Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Phlx's Pricing Schedule, 21490-21493 [2020-08087]
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Federal Register / Vol. 85, No. 75 / Friday, April 17, 2020 / Notices
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–NYSEArca–2019–81, and
should be submitted on or before May
8, 2020.
V. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment No. 2
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment No. 2, prior to
the thirtieth day after the date of
publication of notice of the filing of
Amendment No. 2 in the Federal
Register. In Amendment No. 2, the
Exchange (among other things): (1)
Expanded the circumstances in which it
may halt trading in a series of ExchangeTraded Fund Shares; (2) clarified its
undertakings with respect to ensuring
compliance with the proposed generic
listing standard; (3) specified that
Exchange-Traded Fund Shares would be
subject to rules governing Exchange
member disclosure obligations; and (4)
clarified the applicability of certain
current listing rules in light of proposed
NYSE Arca Rule 5.2–E(j)(8). These
changes assisted the Commission in
finding that the proposal is consistent
with the Act. Accordingly, the
Commission finds good cause, pursuant
to Section 19(b)(2) of the Act,68 to
approve the proposed rule change, as
modified by Amendment No. 2, on an
accelerated basis.
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VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,69 that the
proposed rule change (SR–NYSEArca–
2019–81), as modified by Amendment
No. 2, be, and it hereby is, approved on
an accelerated basis.
68 15
U.S.C. 78s(b)(2).
69 Id.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.70
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–08086 Filed 4–16–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88622; File No. SR–CBOE–
2020–014]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Designation
of Longer Period for Commission
Action on Proposed Rule Change
Relating to Adopt a Delta-Adjusted at
Close Order Instruction
April 13, 2020.
On February 18, 2020, Cboe
Exchange, Inc. (‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to adopt a Delta-Adjusted at
Close order instruction that a User may
apply to an order when entering it into
the System for execution in an
electronic or open outcry auction. The
proposed rule change was published for
comment in the Federal Register on
March 9, 2020.3 The Commission has
received no comments on the proposal.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
is April 23, 2020.
The Commission is extending the 45day time period for Commission action
on the proposed rule change. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change.
70 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 88312
(March 3, 2020), 85 FR 13686.
4 15 U.S.C. 78s(b)(2).
Accordingly, pursuant to Section
19(b)(2) of the Act,5 the Commission
designates June 7, 2020, as the date by
which the Commission shall either
approve or disapprove, or institute
proceedings to determine whether to
approve or disapprove, the proposed
rule change (File No. CBOE–2020–014).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–08088 Filed 4–16–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88626; File No. SR–Phlx–
2020–19]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Phlx’s Pricing
Schedule
April 13, 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 April 3,
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, II, and
III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Phlx’s Pricing Schedule. Specifically,
the Exchange proposes to amend rule
text within Options 7, Section 8,
‘‘Membership Fees.’’
While the changes proposed herein
are effective upon filing, the Exchange
has designated the amendments to
become operative on May 1, 2020.
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.
1 15
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5 Id.
6 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 85, No. 75 / Friday, April 17, 2020 / Notices
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Phlx proposes to amend Options 7,
Section 8, ‘‘Membership Fees’’
concerning a May 2020 credit. In
addition, Phlx proposes to remove
outdated rule text.
Prior Proposal
In light of the recent closure of open
outcry trading on the Phlx Trading Floor
as of March 17, 2020,3 Phlx waived
certain floor-related fees within Options
7, Section 8, ‘‘Membership Fees.’’ 4
Specifically, Phlx’s Prior Proposal
waived: (1) A Permit Fee of $4,000 per
month to Floor Brokers; 5 (2) a Clerk 6
Fee 7 of $100 per month; and (3)
Streaming Quote Trader (‘‘SQT’’) 8 Fees
3 See
Options Trader Alert #2020–7.
Securities Exchange Act Release No. 88525
(March 31, 2020) (not yet published) (SR–Phlx–
2020–12) (‘‘Prior Proposal’’).
