shall also apply
to violation letters executed pursuant to
Phlx Rule 9216(b)(2). The inclusion of
this in the introductory paragraph is
necessary because the Nasdaq rules do
not provide for the issuance of violation
letters, whereas the Phlx rules do. This
provision therefore ensures that there is
no change in the application of the
Waiver of Ex Parte Prohibition and
Separation of Functions rules to Phlx
member organizations or persons
associated with member organizations
who submit executed violation letters.
3. The following text should be read
to follow the existing paragraph in
Nasdaq Rule 9211(a)(1), which is
identical to the existing text in current
Phlx Rule 9211(a)(1): ‘‘When the
number of violations under Exchange
Rules is determined based upon an
exception-based surveillance program,
the Phlx Regulation Department or the
Department of Enforcement may
aggregate, or ‘‘batch,’’ individual
violations of Exchange order handling
Rules and consider such ‘‘batched’’
violations as a single offense only in
accordance with the guidelines set forth
in the Exchange’s Numerical Criteria for
Bringing Cases for Violations of
Exchange Order Handling Rules. In
addition, the Phlx Regulation
Department or the Department of
considers when assessing remedial sanctions
improves regulation and leads to better conduct.
The Exchange notes that all other Affiliated
Exchanges currently refer to FINRA’s sanctions
guidelines when determining appropriate remedial
sanctions for each of its members, including
Nasdaq’s other options markets, the Nasdaq Options
Market, the BX Options Market, Nasdaq ISE, LLC,
Nasdaq GEMX, LLC, and Nasdaq MRX, LLC.
9 See supra, n.5.
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19205
Enforcement may batch individual
violations of Options 2, Section 5(c)
pertaining to quote spread parameters
(and corresponding Options Floor
Procedure Advice Options 11, Section
7). In the alternative, the Phlx
Regulation Department or the
Department of Enforcement may request
authorization from the FINRA Office of
Disciplinary Affairs to issue a complaint
when (i) the Phlx Regulation
Department or the Department of
Enforcement determines that there
exists a pattern or practice of violative
conduct without exceptional
circumstances, or (ii) any single
instance of violative conduct without
exceptional circumstances is deemed to
be egregious.’’ The inclusion of this in
the introductory paragraph is necessary
because the Nasdaq Rules do not
provide for the ‘‘batching’’ of individual
violations, whereas the Phlx Rules do.
Maintaining this provision therefore
ensures that the current process of
‘‘batching’’ on the Exchange for certain
violations remains unchanged.
4. Rules 9216 and IM–9216 in the
Nasdaq Rules shall not apply to
Exchange members, member
organizations, persons associated with
member organizations, or other persons
subject to its jurisdiction. Instead,
current Phlx Rules 9216 and IM–9216
shall apply. Phlx Rules 9216 and IM–
9216 include provisions unique to that
Exchange because, unlike Nasdaq, it has
a trading floor. In addition, Phlx Rule
9216 provides for the imposition of
fines in excess of $2,500 but not to
exceed $10,000. Maintaining the
existing language therefore ensures that
the procedures applicable to acceptance,
waiver, and consent letters, minor rule
violation letters, and violation letters set
forth in the existing Phlx rules remain
unchanged. The Exchange also proposes
to update certain terms and rule
references that exist in Current Phlx
Rule IM–9216 to align them with
current terms and rule references.
Recently, the Exchange updated the
terms ‘‘Registered Options Trader’’ to
‘‘Floor Market Maker’’ and ‘‘Specialist’’
to ‘‘Lead Market Maker.’’ 10 Those new
terms will be reflected in New Phlx Rule
IM–9216. In addition, due to the recent
relocation in the Phlx Rulebook of rules
that are subject to the minor rule
violation plan and the floor option
procedure advices, the Exchange is
updating the rule references as follows:
10 See Securities Exchange Act Release No. 85740
(April 29, 2019), 84 FR 19136 (May 3, 2019);
Securities Exchange Act Release No. 88213
(February 14, 2020), 85 FR 9859 (February 20,
2020).
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Section H Of the Options Floor Procedure Advices.
B–11.
D–1.
E–2.
E–3.
E–4.
E–5.
E–6.
E–7.
E–8.
E–9.
Options 11, Section
6.
Options 11, Section
7.
Options 11, Section
8.
E–13.
E–14.
Options 11, Section
9.
E–15.
E–16.
Options 11, Section
10.
Options 11, Section
11.
Options 11, Section
12.
Options 11, Section
13.
Options 8, Section
39, F.
5. Rule 9231(b)(1)(C) in the Nasdaq
Rules shall be read to allow the Chief
Hearing Officer to select as a Panelist a
person who previously served as a
Governor of the Exchange prior to its
acquisition by Nasdaq, Inc., but does not
serve currently in that position; and
9231(b)(1)(D) shall be read to allow a
person who is a member of FINRA’s
Market Regulation Committee to be
among the FINRA Panelists approved by
the Exchange Board at least annually
whom the Chief Hearing Officer may
also select as a Panelist. This language
is necessary to preserve the pool of
individuals from whom the Chief
Hearing Officer may select to serve as a
Panelist for Phlx disciplinary matters.
6. When applied to a Phlx member
organization, Rule 9558(a)(2) in the
Nasdaq Rule 9000 Series shall also
allow the summary suspension of the
associated permit(s) of a Phlx member
organization. This language is necessary
to make it clear that if the Chief
Regulatory Officer provides written
authorization to FINRA staff to issue on
a case-by-case basis a written notice that
summarily suspends a Phlx member
organization, the Phlx member
organization’s associated permit(s) may
also be suspended.
7. Rules 9552(f), 9553(g), 9554(g),
9555(g), 9556(g), and 9558(g) in the
Nasdaq 9000 Series shall be read to
continue to allow the filing of a request
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for termination of a suspension (or a
request for termination of the limitation,
prohibition or suspension with respect
to Rules 9555(g) and 9558(g)), to be
made with either the head of the
Exchange or the FINRA department or
office that issued the notice or that is
handling the matter on behalf of the
issuing department or office. The
inclusion of this language is necessary
so that it is clear that such filings may
continue to be made with the Exchange.
