Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Various Phlx Rules, 38377-38381 [2021-15339]
Download as PDF
<![CDATA[
Federal Register / Vol. 86, No. 136 / Tuesday, July 20, 2021 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
discriminatory because the
requirements, and credits, and even
entire pricing tiers, would be eliminated
in their entirety and would no longer be
available to any ETP Holder.
For the foregoing reasons, the
Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,13 the Exchange believes that the
proposed rule change would not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
Intramarket Competition. The
Exchange’s proposal to eliminate certain
requirements and credits, and pricing
tiers in their entirety, will not place any
undue burden on intramarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act given that not a
single ETP Holder has qualified for any
of the credits under the pricing tiers that
are the subject of this proposed rule
change in the past six months. To the
extent the proposed rule change places
a burden on competition, any such
burden would be outweighed by the fact
that none of the pricing tiers proposed
for deletion have served their intended
purpose of incentivizing ETP Holders to
more broadly participate on the
Exchange. Moreover, ETP Holders can
choose to trade on other venues to the
extent they believe that the credits
provided are too low or the qualification
criteria are not attractive.
Intermarket Competition. The
Exchange believes the proposed rule
change does not impose any burden on
intermarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange operates in a highly
competitive market in which market
participants can readily choose to send
their orders to other exchanges and offexchange venues if they deem fee levels
at those other venues to be more
favorable. Market share statistics
provide ample evidence that price
competition between exchanges is
fierce, with liquidity and market share
moving freely from one execution venue
to another in reaction to pricing
changes. In such an environment, the
Exchange must continually adjust its
fees and rebates to remain competitive
with other exchanges and with offexchange venues. Because competitors
are free to modify their own fees and
credits in response, and because market
participants may readily adjust their
13 15
order routing practices, the Exchange
does not believe this proposed fee
change would impose any burden on
intermarket competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 14 of the Act and
subparagraph (f)(2) of Rule 19b–4 15
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 16 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEARCA–2021–60 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–NYSEARCA–2021–60. This
file number should be included on the
U.S.C. 78f(b)(8).
VerDate Sep<11>2014
17:00 Jul 19, 2021
Jkt 253001
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
16 15 U.S.C. 78s(b)(2)(B).
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–NYSEARCA–2021–60 and
should be submitted on or before
August 10, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–15335 Filed 7–19–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–92404; File No. SR–Phlx–
2021–41]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Various Phlx
Rules
July 14, 2021.
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 July 13,
2021, Nasdaq PHLX LLC (‘‘Phlx’’ or
‘‘Exchange’’) filed with the Securities
14 15
17 17
15 17
1 15
Frm 00114
Fmt 4703
Sfmt 4703
38377
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
E:\FR\FM\20JYN1.SGM
20JYN1
38378
Federal Register / Vol. 86, No. 136 / Tuesday, July 20, 2021 / Notices
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 Rules at Options 8, Section 2
(Definitions); Section 8 (Trading Floor
Registration); Section 12 (Clerks);
Section 22 (Execution of Options
Transactions on the Trading Floor);
Section 28 (Responsibilities of Floor
Brokers); and Section 39 (Option Minor
Rule Violations and Order and Decorum
Regulations) at C–2 (Options Floor
Based Management System).
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/phlx/rules, 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
khammond on DSKJM1Z7X2PROD with NOTICES
1. Purpose
The Exchange proposes to amend
Phlx Rules at Options 8, Section 2
(Definitions); Section 8 (Trading Floor
Registration); Section 12 (Clerks);
Section 22 (Execution of Options
Transactions on the Trading Floor);
Section 28 (Responsibilities of Floor
Brokers); and Section 39 (Option Minor
Rule Violations and Order and Decorum
Regulations) at C–2 (Options Floor
Based Management System). Each
change is described below.
The Exchange also proposes a
technical amendment to Options 10,
Section 20 (Options Communications).