5 See Phlx Rules at Options 7, Section 8A.
6 The term ‘‘Clerk’’ means any registered on-floor
person employed by or associated with a member
or member organization who is not a member and
is not eligible to effect transactions on the Options
Floor as a Lead Market Maker, Floor Market Maker,
or Floor Broker. An Inactive Nominee is deemed a
Clerk. See Options 8, Section 12(a).
7 The Clerk Fee is imposed on any registered onfloor person employed by or associated with a
member or member organization pursuant to
Options 3, Section 19, including Inactive Nominees
pursuant to Options 8, Section 7. The Clerk Fee is
not imposed on permit holders. See Phlx Rules at
Options 7, Section 8A.
8 The term ‘‘Streaming Quote Trader’’ is defined
in Options 1, Section 1(b)(54) as a Market Maker
who has received permission from the Exchange to
generate and submit option quotations
electronically in options to which such SQT is
assigned. See Options 7, Section 1. Further, Options
1, Section 1(b)(54) provides that an SQT means a
Market Maker who has received permission from
the Exchange to generate and submit option
quotations electronically in options to which such
SQT is assigned. An SQT may only submit such
quotations while such SQT is physically present on
the trading floor of the Exchange. An SQT may only
submit quotes in classes of options in which the
SQT is assigned.
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4 See
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within Options 8, Section 8B.9 Phlx’s 7
tier SQT Fees are as follows:
Number of option class
assignments
Tier
Tier
Tier
Tier
Tier
Tier
Tier
1:
2:
3:
4:
5:
6:
7:
SQT Fees
(per calendar
month)
Up to 200 classes .....
Up to 400 classes .....
Up to 600 classes .....
Up to 800 classes .....
Up to 1,000 classes ..
Up to 1,200 classes ..
All equity issues ........
$0.00
$2,200.00
$3,200.00
$4,200.00
$5,200.00
$6,200.00
$7,200.00
Additionally, Phlx paid a credit to
Trading Floor member organizations of
$5,000 per Clerk based on the number
of Clerks those member organizations
had registered as of April 1, 2020. Phlx
also stated it would pay the
aforementioned credit for the month of
May 2020, in the event that open outcry
trading is unavailable as of May 1, 2020
and the Clerk is registered as of May 1,
2020.
At this time, the Exchange proposes to
amend Options 7, Section 8 to remove
the language regarding the April 2020
waiver and credits, which were already
waived and paid, and amend the
language regarding May credits to state
that Phlx will credit each member
organization an amount of $5,000 per
associated person that was registered as
a Clerk as of April 1, 2020 and remains
registered on May 1, 2020, in the event
that open outcry trading is unavailable
as of May 1, 2020. The credit was not
intended to pay any new Clerks that
registered within the time period that
open outcry was closed, rather it was
intended to ensure that Clerks
continued to be registered with the
Exchange during the closure of open
outcry.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,10 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,11 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Commission and the courts have
repeatedly expressed their preference
9 The Prior Proposal also waived the Floor
Facility Fee of $330 per month, which is applicable
Clerks (excluding Inactive Nominees pursuant to
Options 8, Section 7), Floor Brokers, Market Makers
(including SQTs) and individual Lead Market
Makers), within Options 7, Section 9, for the month
of April 2020 and May 2020.
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(4) and (5).
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21491
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, while
adopting a series of steps to improve the
current market model, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 12
Likewise, in NetCoalition v. Securities
and Exchange Commission 13
(‘‘NetCoalition’’) the D.C. Circuit upheld
the Commission’s use of a market-based
approach in evaluating the fairness of
market data fees against a challenge
claiming that Congress mandated a costbased approach.14 As the court
emphasized, the Commission ‘‘intended
in Regulation NMS that ‘market forces,
rather than regulatory requirements’
play a role in determining the market
data . . . to be made available to
investors and at what cost.’’ 15
Further, ‘‘[n]o one disputes that
competition for order flow is ‘fierce.’
. . . As the SEC explained, ‘[i]n the U.S.
national market system, buyers and
sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’ . . . .’’ 16 Although the court
and the SEC were discussing the cash
equities markets, the Exchange believes
that these views apply with equal force
to the options markets.