8. Rule 9610(b) in the Nasdaq Series
9000 Rules shall not apply to the
Exchange or its members, member
organizations, persons associated with
member organizations, or other persons
subject to its jurisdiction. Instead,
current Phlx Rule 9610(b) shall apply.
While the language of Nasdaq Rule
9610(b) and current Phlx Rule 9610(b) is
substantially similar, certain differences
exist given the existence of member
organizations and members on the Phlx
Exchange such that maintaining the
current Phlx Rule language is necessary.
9. Finally, the Exchange notes that
FINRA amended its rules to reflect an
internal reorganization of FINRA’s
Enforcement Operations.11 In July 2017,
FINRA announced its plan to
consolidate its existing enforcement
functions into a unified Department of
Enforcement. According to FINRA, its
rule change makes technical and other
non-substantive changes to FINRA
Rules 9000 Series Code of Procedure
(the ‘‘Code’’) to reflect the single
Department of Enforcement.12 The rule
change removed references to the
Market Regulation department, its head
and employees from the Code where
those references reflect the previously
separate Market Regulation enforcement
function. In light of FINRA’s
reorganization, Nasdaq likewise
removed references to the Market
Regulation department, its head and
employees from the Code, and relettered the remainder of those sections
where such re-lettering was necessary
(i.e., Rule 9120). Because FINRA’s
Market Regulation department no longer
exists, the Exchange does not need to
preserve references to that entity with
this rule change.
2. Statutory Basis
11 See Securities Exchange Act Release No. 83781
(August 6, 2018), 83 FR 39802 (August 10, 2018)
(FINRA No. SR–FINRA–2018–027).
12 Id.
13 15 U.S.C. 78f(b).
Fmt 4703
U.S.C. 78f(b)(5).
Securities Exchange Act Release No. 86138
(June 18, 2019), 84 FR 29567 (June 24, 2019);
Securities Exchange Act Release No. 86346 (July 10,
2019), 84 FR 33999 (July 16, 2019); Securities
Exchange Act Release No. 86424 (July 22, 2019), 84
FR 36134 (July 26, 2019); and Securities Exchange
Act Release No. 87778 (December 17, 2019), 84 FR
70590 (December 23, 2019). The Exchange plans to
submit a similar rule filing for Nasdaq BX, Inc. in
short order.
16 15 U.S.C. 78f(b).
17 15 U.S.C. 78f(b)(5).
15 See
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,13 in general, and furthers the
Frm 00075
Incorporation by Reference
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,16 in general, and furthers the
objectives of Section 6(b)(5) of the Act,17
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
14 15
Rule Relocation
PO 00000
objectives of Section 6(b)(5) of the Act,14
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
applicable, across Nasdaq markets so
that members of the Affiliated Exchange
can readily locate rules which cover
similar topics. The relocation and
harmonization of these 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 these Phlx Rules into
their new location will facilitate the use
of the Rulebook by members, member
organizations, persons associated with
member organizations, or other persons
subject to the Exchange’s jurisdiction.
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
Exchange has already completed
relocating corresponding rules into the
same location in most of its Affiliated
Exchange’s Rulebooks for ease of
reference.15 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.
Sfmt 4703
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06APN1
jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 66 / Monday, April 6, 2020 / Notices
investors and the public interest, by
consolidating its rules into a single rule
set. The Exchange intends to file a
similar proposed rule change for the
Nasdaq BX, Inc., Nasdaq ISE, LLC,
Nasdaq GEMX, LLC, and Nasdaq MRX,
LLC markets, so that the Nasdaq 8000
Series and 9000 Series Rules which
govern the investigative and
disciplinary processes are similarly
incorporated by reference into those
rulebooks.
Replacing the current Phlx Series
8000 and 9000 Rules with introductory
paragraphs to each that incorporate by
reference Nasdaq Series 8000 and 9000
Rules, respectively, will provide an easy
reference for members, associated
persons, and other persons subject to
the Exchange’s jurisdiction seeking to
understand and follow the investigative
and disciplinary processes across all of
Nasdaq’s Exchanges. As noted, the
Exchange intends to file similar rule
changes for other affiliated markets so
that the Nasdaq Series 8000 and 9000
Rules are the source document for all of
the Affiliated Exchanges’ investigative
and disciplinary processes. The
Exchange notes that the substance of the
current rules is not changing. The
Exchange desires to conform its rules to
give its members and the members of its
Affiliated Exchanges the ability to
quickly locate rules in one central
location.
The Exchange also believes that the
proposal is consistent with Section
6(b)(6) of the Act,18 which requires that
the rules of an exchange provide that its
members be appropriately disciplined
for violations of the Act as well as the
rules and regulations thereunder, or the
rules of the Exchange, by expulsion,
suspension, limitation of activities,
functions, and operations, fine, censure,
being suspended or barred from being
associated with a member, or any other
fitting sanction. As noted above, the
Exchange proposes to include
introductory paragraphs to each of the
Phlx Series 8000 and 9000 Rules (new
General 5, Sections 2 and 3,
respectively) that list instances in which
cross references in the Nasdaq Series
8000 and 9000 Rules to other Nasdaq
rules should be read to refer instead to
the Exchange Rules and references to
Nasdaq terms (whether or not defined)
shall be read to refer to the Exchangerelated meanings of those terms. This is
consistent with the Act because it
minimizes confusion and ensures the
proper application of the Nasdaq Rules
to Phlx. Also as noted above, the
introductory paragraphs (1) indicate that
certain of the Current Phlx Series 8000
18 15
U.S.C. 78f(b)(6).
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17:47 Apr 03, 2020
Jkt 250001
and 9000 Rules, or portions thereof, will
continue to apply to the Exchange, Phlx
members, member organizations,
persons associated with member
organizations, and other persons subject
to the Exchange’s jurisdiction, rather
than the analogous Nasdaq Series 8000
and 9000 Rules; 19 (2) describe how
certain of the Nasdaq Series 8000 and
9000 Rules should be read to apply to
Exchange members, member
organizations, persons associated with
member organizations, or other persons
subject to the Exchange’s jurisdiction; 20
and (3) indicate that certain of the
language in particular rules of the
current Phlx Series 8000 and 9000 Rules
will be maintained.21 With respect to
(1), the Exchange is also updating
certain terms and rule references in
Current Phlx Rule IM–9216 to align
them with current terms and rule
references contained elsewhere in the
Exchange’s Rulebook. The inclusion of
these clarifying provisions is consistent
with the Act because it preserves the
way that certain Phlx Rules that differ
from or do not exist in the Nasdaq Rules
are applied. Moreover, updating certain
terms and rule references in Current
Phlx Rule IM–9216 is consistent with
the Act because it conforms the text in
that rule to changes already made
elsewhere in the Rulebook, thus
ensuring accurate terms and rule
references throughout. Adding this text
therefore ensures the consistent
application of Phlx Rules to its
members, member organizations,
persons associated with member
organizations, or other persons subject
to the Exchange’s jurisdiction.