VerDate Sep<11>2014
17:00 Jul 19, 2021
Jkt 253001
Options 8, Section 2
The Exchange proposes to amend
Options 8, Section 2, Definitions, to
alphabetize the existing definitions. The
Exchange proposes to relocate and
renumber the current definitions
without change, with one exception
which is described below. The
Exchange proposes to amend the
definition of a Presiding Exchange
Official at current Options 8, Section
2(a)(4) to add ‘‘/her’’ next to ‘‘his’’ in
two places. The amendment to this rule
will bring greater clarity to the defined
term.
The Exchange proposes to add two
new definitions, ‘‘Floor Transaction’’
and ‘‘Remote FBMS Transaction’’ to
Options 8, Section 2. The Exchange
proposes to define ‘‘Floor Transaction’’
as a transaction that is effected in open
outcry on the Exchange’s Trading Floor.
This term is currently defined within
Phlx Options 7, Section 1 for the
purposes of pricing. The Exchange also
proposes to define ‘‘Remote FBMS
Transaction.’’ The Exchange recently
amended Options 8, Section 28,
‘‘Responsibilities of Floor Brokers’’ at
subsection (g) and Section 30,
‘‘Crossing, Facilitation and Solicited
Orders’’ at subsection (e) to permit Floor
Brokers to utilize the Options Floor
Based Management System (‘‘FBMS’’),3
remotely,4 to enter certain orders that do
not require exposure in open outcry.5 At
this time the Exchange proposes to
define a ‘‘Remote FBMS Transaction’’ as
a transaction that is effected by a Floor
Broker, while not physically present on
the Trading Floor, by submitting limit,
market or stop orders pursuant to
Options 8, Section 28(g) and Floor
Qualified Contingent Cross Orders
pursuant to Options 8, Section 30(e) to
the electronic order book, through
FBMS, pursuant to Options 8, Sections
3 FBMS, an order management system, is the
gateway for the electronic execution of equity,
equity index and U.S. dollar-settled foreign
currency option orders represented by Floor
Brokers on the Exchange’s Options Floor. Floor
Brokers contemporaneously upon receipt of an
order and prior to the representation of such an
order in the trading crowd, record all options orders
represented by such Floor Broker to FBMS, which
creates an electronic audit trail. The execution of
orders to Phlx’s electronic trading system also
occurs via FBMS. The FBMS application is
available on hand-held tablets and stationary
desktops.
4 Utilizing FBMS while not physically present on
the Trading Floor would be considered remote
access.
5 See Securities Exchange Act Release No. 90909
(January 13, 2021), 86 FR 6389 (January 21, 2021)
(SR–Phlx–2021–02) (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change To Modify
Phlx Options 8, Section 28, ‘‘Responsibilities of
Floor Brokers’’ and Section 30, ‘‘Crossing,
Facilitation and Solicited Orders’’) (‘‘Prior Rule
Change’’).
PO 00000
Frm 00115
Fmt 4703
Sfmt 4703
28 and 30, respectively, in accordance
with the Prior Rule Change. Further, the
Exchange proposes to specify that
members and member organizations
must comply with certain regulatory
requirements, unless the member or
member organization is otherwise
exempt from the requirements in
accordance with Supplementary
Material .08 to Options 10, Section 6 6
or Phlx General 4, Rule 1230.7 The
Exchange proposes to state that in order
to conduct remote FBMS transactions,
unless exempt from such requirements,
Floor Brokers are subject to the
following regulatory requirements: (1)
Compliance with branch office
requirements as described in
Supplementary Material .08 to Options
10, Section 6, as well as supervision of
such branch office as described in Phlx
General 9, Section 20; and (2)
compliance with applicable registration
requirements described in Phlx General
4.8 Finally, the Exchange proposes to
make clear that all uses of FBMS
involving open outcry must be
conducted while physically present on
the Trading Floor. The proposed
definition would describe and cite to
the types of orders that may be
submitted remotely by a Floor Broker
for ease of location in the Options 8
Rules. Further, the proposed rule
indicates the various existing Phlx Rules
that are relevant today for regulatory
compliance when transacting Remote
FBMS Transactions. The last sentence of
the proposed rule indicates that open
outcry transactions may only be effected
while physically present on the
Exchange’s Trading Floor and therefore
uses of FBMS involving open outcry
must be conducted while physically
present on the Trading Floor. Today,
Floor Brokers must comply with these
regulatory requirements. This proposed
rule would serve as a guide for Floor
Brokers conducting Remote FBMS
Transactions.