The Exchange’s proposal to pay a
credit of $5,000 per associated person
that was registered as a Clerk as of April
1, 2020 and remains registered as of
May 1, 2020 for the month of May 2020,
in the event that open outcry trading is
unavailable as of May 1, 2020, is
reasonable. The intent of the credit was
to provide relief to member
organizations that are currently unable
to transact options in open outcry on the
Phlx Trading Floor by paying a credit
12 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
13 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
2010).
14 See NetCoalition, at 534–535.
15 Id. at 537.
16 Id. at 539 (quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74782–83 (December 9, 2008) (SR–
NYSEArca–2006–21)).
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Federal Register / Vol. 85, No. 75 / Friday, April 17, 2020 / Notices
jbell on DSKJLSW7X2PROD with NOTICES
for their Clerks who were registered
with the Exchange. The Exchange
intended to pay a May 2020 credit to
member organizations, provided those
Clerks were registered as of April 1,
2020 and were retained by the Phlx
member organizations as of May 1,
2020, in the event that open outcry
trading was unavailable as of May 1,
2020. The credit was not intended to
attract new Clerks to the Trading Floor
during the closure of open outcry.
Inserting rule text to make clear the
Clerks that receive the credit had to be
registered as of April 1, 2020 and
remain registered as of May 1, 2020 will
achieve the goal for which the credit
was intended. Phlx believes this credit
will assist member organizations to
continue to maintain their business
operations during the time period that
open outcry trading is unavailable.
The Exchange’s proposal to pay a
credit of $5,000 per associated person
that was registered as a Clerk as of April
1, 2020 and remains registered as of
May 1, 2020 for the month of May 2020,
in the event that open outcry trading is
unavailable as of May 1, 2020, is
equitable and not unfairly
discriminatory. The Exchange proposes
to pay all member organizations a credit
for each Clerk the firm has registered as
of April 1, 2020 and remains registered
as of May 1, 2020 in a uniform manner,
in the event that open outcry trading is
unavailable as of May 1, 2020. The
Exchange believes that paying a credit
to member organizations for each Clerk
would alleviate some of the financial
burden for each member organization. A
Clerk is any registered on-floor person
employed by or associated with a
member or member organization who is
not a member and is not eligible to
effect transactions on the Options Floor
as a Lead Market Maker, Floor Market
Maker, or Floor Broker. As such, Clerks
are employees of Phlx Trading Floor
member organizations that would not
otherwise be able to transact an options
business as a Lead Market Maker, Floor
Market Maker, or Floor Broker. The
Exchange believes the credit to member
organizations for each Clerk will assist
member organizations in continuing to
employee Clerks during the closure of
open outcry trading.
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.
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Inter-Market Competition
The proposal does not impose an
undue burden on inter-market
competition. The Exchange believes its
proposal remains competitive with
other options markets and will offer
market participants with another choice
of where to transact options. The
Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees to remain competitive with other
exchanges that have been exempted
from compliance with the statutory
standards applicable to exchanges.
Because competitors are free to modify
their own fees in response, and because
market participants may readily adjust
their order routing practices, the
Exchange believes that the degree to
which fee changes in this market may
impose any burden on competition is
extremely limited.
Intra-Market Competition
The proposed amendments do not
impose an undue burden on intramarket competition.
The Exchange’s proposal to pay a
credit of $5,000 per associated person
that was registered as a Clerk as of April
1, 2020 and remains registered as of
May 1, 2020 for the month of May 2020,
in the event that open outcry trading is
unavailable as of May 1, 2020, does not
impose an undue burden on
competition. The Exchange proposes to
pay all member organizations a credit
for each Clerk the firm has registered as
of April 1, 2020 and remains registered
as of May 1, 2020 in a uniform manner.