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 this rule change
does not impose an undue burden on
competition because the Exchange is
merely incorporating Nasdaq’s Series
8000 and 9000 Rules, which are
substantially similar to the current Phlx
Series 8000 and 9000 Rules. Those rules
will now apply to Phlx members,
member organizations, persons
associated with member organizations,
or other persons subject to the
Exchange’s jurisdiction. To the extent
that there are differences between the
19 Rules IM–8310–1, 9110(d), 9211(a)(1), 9216,
IM–9216, and 9610(b).
20 Rule 8310, IM–8310–3, 8320 and 9558(a)(2).
21 Rules 9143(e)(3), 9144(c)(3), 9231(b)(1)(C),
9231(b)(1)(D), 9552(f), 9553(g), 9554(g), 9555(g),
9556(g), and 9558(g).
PO 00000
Frm 00076
Fmt 4703
Sfmt 4703
19207
two rule sets, the Exchange notes those
differences in introductory paragraphs
to each of the Phlx Series 8000 and 9000
Rules (new General 5, Sections 2 and 3,
respectively). As noted above, the
proposed introductory paragraphs list
instances in which cross references in
Nasdaq Series 8000 and 9000 Rules to
other Nasdaq rules shall be read to refer
instead to the Exchange Rules, and
references to Nasdaq terms (whether or
not defined) shall be read to refer to the
Exchange-related meanings of those
terms. The introductory paragraphs also
(1) indicate that certain of the current
Phlx Series 8000 and 9000 Rules, or
portions thereof, will continue to apply
to the Exchange, Phlx members, member
organizations, persons associated with
member organizations, or other persons
subject to the Exchange’s jurisdiction,
rather than the analogous Nasdaq Series
8000 and 9000 Rules; (2) describe how
certain rule text of the Nasdaq Series
8000 and 9000 Rules should be read to
apply to the Exchange, Phlx members,
member organizations, persons
associated with member organizations,
or other persons subject to the
Exchange’s jurisdiction; and (3) indicate
that certain of the language in particular
rules of the current Phlx Series 8000
and 9000 Rules will be maintained.
Because Nasdaq’s current Series 8000
and 9000 Rules are substantially similar
to the current Phlx Series 8000 and 9000
Rules, and because the introductory
paragraphs ensure that any differences
are preserved, the proposed changes do
not impose any burden on competition
not necessary or appropriate in
furtherance of the purposes of the Act.
Finally, updating certain terms and rule
references in Current Phlx Rule IM–
9216 does not do not impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act because it conforms
the text in that rule to changes already
made elsewhere in the Rulebook, thus
ensuring accurate terms and rule
references throughout.
Finally, 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.
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.
E:\FR\FM\06APN1.SGM
06APN1
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Federal Register / Vol. 85, No. 66 / Monday, April 6, 2020 / Notices
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 22 and Rule 19b–
4(f)(6) thereunder.23
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 rule-comments@
sec.gov. Please include File Number SR–
Phlx–2020–09 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–2020–09. 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
jbell on DSKJLSW7X2PROD with NOTICES
22 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.
23 17
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17:47 Apr 03, 2020
Jkt 250001
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–2020–09 and should
be submitted on or before April 27,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–07075 Filed 4–3–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88520; File No. SR–
NYSEARCA–2020–26]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change for an Extension of the
Temporary Waiver of the Co-Location
‘‘Hot Hands’’ Fee
March 31, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on March
27, 2020, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
24 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00077
Fmt 4703
Sfmt 4703
III below, which Items have been
prepared by the self-regulatory
organization. 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 an
extension of the temporary waiver of the
co-location ‘‘Hot Hands’’ fee. The
proposed rule change is available on the
Exchange’s website at www.nyse.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
self-regulatory organization 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 those 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes an extension
of the temporary waiver of the colocation 4 ‘‘Hot Hands’’ fee through the
earlier of the reopening of the Mahwah,
New Jersey data center (‘‘Data Center’’)
or May 15, 2020. The waiver of the Hot
Hands fee was originally through March
29, 2020.5
The Exchange is an indirect
subsidiary of Intercontinental Exchange,
Inc. (‘‘ICE’’). Through its ICE Data
Services (‘‘IDS’’) business, ICE operates
the Mahwah, New Jersey data center
(‘‘Data Center’’), from which the
Exchange provides co-location services
to Users.6 Among those services is a
4 The Exchange initially filed rule changes
relating to its co-location services with the
Securities and Exchange Commission
(‘‘Commission’’) in 2010. See Securities Exchange
Act Release No. 63275 (November 8, 2010), 75 FR
70048 (November 16, 2010) (SR–NYSEArca–2010–
100).
5 See Securities Exchange Act Release No. 88398
(March 17, 2020), 85 FR 16398 (March 23, 2020)
(SR–NYSEArca–2020–22).
6 For purposes of the Exchange’s co-location
services, a ‘‘User’’ means any market participant
that requests to receive co-location services directly
E:\FR\FM\06APN1.SGM
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]]>Agencies
[Federal Register Volume 85, Number 66 (Monday, April 6, 2020)]
[Notices]
[Pages 19203-19208]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07075]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88519; File No. SR-Phlx-2020-09]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Relocate the
Phlx Series 8000 and 9000 Rules and Incorporate by Reference the
Disciplinary Rules of The Nasdaq Stock Market LLC
March 31, 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 20, 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to relocate the Phlx Series 8000 and 9000
Rules from its current rulebook (``Rulebook'') into its new Rulebook
shell. The Exchange is also proposing to simultaneously replace the
text of the current Phlx Series 8000 and 9000 Rules with introductory
paragraphs to each that incorporate by reference The Nasdaq Stock
Market LLC's (``Nasdaq'') Series 8000 and 9000 Rules located in Nasdaq
General 5 Discipline.