6 Supplementary Material .08(i)–(vii) to Options
10, Section 6 describe branch office exclusions.
7 Phlx General 4 Rules are incorporated by
reference to the General 4 Rules of The Nasdaq
Stock Market LLC. General 4, Rule 1230 describes
associated persons exempt from registration.
8 General 4 Rules describe registration,
qualification and continuing education
requirements. Phlx floor members are required to
comply with Phlx General 4 Rules. If a member is
no longer present on a trading floor, the member
would not be subject to the exemption associated
with effecting transactions on the floor of another
national securities exchange. A Floor Broker
conducting a Remote FBMS Transaction would
therefore need to comply with General 4
registration requirements, including but not limited
to, the Series 57 registration.
E:\FR\FM\20JYN1.SGM
20JYN1
Federal Register / Vol. 86, No. 136 / Tuesday, July 20, 2021 / Notices
Options 8, Sections 8 and 12
The Exchange proposes to update
cross citations to General 4 Rules within
Options 8, Section 8, Trading Floor
Registration and Options 8, Section 12,
Clerks to reflect The Nasdaq Stock
Market LLC’s (‘‘Nasdaq’’) General 4 rule
numbering that was amended.9 These
amendments are non-substantive.
The Exchange proposes to amend
Options 8, Section 12, Clerks, at
subparagraph (c) to remove the phrase
‘‘or assigned to their employer’s clearing
firm.’’ Previously, Clearing Members
operated posts on the Trading Floor.
Member organizations were able to
assign clerks to operate from those
posts. Clearing Member posts no longer
exist on the Trading Floor and therefore
this language is obsolete.
Options 8, Section 22
The Exchange proposes to update a
citation to Options 8, Section 22(a)(3).
The citation is incorrect and should
instead refer to Options 8, Section
22(a)(2). There is no Options 8, Section
22(a)(3). Similar changes are also
proposed for Options 8, Section 28(e)(2)
and Options 8, Section 39 at C–2 to
correct improper citations.
khammond on DSKJM1Z7X2PROD with NOTICES
Options 8, Section 28
The Exchange proposes to amend
Options 8, Section 28, Responsibilities
of Floor Brokers, at subsection (g) to
replace the word ‘‘limit’’ with
‘‘electronic’’ before the term ‘‘order
book.’’ The term ‘‘electronic order book’’
makes clear the order book is being
described. Also, the Exchange notes
that, today, Floor Brokers may enter
limit,10 market,11 stop-limit or stop
orders 12 into the electronic order book.
9 See Securities Exchange Act Release No. 90577
(December 7, 2020), 85 FR 80202 (December 11,
2020) (SR–NASDAQ–2020–079) (Notice of Filing
and Immediate Effectiveness of Proposed Rule
Change To Relocate Its Equity and General Rules
From Its Current Rulebook Into Its New Rulebook
Shell).
10 A Limit Order is an order to buy or sell a stated
number of option contracts at a specified price, or
better. See Options 8, Section 32(a)(2).
11 A Market Order is an order to buy or sell a
stated number of option contracts and is to be
executed at the best price obtainable when the order
reaches the post. See Options 8, Section 32(a)(1).
12 A Stop-Limit Order is a contingency order to
buy or sell at a limited price when a trade or quote
on the Exchange for a particular option contract
reaches a specified price. A Stop-Limit Order to buy
becomes a Limit Order executable at the limit price
or better when the option contract trades or is bid
on the Exchange at or above the stop-limit price. A
Stop-Limit Order to sell becomes a Limit Order
executable at the limit price or better when the
option contract trades or is offered on the Exchange
at or below the stop-limit price.
A Stop Order is a contingency order to buy or sell
when a trade or quote on the Exchange for a
particular option contract reaches a specified price.