The Exchange believes that paying a
credit to member organizations for each
Clerk would alleviate some of the
financial burden for each member
organization. A Clerk is any registered
on-floor person employed by or
associated with a member or member
organization who is not a member and
is not eligible to effect transactions on
the Options Floor as a Lead Market
Maker, Floor Market Maker, or Floor
Broker. As such, Clerks are employees
of Phlx Trading Floor member
organizations that would not otherwise
be able to transact an options business
as a Lead Market Maker, Floor Market
Maker, or Floor Broker. The Exchange
believes the credit to member
organizations for each Clerk will assist
member organizations in continuing to
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employee Clerks during the closure of
open outcry trading.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.17
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
Phlx–2020–19 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–2020–19. 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
17 15
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U.S.C. 78s(b)(3)(A)(ii).
17APN1
Federal Register / Vol. 85, No. 75 / Friday, April 17, 2020 / Notices
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–2020–19 and should
be submitted on or before May 8, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–08087 Filed 4–16–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–616, OMB Control No.
3235–0671]
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
jbell on DSKJLSW7X2PROD with NOTICES
Extension:
Rule 613 of Regulation NMS
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in connection with a
National Market System (NMS) Plan
filed with the Commission under Rule
613 (17 CFR 242.613), under the
Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.). The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget (‘‘OMB’’) for
extension and approval.
18 17
CFR 200.30–3(a)(12).
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Rule 613 of Regulation NMS (17 CFR
part 242) required national securities
exchanges and national securities
associations (‘‘Participants’’) to jointly
submit to the Commission a national
market system (‘‘NMS’’) plan to govern
the creation, implementation, and
maintenance of a consolidated audit
trail (‘‘CAT’’) and Central Repository for
the collection of information for NMS
securities. On February 27, 2015, the
Participants submitted the CAT NMS
Plan to the Commission.1 On April 27,
2016, the Commission published a
notice soliciting comments from the
public (‘‘CAT NMS Plan Notice’’).2 On
November 15, 2016, the Commission
approved the CAT NMS Plan (‘‘CAT
NMS Plan Order’’), including the
information collections proposed in the
CAT NMS Plan Notice, and certain
additional information collections.3
Since November 15, 2016, the
Commission believes that three
information collection requirements
have been completed, specifically: (1) A
document outlining how the
Participants could incorporate into the
consolidated audit trail information
regarding certain products that are not
NMS securities; 4 (2) a one-time
assessment of the clock synchronization
standards in the Plan before reporting
begins for Industry Members, which
assessment shall take into account the
1 See Letter from Participants to Brent J. Fields,
Secretary, Commission, dated February 27, 2015.
The Participants filed the CAT NMS Plan on
September 30, 2014. See Letter from the
Participants, to Brent J. Fields, Secretary,
Commission, dated September 30, 2014. The CAT
NMS Plan filed on February 27, 2015, was an
amendment to and replacement of the Initial CAT
NMS Plan (the ‘‘Amended and Restated CAT NMS
Plan’’). On December 24, 2015, the Participants
submitted an Amendment to the Amended and
Restated CAT NMS Plan. See Letter from
Participants to Brent J. Fields, Secretary,
Commission, dated December 23, 2015 (the
‘‘Amendment’’). On February 9, 2016, the
Participants filed with the Commission an identical,
but unmarked, version of the Amended and
Restated CAT NMS Plan, dated February 27, 2015,
as modified by the Amendment, as well as a copy
of the request for proposal issued by the
Participants to solicit Bids from parties interested
in serving as the Plan Processor for the consolidated
audit trail. Unless the context otherwise requires,
the ‘‘CAT NMS Plan’’ shall refer to the Amended
and Restated CAT NMS Plan, as modified by the
Amendment.
2 See Securities Exchange Act Release No. 77724
(April 27, 2016), 81 FR 30613 (May 17, 2016). The
burdens associated with the CAT NMS Plan Notice
were submitted under OMB number 3235–0671
which relates to the NMS Plan required to be filed
under Rule 613.
3 See Securities Exchange Act Release No. 79318
(November 15, 2016), 81 FR 84696 (November 23,
2016), available at https://www.sec.gov/rules/sro/
nms/2016/34-79318.pdf (‘‘CAT NMS Plan Order’’).
4 See 17 CFR 242.613(i). See also ‘‘One-Time
Written Assessments,’’ Consolidated Audit Trail,
LLC at: https://www.catnmsplan.com/one-timewritten-assessments/.