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
Rule Relocation
The Exchange proposes to relocate the current Phlx Rule 8000 and
9000 Series Rules into the new Rulebook shell. The relocation and
harmonization of these rules is part of the Exchange's continued effort
to promote efficiency and conformity of its processes with those of its
Affiliated Exchanges.\3\ The Exchange believes that the placement of
these Phlx Rules into their new location in the shell will facilitate
the use of the Rulebook by members, member organizations, persons
associated with member organizations, or other persons subject to its
jurisdiction. Specifically, the Exchange proposes to relocate the
following rules into General 5 Discipline:
---------------------------------------------------------------------------
\3\ The term ``Affiliated Exchanges'' refers to Nasdaq; Nasdaq
BX, Inc.; Nasdaq ISE, LLC; Nasdaq GEMX, LLC; and Nasdaq MRX, LLC.
------------------------------------------------------------------------
Proposed new rule number Current rule number
------------------------------------------------------------------------
Section 1.............................. Rule 9110(d) Disciplinary
Jurisdiction.
Section 2.............................. 8000. Investigations and
Sanctions.
Section 3.............................. 9000. Code of Procedure.
------------------------------------------------------------------------
Incorporation by Reference
The Exchange also proposes to simultaneously replace the current
Phlx Series 8000 and 9000 Rules with introductory paragraphs to each
that incorporate by reference the Nasdaq Series 8000 and 9000 Rules
(located in General 5 Discipline), respectively, and state that such
Nasdaq Rules shall be applicable to Exchange Members, Member
Organizations, persons associated with Member Organizations, and other
persons subject to the Exchange's jurisdiction.\4\
---------------------------------------------------------------------------
\4\ The Exchange notes that the proposed changes will not become
operative unless and until the Commission approves the Exchange's
request, which it has filed pursuant to Section 36 of the Exchange
Act and SEC Rule 0-12 thereunder, for an exemption from the rule
filing requirements of Section 19(b) of the Exchange Act as to
changes to Phlx Series 8000 (New General 5, Section 2) and 9000 (New
General 5, Section 3) Rules that are effected solely by virtue of a
change to the Nasdaq Series 8000 or 9000 Rules.
---------------------------------------------------------------------------
Except as noted below, the Nasdaq Series 8000 and 9000 Rules are
substantially similar to the current Phlx Series 8000 and 9000 Rules,
respectively. To account for any
[[Page 19204]]
differences that do exist, the proposed introductory paragraphs list
instances in which cross references in the Nasdaq Series 8000 and 9000
Rules to other Nasdaq rules shall be read to refer instead to the
Exchange Rules, and references to Nasdaq terms (whether or not defined)
shall be read to refer to the Exchange-related meanings of those terms.
For example, references in both the Nasdaq Series 8000 and 9000 Rules
to the following terms shall be read to refer to the Exchange-specific
meanings of those terms: the terms ``Exchange'' or ``Nasdaq'' shall be
read to refer to the Phlx Exchange; the terms ``Rule'' or ``Rules of
Nasdaq'' shall be read to refer to the Phlx Rules; the terms ``Board''
or ``Nasdaq Board'' shall be read to refer to the Phlx Board of
Directors; the terms ``member'' or ``member firm'' shall be read to
refer to a Phlx member organization, except that with respect to Rules
9268(e)(2), 9269(d)(2), 9312(a)(3), 9351(a), 9524(a)(10), 9524(b)(3),
and 9559(q)(1), the term ``member'' shall be read also to apply to a
Phlx member; the term ``Associated Person'' shall be read to refer to a
Phlx Member or person associated with a Phlx member organization; the
term ``person associated with a member'' shall be read to refer to a
Phlx member or a person associated with a Phlx member organization; \5\
the terms ``Nasdaq Regulation'' or ``Nasdaq Regulation Department''
shall be read to refer to the Phlx Regulation Department; and the term
``Chief Regulatory Officer'' shall be read to refer to the Chief
Regulatory Officer of Phlx.
---------------------------------------------------------------------------
\5\ The Exchange notes that the term ``member'' under Nasdaq's
rules is synonymous with the Exchange's definition of ``member
organization,'' whereas the definition of a ``member'' of the
Exchange relates to the permit holder. Nasdaq does not have such a
concept. Under the Phlx rules, a ``member'' is a natural person,
where as a ``member organization'' is an entity and not a person.
---------------------------------------------------------------------------
Additionally, the proposed introduction to the Phlx Series 8000
Rules (New General 5, Section 2) states that references in the Nasdaq
Series 8000 Rules to ``Rule 0120'' \6\ shall be read to refer to Phlx
Rule General 1, Section 1 and references in the Nasdaq Series 8000
Rules to ``Rule 1015'' shall be read to refer to Phlx Rule General 3,
Section 16(a).
---------------------------------------------------------------------------
\6\ The definitions in Nasdaq Rule 0120 are now located under
the General 1 title (``General Provisions'') in the Nasdaq rulebook.
See Securities Exchange Act Release No. 34-87778 (December 17,
2019), 84 FR 70590 (December 23, 2019) (SR-NASDAQ-2019-098). The
Exchange plans to submit a subsequent filing for the Nasdaq rulebook
to address references to rules in the Nasdaq Rulebook that have
since been changed.