A Stop Order to buy becomes a Market Order when
VerDate Sep<11>2014
17:00 Jul 19, 2021
Jkt 253001
Options 8, Section 28(g) only refers to
limit orders when it should have also
noted market, stop-limit and stop
orders. With respect to remotely
entering limit orders into the electronic
order book through FBMS, the Prior
Rule Change stated that this capability
exists to enable Floor Brokers to access
electronic liquidity and/or to clear
priority orders on the limit order book
prior to transacting an order in the
trading crowd through FBMS.13 Placing
limit orders on the electronic order book
does not require exposure in open
outcry and allows Floor Brokers the
ability to clear resting Customer orders
from the limit order book for their
customers in the event that a Customer
order had priority on the limit order
book that would otherwise prevent a
Floor Qualified Contingent Cross Order
from being entered in compliance with
Options 8, Section 30(e).14 The
Exchange notes that Floor Brokers may
also utilize market, stop-limit and stop
orders to clear resting Customers’ orders
from the electronic order book. Also,
placing market, stop-limit and stop
orders on the electronic order book does
not require exposure in open outcry
today.
Options 10, Section 20
The Exchange proposes to update a
reference to Phx Rule 1049 within
Options 10, Section 20, Options
Communications. Phlx Rule 1049 was
the prior reference to Options 10,
the option contract trades or is bid on the Exchange
at or above the stop price. A Stop Order to sell
becomes a Market Order when the option contract
trades or is offered on the Exchange at or below the
stop price.
Notwithstanding the foregoing, a Stop or StopLimit Order shall not be elected by a trade that is
reported late or out of sequence. See Options 8,
Section 32(b)(1) and (2).
13 See Securities Exchange Act Release No. 68960
(February 20, 2013), 78 FR 13132, 13134 (February
26, 2013) (SR–Phlx–2013–09) (Notice of Filing of
Proposed Rule Change To Enhance the
Functionality Offered on Its Options Floor Broker
Management System (‘‘FBMS’’) by, Among Other
Things, Automating Functions Currently Performed
by Floor Brokers). This filing provided the
following explanation, ‘‘For example, if a Floor
Broker enters a two-sided order through the new
FBMS and there is an order on the book at a price
that prevents the Floor Broker’s order from
executing, FBMS will indicate to the Floor Broker
how many contracts need to be satisfied before the
Floor Broker’s order can execute at the agreed-upon
price. If the Floor Broker agrees to satisfy that order,
consistent with the order placed in his care, he can
cause FBMS to send a portion of one of his orders
to Phlx XL to trade against the order on the book,
thereby clearing it and permitting the remainder of
the Floor Broker’s order to trade. This functionality
is optional in the sense that the Floor Broker can
decide not to trade against the book, consistent with
order instructions he has been given, and therefore
not execute his two-sided order at that particular
price.’’ Phlx XL refers to the electronic order book.
14 See supra note 5.
PO 00000
Frm 00116
Fmt 4703
Sfmt 4703
38379
Section 20.15 At this time the Exchange
proposes to replace ‘‘Nasdaq PHLX Rule
1049’’ with ‘‘Options 10, Section 20.’’ In
addition the Exchange proposes to
replace ‘‘Nasdaq PHLX’’ throughout this
rule with ‘‘Phlx’’ to conform the
reference to the Exchange to the
remainder of the Rulebook.
2. Statutory Basis
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 and to protect investors and the
public interest.
Options 8, Section 2
The Exchange’s proposal to
alphabetize the existing definitions
within Options 8, Section 2 is consistent
with the Act as the definitions will
become easier to locate. Amending the
definition of a Presiding Exchange
Official at current Options 8, Section
2(a)(4) to add ‘‘/her’’ next to ‘‘his’’ in
two places is a non-substantive rule
change. These amendments are
intended to bring greater clarity to the
Options 8 Rules.
The proposal to define ‘‘Floor
Transaction’’ as a transaction that is
effected in open outcry on the
Exchange’s Trading Floor is consistent
with the Act. This term is currently
defined within Phlx Options 7, Section
1 for the purposes of pricing. The
defined term is consistent with the use
of that term in the current rules. This
defined term will bring greater clarity to
the Options 8 Rules.