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21493
diversity of CAT Reporters and
systems; 5 and (3) a one-time report that
discusses the Participants’ assessment of
implementing coordinated
surveillance.6
This Notice addresses the remaining
information collection requirements
noticed in the CAT NMS Plan Notice
and certain additional information
collections of the CAT NMS Plan Order,
which are: (1) Development of a Central
Repository tasked with the receipt,
consolidation, and retention of reported
order and execution information
submitted by Participants and their
members; 7 (2) the requirement that each
Participant, and any member of such
Participant, record and electronically
report to the Central Repository details
for each order and Reportable Event
documenting the life of an order
through the process of original receipt
or origination, routing, modification,
cancellation, and execution (in whole or
in part) for each NMS security; 8 (3) the
requirement that the CAT NMS Plan
require the Central Repository to collect
and retain on a current and continuous
basis NBBO information for each NMS
security, transaction reports reported
pursuant to an effective transaction
reporting plan, and Last Sale Reports
reported pursuant to the Options Price
Reporting Authority Plan; 9 (4) the
requirement that the CAT NMS Plan
must require that every national
securities exchange and national
securities association develop and
implement a surveillance system, or
enhance existing surveillance systems,
reasonably designed to make use of the
consolidated information contained in
the consolidated audit trail; 10 (5) a onetime independent audit of the fees,
costs, and expenses incurred by the
Participants on behalf of CAT NMS, LLC
prior to the Effective Date 11 of the
Plan; 12 (6) a one-time report from the
Participants discussing the feasibility
and advisability of allowing Industry
Members to bulk download the Raw
Data that it has submitted to the Central
Repository; 13 (7) a one-time assessment
of the nature and extent of errors in the
Customer information submitted to the
Central Repository and whether the
5 See CAT NMS Plan Order, supra note 3, at
84940.
6 Id. at 84940–84941.
7 See 17 CFR 242.613.
8 See 17 CFR 242.613(c)(1), (c)(5), (c)(6), (c)(7).
9 See 17 CFR 242.613(e)(7).
10 See 17 CFR 242.613(f).
11 The ‘‘Effective Date’’ is the date the
Commission approved the CAT NMS Plan, which
is November 15, 2016. See id.
12 See CAT NMS Plan Order, supra note, at
84940.
13 Id. at 84941.
E:\FR\FM\17APN1.SGM
17APN1
]]>Agencies
[Federal Register Volume 85, Number 75 (Friday, April 17, 2020)]
[Notices]
[Pages 21490-21493]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08087]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88626; File No. SR-Phlx-2020-19]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Phlx's
Pricing Schedule
April 13, 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 April 3, 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, II, and III, below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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\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's Pricing Schedule.
Specifically, the Exchange proposes to amend rule text within Options
7, Section 8, ``Membership Fees.''
While the changes proposed herein are effective upon filing, the
Exchange has designated the amendments to become operative on May 1,
2020.
The text of the proposed rule change is available on the Exchange's
website at https://nasdaqphlx.cchwallstreet.com/, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
[[Page 21491]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Phlx proposes to amend Options 7, Section 8, ``Membership Fees''
concerning a May 2020 credit. In addition, Phlx proposes to remove
outdated rule text.
Prior Proposal
In light of the recent closure of open outcry trading on the Phlx
Trading Floor as of March 17, 2020,\3\ Phlx waived certain floor-
related fees within Options 7, Section 8, ``Membership Fees.'' \4\
Specifically, Phlx's Prior Proposal waived: (1) A Permit Fee of $4,000
per month to Floor Brokers; \5\ (2) a Clerk \6\ Fee \7\ of $100 per
month; and (3) Streaming Quote Trader (``SQT'') \8\ Fees within Options
8, Section 8B.\9\ Phlx's 7 tier SQT Fees are as follows:
---------------------------------------------------------------------------
\3\ See Options Trader Alert #2020-7.
\4\ See Securities Exchange Act Release No. 88525 (March 31,
2020) (not yet published) (SR-Phlx-2020-12) (``Prior Proposal'').