---------------------------------------------------------------------------
The proposed introduction to the Phlx Series 8000 Rules (New
General 5, Section 2) also indicates how certain of the Nasdaq Series
8000 Rules should be read to apply to Exchange members, member
organizations, persons associated with member organizations, or other
persons subject to its jurisdiction. Specifically, when applied to a
Phlx member, Nasdaq Rule 8310(a)(3) shall also permit the suspension of
the permit of a Phlx member and 8310(a)(4) shall also permit the
revocation or cancellation of the permit of a Phlx member, or expulsion
of a Phlx member. In addition, IM-8310-3(c)(1) shall also permit the
Phlx Regulation Department to release to the public information with
respect to any disciplinary decision issued pursuant to the Phlx Series
9000 Rules (New General 5, Section 3) imposing a suspension,
cancellation or expulsion of a Phlx member, or suspension or revocation
of a Phlx member's permit or any decision issued pursuant to the Rule
9550 Series imposing a suspension or cancellation of the Phlx member,
or a suspension or bar of the association of a Phlx member with a Phlx
member organization. Moreover, IM-8310-3(g) and (h) also shall be read
to apply to a Phlx member with respect to decisions of the Exchange
that impose upon him or her a monetary sanction of $10,000 or more or a
penalty of expulsion, revocation, suspension, or bar; and IM-8310(i)
also shall be read to apply to a Phlx member with respect to any order
issued by the Commission of suspension, expulsion, bar, or the
imposition of monetary sanctions of $10,000 or more. The inclusion of
these provisions in the introductory paragraph ensures that there is no
change in the way current Phlx Rules 8310 and IM-8310-3 are applied to
Phlx Members who are sanctioned for violation of the Phlx Rules.
The proposed introduction to the Phlx Series 8000 Rules (New
General 5, Section 2) clarifies that, while Rules 8320(a)(2), (b), and
(c) in the Nasdaq Series 8000 Rules shall also apply to Phlx members,
subsection (a)(1) shall have no application to the Exchange or its
members, member organizations, persons associated with member
organizations, and other persons subject to the Exchange's
jurisdiction. The inclusion of this in the introductory paragraph is
needed because that subsection relates specifically to Nasdaq Options
Market members, and there is no analogous rule in the Phlx Series 8000
Rules (New General 5, Section 2).
Finally, the introductory paragraph to the Phlx Series 8000 Rules
(New General 5, Section 2) explains that Nasdaq Rule IM-8310-1 shall
have no application to the Phlx Exchange or its members, member
organizations, persons associated with member organizations, or other
persons subject to its jurisdiction. Instead, current Phlx Rule IM-
8310-1 shall continue to apply. While the language of Nasdaq Rule IM-
8310-1 and current Phlx Rule IM-8310-1 is substantially similar,
certain differences exist given the existence of member organizations
on the Exchange such that maintaining the current Phlx Rule language is
necessary.
With respect to the Phlx Series 9000 Rules (New General 5, Section
3), the proposed introduction states that cross-references in the
Nasdaq Series 9000 Rules to the following rules shall be read to refer
to the following Exchange Rules:
------------------------------------------------------------------------
Nasdaq rule \7\ Corresponding exchange rule
------------------------------------------------------------------------
0120................................... General 1, Section 1.
1013................................... General 3, Section 5 or General
3, Section 2.
1015................................... General 3, Section 16(a).
1160................................... General 3, Section 7(d).
2010A.................................. Options 9, Section 1.
2160................................... General 2, Section 4.
2170................................... General 9, Section 53.
4110A.................................. Options 6D, Section 1.
4120A.................................. Options 6D, Section 1.
Options 9, Section 4................... General 9, Section 53.
------------------------------------------------------------------------
In addition, when applied to a Phlx member organization, Rule
9558(a)(2) and any other applicable rules in the Nasdaq Rule 9000
series shall also allow the summary suspension of the associated
permit(s) of a Phlx member organization. This language is necessary to
make it clear that if the Chief Regulatory Officer provides written
authorization to the Financial Industry Regulatory Authority
(``FINRA'') staff to issue on a case-by-case basis a written notice
that summarily suspends a Phlx member organization, the Phlx member
organization's associated permit(s) may also be suspended.
---------------------------------------------------------------------------
\7\ The Exchange plans to submit a subsequent filing for the
Nasdaq Series 8000 and 9000 Rules to replace references to the
following rules with the new rule cites: Rules 0120 (now General 1),
1160 (now General 2, Section 11), 2010A (now General 9, Section 1),
2160 (now General 2, Section 14), 4110A (now General 9, Section 40),
and 4120A (now General 9, Section 41).
---------------------------------------------------------------------------
Moreover, as with the current Phlx Series 8000 Rules, the proposed
introduction to the Phlx Series 9000 Rules (New General 5, Section 3)
indicates how certain of the Nasdaq Series 9000 Rules should be read to
apply to Exchange members, member organizations, persons associated
with member organizations, or other persons subject to its jurisdiction
\8\ and indicates
[[Page 19205]]
that certain of the language in particular rules of the Current Phlx
Series 8000 and 9000 Rules will be maintained. Specifically:
---------------------------------------------------------------------------
\8\ Rule 9270(c)(5) in the current Phlx Rule 9000 Series refers
to the ``Exchange Enforcement Sanctions User's Guide,'' whereas Rule
9270(c)(5) in the Nasdaq Rule 9000 Series refers to ``sanction
guidelines.'' The Exchange is not preserving the reference to the
Exchange Enforcement Sanctions User's Guide (the ``Sanctions User
Guide'') because the Exchange, like Nasdaq, consults FINRA's
sanction guidelines when determining appropriate remedial sanctions.
The Exchange notes that, pursuant to a September 11, 2000,
settlement with the Commission (the ``Settlement''), see Release No.
43268, September 11, 2000, the Exchange was required to ``adopt
rules establishing, or modifying existing, sanctioning guidelines
such that they are reasonably designed to effectively enforce
compliance with such exchange's options order handling rules,
including, the duty of best execution with respect to the handling
of orders after the broker-dealer routes the order to such
respondent exchange, limit order display, priority, firm quote, and
trade reporting rules.'' The Exchange thereafter sought Commission
approval to adopt new sanctioning guidelines to assist the Exchange
in enforcing compliance with its options order handling rules. See
Securities Exchange Act Release No. 45415 (February 7, 2002), 67 FR
6781 (February 13, 2002). The Exchange received Commission approval
on March 15, 2002. See Securities Exchange Act Release No. 45569
(March 15, 2002), 67 FR 13397 (March 22. 2002). In approving the
Sanctions User Guide, the Commission noted that ``the Commission
expects the Exchange to continue to evaluate the adequacy of the
proposed sanctioning guidelines to determine whether they do, in
fact, effectively enforce compliance with the options order handling
rules.'' See Securities Exchange Act Release No. 45569 (March 15,
2002), 67 FR 13397, 13398 (March 22, 2002).