The Exchange’s proposal to define
‘‘Remote FBMS Transaction’’ is
consistent with the Act. The Exchange
recently amended Options 8, Section 28,
‘‘Responsibilities of Floor Brokers’’ at
subsection (g) and Section 30,
‘‘Crossing, Facilitation and Solicited
Orders’’ at subsection (e) to permit Floor
Brokers to utilize the FBMS remotely,18
to enter certain orders that do not
require exposure in open outcry.19 The
proposed term ‘‘Remote FBMS
Transaction’’ would serve to provide
members and member organizations a
description of the manner in which a
Floor Broker may remotely transact
15 See Securities Exchange Act Release No. 88213
(February 14, 2020), 85 FR 9859 (February 20, 2020)
(SR–Phlx–2020–03) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Relocate
Rules From Its Current Rulebook Into Its New
Rulebook Shell).
16 15 U.S.C. 78f(b).
17 15 U.S.C. 78f(b)(5).
18 See supra note 4.
19 See supra note 5.
E:\FR\FM\20JYN1.SGM
20JYN1
38380
Federal Register / Vol. 86, No. 136 / Tuesday, July 20, 2021 / Notices
certain orders while not physically
present on the Trading Floor. This
defined term provides the citations to
the applicable rules and further makes
clear the current regulatory
requirements that apply to such remote
activity. Today, Floor Brokers must
comply with these regulatory
requirements provided they are not
exempt from those requirements
pursuant to Supplementary Material .08
to Options 10, Section 6 or Phlx General
4, Rule 1230. Also, the defined term
makes clear that all uses of FBMS
involving open outcry must be
conducted while physically present on
the Trading Floor. This proposed rule
would serve as a guide for Floor Brokers
conducting Remote FBMS Transactions.
Options 8, Sections 8 and 12
The Exchange’s proposal to update
cross citations to Nasdaq General 4
Rules within Options 8, Section 8,
Trading Floor Registration and Options
8, Section 12, Clerks is consistent with
the Act. These amendments are nonsubstantive and will clarify the rules.
The Exchange’s proposal to amend
Options 8, Section 12, Clerks at
subparagraph (c) to remove the phrase
‘‘or assigned to their employer’s clearing
firm’’ is consistent with the Act.
Previously, Clearing Members operated
posts on the Trading Floor. Member
organizations were able to assign clerks
to operate from those posts. Clearing
Member posts no longer exist on the
Trading Floor and therefore this
language is obsolete.
khammond on DSKJM1Z7X2PROD with NOTICES
Options 8, Section 22
The Exchange’s proposal to update
citations to Options 8, Section 22(a)(3)
within Options 8, Section 22(a)(2)(E)(i),
Options 8, Section 28(e)(2), and Options
8, Section 39 at C–2 is consistent with
the Act as the rule text corrects
improper citations. Citations to Options
8, Section 22(a)(3) should instead refer
to Options 8, Section 22(a)(3). Options
8, Section 22(a)(3) does not exist.
Options 8, Section 28
The Exchange’s proposal to amend
Options 8, Section 28, Responsibilities
of Floor Brokers, to replace the word
‘‘limit’’ with ‘‘electronic’’ before the
term ‘‘order book’’ is consistent with the
Act. The term ‘‘electronic order book’’
makes clear that specific order book
being described.
The Exchange’s proposal to amend
Options 8, Section 28 to provide that
Floor Brokers may enter limit, market,
stop-limit or stop orders into the
electronic order book is consistent with
the Act. Currently, Options 8, Section
28 only refers to limit orders when it
VerDate Sep<11>2014
17:00 Jul 19, 2021
Jkt 253001
should have also noted market, stoplimit and stop orders. With respect to
remotely entering limit orders into the
electronic order book through FBMS,
the Prior Rule Change stated that this
capability exists to enable Floor Brokers
to access electronic liquidity and/or to
clear priority orders on the limit order
book prior to transacting an order in the
trading crowd through FBMS.20 Placing
limit orders on the electronic order book
does not require exposure in open
outcry and allows Floor Brokers the
ability to clear resting Customers orders
from the limit order book for their
customers in the event that a Customer
order had priority on the limit order
book that would otherwise prevent a
Floor Qualified Contingent Cross Order
from being entered in compliance with
Options 8, Section 30(e).21 Today, Floor
Brokers may also utilize market, stoplimit and stop orders to clear resting
Customers orders from the electronic
order book. Also, placing market, stoplimit and stop orders on the electronic
order book does not require exposure in
open outcry.