\5\ See Phlx Rules at Options 7, Section 8A.
\6\ The term ``Clerk'' means any registered on-floor person
employed by or associated with a member or member organization who
is not a member and is not eligible to effect transactions on the
Options Floor as a Lead Market Maker, Floor Market Maker, or Floor
Broker. An Inactive Nominee is deemed a Clerk. See Options 8,
Section 12(a).
\7\ The Clerk Fee is imposed on any registered on-floor person
employed by or associated with a member or member organization
pursuant to Options 3, Section 19, including Inactive Nominees
pursuant to Options 8, Section 7. The Clerk Fee is not imposed on
permit holders. See Phlx Rules at Options 7, Section 8A.
\8\ The term ``Streaming Quote Trader'' is defined in Options 1,
Section 1(b)(54) as a Market Maker who has received permission from
the Exchange to generate and submit option quotations electronically
in options to which such SQT is assigned. See Options 7, Section 1.
Further, Options 1, Section 1(b)(54) provides that an SQT means a
Market Maker who has received permission from the Exchange to
generate and submit option quotations electronically in options to
which such SQT is assigned. An SQT may only submit such quotations
while such SQT is physically present on the trading floor of the
Exchange. An SQT may only submit quotes in classes of options in
which the SQT is assigned.
\9\ The Prior Proposal also waived the Floor Facility Fee of
$330 per month, which is applicable Clerks (excluding Inactive
Nominees pursuant to Options 8, Section 7), Floor Brokers, Market
Makers (including SQTs) and individual Lead Market Makers), within
Options 7, Section 9, for the month of April 2020 and May 2020.
------------------------------------------------------------------------
SQT Fees (per
Number of option class assignments calendar
month)
------------------------------------------------------------------------
Tier 1: Up to 200 classes............................... $0.00
Tier 2: Up to 400 classes............................... $2,200.00
Tier 3: Up to 600 classes............................... $3,200.00
Tier 4: Up to 800 classes............................... $4,200.00
Tier 5: Up to 1,000 classes............................. $5,200.00
Tier 6: Up to 1,200 classes............................. $6,200.00
Tier 7: All equity issues............................... $7,200.00
------------------------------------------------------------------------
Additionally, Phlx paid a credit to Trading Floor member
organizations of $5,000 per Clerk based on the number of Clerks those
member organizations had registered as of April 1, 2020. Phlx also
stated it would pay the aforementioned credit for the month of May
2020, in the event that open outcry trading is unavailable as of May 1,
2020 and the Clerk is registered as of May 1, 2020.
At this time, the Exchange proposes to amend Options 7, Section 8
to remove the language regarding the April 2020 waiver and credits,
which were already waived and paid, and amend the language regarding
May credits to state that Phlx will credit each member organization an
amount of $5,000 per associated person that was registered as a Clerk
as of April 1, 2020 and remains registered on May 1, 2020, in the event
that open outcry trading is unavailable as of May 1, 2020. The credit
was not intended to pay any new Clerks that registered within the time
period that open outcry was closed, rather it was intended to ensure
that Clerks continued to be registered with the Exchange during the
closure of open outcry.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\11\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4) and (5).
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The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \12\
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\12\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
Likewise, in NetCoalition v. Securities and Exchange Commission
\13\ (``NetCoalition'') the D.C. Circuit upheld the Commission's use of
a market-based approach in evaluating the fairness of market data fees
against a challenge claiming that Congress mandated a cost-based
approach.\14\ As the court emphasized, the Commission ``intended in
Regulation NMS that `market forces, rather than regulatory
requirements' play a role in determining the market data . . . to be
made available to investors and at what cost.'' \15\
---------------------------------------------------------------------------
\13\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\14\ See NetCoalition, at 534-535.
\15\ Id. at 537.
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Further, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers' . . . .'' \16\ Although the court and
the SEC were discussing the cash equities markets, the Exchange
believes that these views apply with equal force to the options
markets.
---------------------------------------------------------------------------
\16\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008)
(SR-NYSEArca-2006-21)).