After Nasdaq acquired Phlx in 2008, Phlx contracted with FINRA
in 2010 through a regulatory services agreement to perform certain
of the investigation and enforcement functions on its behalf that
the Exchange's enforcement department had previously performed. Over
time, with the support of the Exchange, FINRA began consulting
FINRA's sanction guidelines when determining appropriate remedial
sanctions for Members, Member Organizations, persons associated with
Member Organizations, and other persons subject to the Exchange's
jurisdiction. The National Adjudicatory Council (``NAC'') (formerly
the National Business Conduct Committee) developed the sanctions
guidelines. The NAC is an independent committee of FINRA comprised
of professionals who also review initial decisions rendered in FINRA
disciplinary and membership proceedings. FINRA's guidelines include
guidance on sanctioning a member for failing to comply with best
execution obligations, limit order display rules, and trade
reporting rules. For those rules not specifically covered by FINRA's
sanctions guidelines, such as priority and firm quote rules, FINRA
and/or the Exchange, as applicable, consults the guidelines for
analogous violations when determining the appropriate sanction. For
each rule covered, the guidelines set forth factors that may be
taken into account when determining the appropriate sanction, and
the recommended sanction or sanction range (which are higher than
the Sanctions User Guide recommends). The guidelines do not
prescribe specific sanctions for particular violations. Instead, the
objective is to provide recommended sanctions based on a number of
factors that may be considered pertinent in determining what
sanction should be levied. FINRA's guidelines also provide direction
on when to consider a suspension, bar or other sanctions. The
Exchange believes the higher sanction ranges and guidance on when to
suspend or bar a member lead to better deterrence of misconduct. In
addition, FINRA's sanctions guidelines are available publicly (see
https://www.finra.org/sites/default/files/Sanctions_Guidelines.pdf).
The Exchange believes that public access to guidelines that the
Exchange considers when assessing remedial sanctions improves
regulation and leads to better conduct.
The Exchange notes that all other Affiliated Exchanges
currently refer to FINRA's sanctions guidelines when determining
appropriate remedial sanctions for each of its members, including
Nasdaq's other options markets, the Nasdaq Options Market, the BX
Options Market, Nasdaq ISE, LLC, Nasdaq GEMX, LLC, and Nasdaq MRX,
LLC.
---------------------------------------------------------------------------
1. Rule 9110(d) (``Jurisdiction'') in the Nasdaq Series 9000 Rules
shall not apply to the Exchange or its members, member organizations,
persons associated with member organizations, or other persons subject
to its jurisdiction. Instead, current Phlx Rule 9110(d) shall apply.
While the language of Nasdaq Rule 9110(d) and current Phlx Rule 9110(d)
is substantially similar, certain differences exist given the existence
of member organizations and members on the Phlx Exchange such that
maintaining the current Phlx Rule language is necessary.\9\ Moreover,
as noted above, current Phlx Rule 9110(d) will be relocated to New
General 5, Section 1.
---------------------------------------------------------------------------
\9\ See supra, n.5.
---------------------------------------------------------------------------
2. The Waiver of Ex Parte Prohibition set forth in Nasdaq Rule
9143(e)(3) and Separation of Functions set forth in Nasdaq Rule
9144(c)(3) shall also apply to violation letters executed pursuant to
Phlx Rule 9216(b)(2). The inclusion of this in the introductory
paragraph is necessary because the Nasdaq rules do not provide for the
issuance of violation letters, whereas the Phlx rules do. This
provision therefore ensures that there is no change in the application
of the Waiver of Ex Parte Prohibition and Separation of Functions rules
to Phlx member organizations or persons associated with member
organizations who submit executed violation letters.
3. The following text should be read to follow the existing
paragraph in Nasdaq Rule 9211(a)(1), which is identical to the existing
text in current Phlx Rule 9211(a)(1): ``When the number of violations
under Exchange Rules is determined based upon an exception-based
surveillance program, the Phlx Regulation Department or the Department
of Enforcement may aggregate, or ``batch,'' individual violations of
Exchange order handling Rules and consider such ``batched'' violations
as a single offense only in accordance with the guidelines set forth in
the Exchange's Numerical Criteria for Bringing Cases for Violations of
Exchange Order Handling Rules. In addition, the Phlx Regulation
Department or the Department of Enforcement may batch individual
violations of Options 2, Section 5(c) pertaining to quote spread
parameters (and corresponding Options Floor Procedure Advice Options
11, Section 7). In the alternative, the Phlx Regulation Department or
the Department of Enforcement may request authorization from the FINRA
Office of Disciplinary Affairs to issue a complaint when (i) the Phlx
Regulation Department or the Department of Enforcement determines that
there exists a pattern or practice of violative conduct without
exceptional circumstances, or (ii) any single instance of violative
conduct without exceptional circumstances is deemed to be egregious.''
The inclusion of this in the introductory paragraph is necessary
because the Nasdaq Rules do not provide for the ``batching'' of
individual violations, whereas the Phlx Rules do. Maintaining this
provision therefore ensures that the current process of ``batching'' on
the Exchange for certain violations remains unchanged.
4. Rules 9216 and IM-9216 in the Nasdaq Rules shall not apply to
Exchange members, member organizations, persons associated with member
organizations, or other persons subject to its jurisdiction. Instead,
current Phlx Rules 9216 and IM-9216 shall apply. Phlx Rules 9216 and
IM-9216 include provisions unique to that Exchange because, unlike
Nasdaq, it has a trading floor. In addition, Phlx Rule 9216 provides
for the imposition of fines in excess of $2,500 but not to exceed
$10,000. Maintaining the existing language therefore ensures that the
procedures applicable to acceptance, waiver, and consent letters, minor
rule violation letters, and violation letters set forth in the existing
Phlx rules remain unchanged. The Exchange also proposes to update
certain terms and rule references that exist in Current Phlx Rule IM-
9216 to align them with current terms and rule references. Recently,
the Exchange updated the terms ``Registered Options Trader'' to ``Floor
Market Maker'' and ``Specialist'' to ``Lead Market Maker.'' \10\ Those
new terms will be reflected in New Phlx Rule IM-9216. In addition, due
to the recent relocation in the Phlx Rulebook of rules that are subject
to the minor rule violation plan and the floor option procedure
advices, the Exchange is updating the rule references as follows:
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 85740 (April 29,
2019), 84 FR 19136 (May 3, 2019); Securities Exchange Act Release
No. 88213 (February 14, 2020), 85 FR 9859 (February 20, 2020).