Options 10, Section 20
The Exchange proposes to update a
reference to Phx Rule 1049 within
Options 10, Section 20, Options
Communications, and replace ‘‘Nasdaq
PHLX’’ throughout this rule with ‘‘Phlx’’
are non-substantive amendments that
will clarify the Rulebook.
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.
Options 8, Section 2
The Exchange’s proposal to
alphabetize the existing definitions
within Options 8, Section 2 does not
impose an undue burden on
competition as the definitions will
become easier to locate. Amending the
definition of a Presiding Exchange
Official at current Options 8, Section
2(a)(4) to add ‘‘/her’’ next to ‘‘his’’ in
two places is a non-substantive rule
change. These amendments are
intended to bring greater clarity to the
Options 8 Rules.
The proposal to define ‘‘Floor
Transaction’’ as a transaction that is
effected in open outcry on the
Exchange’s Trading Floor does not
impose an undue burden on
competition. This term is currently
PO 00000
20 See
21 See
supra note 10.
supra note 5.
Frm 00117
Fmt 4703
Sfmt 4703
defined within Phlx Options 7, Section
1 for the purposes of pricing. The
defined term is consistent with the use
of that term in the current rules. This
defined term will bring greater clarity to
the Options 8 Rules. The Exchange’s
proposal to define ‘‘Remote FBMS
Transaction’’ does not impose an undue
burden on competition. The proposed
term ‘‘Remote FBMS Transaction’’
would serve to provide members and
member organizations a description of
the manner in which a Floor Broker may
remotely transact certain orders while
not physically present on the Trading
Floor. This defined term provides the
citations to the applicable rules and
further makes clear the current
regulatory requirements that apply to
such remote activity. Today, Floor
Brokers must comply with these
regulatory requirements. Also, the
defined term makes clear that all uses of
FBMS involving open outcry must be
conducted while physically present on
the Trading Floor.
Options 8, Sections 8 and 12
The Exchange’s proposal to update
cross citations to Nasdaq General 4
Rules within Options 8, Section 8,
Trading Floor Registration and Options
8, Section 12, Clerks does not impose an
undue burden on competition. These
amendments are non-substantive and
would clarify the current rules.
The Exchange’s proposal to amend
Options 8, Section 12, Clerks at
subparagraph (c) to remove the phrase
‘‘or assigned to their employer’s clearing
firm’’ does not impose an undue burden
on competition. Previously, Clearing
Members operated posts on the Trading
Floor. Member organizations were able
to assign clerks to operate from those
posts. Clearing Member posts no longer
exist on the Trading Floor and therefore
this language is obsolete.
Options 8, Section 22
The Exchange’s proposal to update
citations to Options 8, Section 22(a)(3)
within Options 8, Section 22(a)(2)(E)(i),
Options 8, Section 28(e)(2), and Options
8, Section 39 at C–2 does not impose an
undue burden on competition as the
rule text corrects improper citations.
Citations to Options 8, Section 22(a)(3)
should instead refer to Options 8,
Section 22(a)(3). Options 8, Section
22(a)(3) does not exist.
Options 8, Section 28
The Exchange’s proposal to amend
Options 8, Section 28, Responsibilities
of Floor Brokers, at subsection (g) to
replace the word ‘‘limit’’ with
‘‘electronic’’ before the term ‘‘order
book’’ does not impose an undue
E:\FR\FM\20JYN1.SGM
20JYN1
Federal Register / Vol. 86, No. 136 / Tuesday, July 20, 2021 / Notices
burden on competition. The term
‘‘electronic order book’’ makes clear that
specific order book being described.
The Exchange’s proposal to amend
Options 8, Section 28(g) to provide that
Floor Brokers may enter limit, market,
stop-limit or stop orders into the
electronic order book does not impose
an undue burden on competition.