---------------------------------------------------------------------------
The Exchange's proposal to pay a credit of $5,000 per associated
person that was registered as a Clerk as of April 1, 2020 and remains
registered as of May 1, 2020 for the month of May 2020, in the event
that open outcry trading is unavailable as of May 1, 2020, is
reasonable. The intent of the credit was to provide relief to member
organizations that are currently unable to transact options in open
outcry on the Phlx Trading Floor by paying a credit
[[Page 21492]]
for their Clerks who were registered with the Exchange. The Exchange
intended to pay a May 2020 credit to member organizations, provided
those Clerks were registered as of April 1, 2020 and were retained by
the Phlx member organizations as of May 1, 2020, in the event that open
outcry trading was unavailable as of May 1, 2020. The credit was not
intended to attract new Clerks to the Trading Floor during the closure
of open outcry. Inserting rule text to make clear the Clerks that
receive the credit had to be registered as of April 1, 2020 and remain
registered as of May 1, 2020 will achieve the goal for which the credit
was intended. Phlx believes this credit will assist member
organizations to continue to maintain their business operations during
the time period that open outcry trading is unavailable.
The Exchange's proposal to pay a credit of $5,000 per associated
person that was registered as a Clerk as of April 1, 2020 and remains
registered as of May 1, 2020 for the month of May 2020, in the event
that open outcry trading is unavailable as of May 1, 2020, is equitable
and not unfairly discriminatory. The Exchange proposes to pay all
member organizations a credit for each Clerk the firm has registered as
of April 1, 2020 and remains registered as of May 1, 2020 in a uniform
manner, in the event that open outcry trading is unavailable as of May
1, 2020. The Exchange believes that paying a credit to member
organizations for each Clerk would alleviate some of the financial
burden for each member organization. A Clerk is any registered on-floor
person employed by or associated with a member or member organization
who is not a member and is not eligible to effect transactions on the
Options Floor as a Lead Market Maker, Floor Market Maker, or Floor
Broker. As such, Clerks are employees of Phlx Trading Floor member
organizations that would not otherwise be able to transact an options
business as a Lead Market Maker, Floor Market Maker, or Floor Broker.
The Exchange believes the credit to member organizations for each Clerk
will assist member organizations in continuing to employee Clerks
during the closure of open outcry trading.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Inter-Market Competition
The proposal does not impose an undue burden on inter-market
competition. The Exchange believes its proposal remains competitive
with other options markets and will offer market participants with
another choice of where to transact options. The Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
exchanges that have been exempted from compliance with the statutory
standards applicable to exchanges. Because competitors are free to
modify their own fees in response, and because market participants may
readily adjust their order routing practices, the Exchange believes
that the degree to which fee changes in this market may impose any
burden on competition is extremely limited.
Intra-Market Competition
The proposed amendments do not impose an undue burden on intra-
market competition.
The Exchange's proposal to pay a credit of $5,000 per associated
person that was registered as a Clerk as of April 1, 2020 and remains
registered as of May 1, 2020 for the month of May 2020, in the event
that open outcry trading is unavailable as of May 1, 2020, does not
impose an undue burden on competition. The Exchange proposes to pay all
member organizations a credit for each Clerk the firm has registered as
of April 1, 2020 and remains registered as of May 1, 2020 in a uniform
manner. The Exchange believes that paying a credit to member
organizations for each Clerk would alleviate some of the financial
burden for each member organization. A Clerk is any registered on-floor
person employed by or associated with a member or member organization
who is not a member and is not eligible to effect transactions on the
Options Floor as a Lead Market Maker, Floor Market Maker, or Floor
Broker. As such, Clerks are employees of Phlx Trading Floor member
organizations that would not otherwise be able to transact an options
business as a Lead Market Maker, Floor Market Maker, or Floor Broker.
The Exchange believes the credit to member organizations for each Clerk
will assist member organizations in continuing to employee Clerks
during the closure of open outcry trading.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\17\
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\17\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-Phlx-2020-19 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-2020-19. 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
[[Page 21493]]
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-2020-19 and should be submitted on or before May 8, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-08087 Filed 4-16-20; 8:45 am]
BILLING CODE 8011-01-P