[[Page 19206]]
------------------------------------------------------------------------
Old cite New cite
------------------------------------------------------------------------
B-12...................................... B-11.
E-1....................................... D-1.
F-2....................................... E-2.
F-4....................................... E-3.
F-5....................................... E-4.
F-6....................................... E-5.
F-8....................................... E-6.
F-9....................................... E-7.
F-11...................................... E-8.
F-12...................................... E-9.
F-13...................................... Options 11, Section 6.
F-15...................................... Options 11, Section 7.
F-19...................................... Options 11, Section 8.
F-23...................................... E-13.
F-25...................................... E-14.
F-27...................................... Options 11, Section 9.
F-30...................................... E-15.
F-31...................................... E-16.
F-33...................................... Options 11, Section 10.
F-34...................................... Options 11, Section 11.
F-35...................................... Options 11, Section 12.
G-1....................................... Options 11, Section 13.
Section H Of the Options Floor Procedure Options 8, Section 39, F.
Advices.
------------------------------------------------------------------------
5. Rule 9231(b)(1)(C) in the Nasdaq Rules shall be read to allow
the Chief Hearing Officer to select as a Panelist a person who
previously served as a Governor of the Exchange prior to its
acquisition by Nasdaq, Inc., but does not serve currently in that
position; and 9231(b)(1)(D) shall be read to allow a person who is a
member of FINRA's Market Regulation Committee to be among the FINRA
Panelists approved by the Exchange Board at least annually whom the
Chief Hearing Officer may also select as a Panelist. This language is
necessary to preserve the pool of individuals from whom the Chief
Hearing Officer may select to serve as a Panelist for Phlx disciplinary
matters.
6. When applied to a Phlx member organization, Rule 9558(a)(2) in
the Nasdaq Rule 9000 Series shall also allow the summary suspension of
the associated permit(s) of a Phlx member organization. This language
is necessary to make it clear that if the Chief Regulatory Officer
provides written authorization to FINRA staff to issue on a case-by-
case basis a written notice that summarily suspends a Phlx member
organization, the Phlx member organization's associated permit(s) may
also be suspended.
7. Rules 9552(f), 9553(g), 9554(g), 9555(g), 9556(g), and 9558(g)
in the Nasdaq 9000 Series shall be read to continue to allow the filing
of a request for termination of a suspension (or a request for
termination of the limitation, prohibition or suspension with respect
to Rules 9555(g) and 9558(g)), to be made with either the head of the
Exchange or the FINRA department or office that issued the notice or
that is handling the matter on behalf of the issuing department or
office. The inclusion of this language is necessary so that it is clear
that such filings may continue to be made with the Exchange.
8. Rule 9610(b) in the Nasdaq Series 9000 Rules shall not apply to
the Exchange or its members, member organizations, persons associated
with member organizations, or other persons subject to its
jurisdiction. Instead, current Phlx Rule 9610(b) shall apply. While the
language of Nasdaq Rule 9610(b) and current Phlx Rule 9610(b) is
substantially similar, certain differences exist given the existence of
member organizations and members on the Phlx Exchange such that
maintaining the current Phlx Rule language is necessary.
9. Finally, the Exchange notes that FINRA amended its rules to
reflect an internal reorganization of FINRA's Enforcement
Operations.\11\ In July 2017, FINRA announced its plan to consolidate
its existing enforcement functions into a unified Department of
Enforcement. According to FINRA, its rule change makes technical and
other non-substantive changes to FINRA Rules 9000 Series Code of
Procedure (the ``Code'') to reflect the single Department of
Enforcement.\12\ The rule change removed references to the Market
Regulation department, its head and employees from the Code where those
references reflect the previously separate Market Regulation
enforcement function. In light of FINRA's reorganization, Nasdaq
likewise removed references to the Market Regulation department, its
head and employees from the Code, and re-lettered the remainder of
those sections where such re-lettering was necessary (i.e., Rule 9120).
Because FINRA's Market Regulation department no longer exists, the
Exchange does not need to preserve references to that entity with this
rule change.
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 83781 (August 6,
2018), 83 FR 39802 (August 10, 2018) (FINRA No. SR-FINRA-2018-027).
\12\ Id.
---------------------------------------------------------------------------
2. Statutory Basis
Rule Relocation
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\13\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\14\ 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 applicable, across Nasdaq
markets so that members of the Affiliated Exchange can readily locate
rules which cover similar topics. The relocation and harmonization of
these 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 these Phlx Rules
into their new location will facilitate the use of the Rulebook by
members, member organizations, persons associated with member
organizations, or other persons subject to the Exchange's jurisdiction.
Specifically, the Exchange believes that market participants that are
members of more than one Nasdaq market will benefit from the ability to
compare Rulebooks.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange is not substantively amending rule text unless noted
otherwise within this rule change. The Exchange has already completed
relocating corresponding rules into the same location in most of its
Affiliated Exchange's Rulebooks for ease of reference.\15\ 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.
---------------------------------------------------------------------------
\15\ See Securities Exchange Act Release No. 86138 (June 18,
2019), 84 FR 29567 (June 24, 2019); Securities Exchange Act Release
No. 86346 (July 10, 2019), 84 FR 33999 (July 16, 2019); Securities
Exchange Act Release No. 86424 (July 22, 2019), 84 FR 36134 (July
26, 2019); and Securities Exchange Act Release No. 87778 (December
17, 2019), 84 FR 70590 (December 23, 2019). The Exchange plans to
submit a similar rule filing for Nasdaq BX, Inc. in short order.
---------------------------------------------------------------------------
Incorporation by Reference
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\16\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\17\ 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
[[Page 19207]]
investors and the public interest, by consolidating its rules into a
single rule set. The Exchange intends to file a similar proposed rule
change for the Nasdaq BX, Inc., Nasdaq ISE, LLC, Nasdaq GEMX, LLC, and
Nasdaq MRX, LLC markets, so that the Nasdaq 8000 Series and 9000 Series
Rules which govern the investigative and disciplinary processes are
similarly incorporated by reference into those rulebooks.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Replacing the current Phlx Series 8000 and 9000 Rules with
introductory paragraphs to each that incorporate by reference Nasdaq
Series 8000 and 9000 Rules, respectively, will provide an easy
reference for members, associated persons, and other persons subject to
the Exchange's jurisdiction seeking to understand and follow the
investigative and disciplinary processes across all of Nasdaq's
Exchanges. As noted, the Exchange intends to file similar rule changes
for other affiliated markets so that the Nasdaq Series 8000 and 9000
Rules are the source document for all of the Affiliated Exchanges'
investigative and disciplinary processes. The Exchange notes that the
substance of the current rules is not changing. The Exchange desires to
conform its rules to give its members and the members of its Affiliated
Exchanges the ability to quickly locate rules in one central location.
The Exchange also believes that the proposal is consistent with
Section 6(b)(6) of the Act,\18\ which requires that the rules of an
exchange provide that its members be appropriately disciplined for
violations of the Act as well as the rules and regulations thereunder,
or the rules of the Exchange, by expulsion, suspension, limitation of
activities, functions, and operations, fine, censure, being suspended
or barred from being associated with a member, or any other fitting
sanction. As noted above, the Exchange proposes to include introductory
paragraphs to each of the Phlx Series 8000 and 9000 Rules (new General
5, Sections 2 and 3, respectively) that list instances in which cross
references in the Nasdaq Series 8000 and 9000 Rules to other Nasdaq
rules should be read to refer instead to the Exchange Rules and
references to Nasdaq terms (whether or not defined) shall be read to
refer to the Exchange-related meanings of those terms. This is
consistent with the Act because it minimizes confusion and ensures the
proper application of the Nasdaq Rules to Phlx. Also as noted above,
the introductory paragraphs (1) indicate that certain of the Current
Phlx Series 8000 and 9000 Rules, or portions thereof, will continue to
apply to the Exchange, Phlx members, member organizations, persons
associated with member organizations, and other persons subject to the
Exchange's jurisdiction, rather than the analogous Nasdaq Series 8000
and 9000 Rules; \19\ (2) describe how certain of the Nasdaq Series 8000
and 9000 Rules should be read to apply to Exchange members, member
organizations, persons associated with member organizations, or other
persons subject to the Exchange's jurisdiction; \20\ and (3) indicate
that certain of the language in particular rules of the current Phlx
Series 8000 and 9000 Rules will be maintained.\21\ With respect to (1),
the Exchange is also updating certain terms and rule references in
Current Phlx Rule IM-9216 to align them with current terms and rule
references contained elsewhere in the Exchange's Rulebook. The
inclusion of these clarifying provisions is consistent with the Act
because it preserves the way that certain Phlx Rules that differ from
or do not exist in the Nasdaq Rules are applied. Moreover, updating
certain terms and rule references in Current Phlx Rule IM-9216 is
consistent with the Act because it conforms the text in that rule to
changes already made elsewhere in the Rulebook, thus ensuring accurate
terms and rule references throughout. Adding this text therefore
ensures the consistent application of Phlx Rules to its members, member
organizations, persons associated with member organizations, or other
persons subject to the Exchange's jurisdiction.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78f(b)(6).
\19\ Rules IM-8310-1, 9110(d), 9211(a)(1), 9216, IM-9216, and
9610(b).
\20\ Rule 8310, IM-8310-3, 8320 and 9558(a)(2).
\21\ Rules 9143(e)(3), 9144(c)(3), 9231(b)(1)(C), 9231(b)(1)(D),
9552(f), 9553(g), 9554(g), 9555(g), 9556(g), and 9558(g).
---------------------------------------------------------------------------
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 this
rule change does not impose an undue burden on competition because the
Exchange is merely incorporating Nasdaq's Series 8000 and 9000 Rules,
which are substantially similar to the current Phlx Series 8000 and
9000 Rules. Those rules will now apply to Phlx members, member
organizations, persons associated with member organizations, or other
persons subject to the Exchange's jurisdiction. To the extent that
there are differences between the two rule sets, the Exchange notes
those differences in introductory paragraphs to each of the Phlx Series
8000 and 9000 Rules (new General 5, Sections 2 and 3, respectively). As
noted above, the proposed introductory paragraphs list instances in
which cross references in Nasdaq Series 8000 and 9000 Rules to other
Nasdaq rules shall be read to refer instead to the Exchange Rules, and
references to Nasdaq terms (whether or not defined) shall be read to
refer to the Exchange-related meanings of those terms. The introductory
paragraphs also (1) indicate that certain of the current Phlx Series
8000 and 9000 Rules, or portions thereof, will continue to apply to the
Exchange, Phlx members, member organizations, persons associated with
member organizations, or other persons subject to the Exchange's
jurisdiction, rather than the analogous Nasdaq Series 8000 and 9000
Rules; (2) describe how certain rule text of the Nasdaq Series 8000 and
9000 Rules should be read to apply to the Exchange, Phlx members,
member organizations, persons associated with member organizations, or
other persons subject to the Exchange's jurisdiction; and (3) indicate
that certain of the language in particular rules of the current Phlx
Series 8000 and 9000 Rules will be maintained. Because Nasdaq's current
Series 8000 and 9000 Rules are substantially similar to the current
Phlx Series 8000 and 9000 Rules, and because the introductory
paragraphs ensure that any differences are preserved, the proposed
changes do not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act. Finally,
updating certain terms and rule references in Current Phlx Rule IM-9216
does not do not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act because it
conforms the text in that rule to changes already made elsewhere in the
Rulebook, thus ensuring accurate terms and rule references throughout.
Finally, 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.
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.
[[Page 19208]]
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 \22\ and Rule 19b-
4(f)(6) thereunder.\23\
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78s(b)(3)(A).
\23\ 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.
---------------------------------------------------------------------------
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-2020-09 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-2020-09. 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-2020-09 and should be submitted on
or before April 27, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
---------------------------------------------------------------------------
\24\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07075 Filed 4-3-20; 8:45 am]
BILLING CODE 8011-01-P