Currently, Options 8, Section 28(g) only
refers to limit orders when it should
have also noted market, stop-limit and
stop orders. The Exchange notes that
Floor Brokers may also utilize market,
stop-limit and stop orders to clear
resting Customers orders from the
electronic order book. Today, placing
market, stop-limit and stop orders on
the electronic order book does not
require exposure in open outcry.
Options 10, Section 20
The Exchange proposes to update a
reference to Phx Rule 1049 within
Options 10, Section 20, Options
Communications, and replace ‘‘Nasdaq
PHLX’’ throughout this rule with ‘‘Phlx’’
are non-substantive amendments that
will clarify the Rulebook.
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.
khammond on DSKJM1Z7X2PROD with 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)(iii) of the Act 22 and
subparagraph (f)(6) of Rule 19b–4
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
22 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
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
VerDate Sep<11>2014
17:00 Jul 19, 2021
Jkt 253001
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
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–2021–41 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–2021–41. 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–2021–41 and should
be submitted on or before August 10,
2021.
Frm 00118
Fmt 4703
Sfmt 4703
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–15339 Filed 7–19–21; 8:45 am]
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:
PO 00000
38381
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–92410; File No. SR–DTC–
2021–012]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Consisting of
Modifications to the Text of the Rules
and the Procedures, of the Service
Guide for the DTC Canadian-Link
Service and the DTC Operational
Arrangements Relating to the
Elimination of the Canadian Dollar
Settlement Feature of the CanadianLink Service
July 14, 2021.
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 July 12,
2021, The Depository Trust Company
(‘‘DTC’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I, II and III below, which Items
have been prepared by the clearing
agency. DTC filed the proposed rule
change pursuant to Section 19(b)(3)(A)
of the Act 3 and Rule 19b–4(f)(4)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change of DTC 5
consists of modifications to the text of
the Rules and the Procedures,6
24 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(4).
5 Capitalized terms not defined herein are defined
in the Rules, By-Laws, and Organization Certificate
of DTC (‘‘Rules’’), available at www.dtcc.com/∼/
media/Files/Downloads/legal/rules/dtc_rules.pdf
and the Guide.
6 Pursuant to the Rules, the term ‘‘Procedures’’
means the Procedures, service guides, and
regulations of DTC adopted pursuant to Rule 27, as
amended from time to time. See Rule 1, Section 1,
supra note 5. Pursuant to Rule 27, each Participant
and DTC is bound by the Procedures and any
amendment thereto in the same manner as it is
1 15
E:\FR\FM\20JYN1.SGM
Continued
20JYN1
]]>Agencies
[Federal Register Volume 86, Number 136 (Tuesday, July 20, 2021)]
[Notices]
[Pages 38377-38381]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15339]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92404; File No. SR-Phlx-2021-41]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Various
Phlx Rules
July 14, 2021.
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 July 13, 2021, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed with
the Securities
[[Page 38378]]
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.
---------------------------------------------------------------------------
\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 amend Phlx Rules at Options 8, Section 2
(Definitions); Section 8 (Trading Floor Registration); Section 12
(Clerks); Section 22 (Execution of Options Transactions on the Trading
Floor); Section 28 (Responsibilities of Floor Brokers); and Section 39
(Option Minor Rule Violations and Order and Decorum Regulations) at C-2
(Options Floor Based Management System).
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/phlx/rules, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Phlx Rules at Options 8, Section 2
(Definitions); Section 8 (Trading Floor Registration); Section 12
(Clerks); Section 22 (Execution of Options Transactions on the Trading
Floor); Section 28 (Responsibilities of Floor Brokers); and Section 39
(Option Minor Rule Violations and Order and Decorum Regulations) at C-2
(Options Floor Based Management System). Each change is described
below.
The Exchange also proposes a technical amendment to Options 10,
Section 20 (Options Communications).
Options 8, Section 2
The Exchange proposes to amend Options 8, Section 2, Definitions,
to alphabetize the existing definitions. The Exchange proposes to
relocate and renumber the current definitions without change, with one
exception which is described below. The Exchange proposes to amend the
definition of a Presiding Exchange Official at current Options 8,
Section 2(a)(4) to add ``/her'' next to ``his'' in two places. The
amendment to this rule will bring greater clarity to the defined term.
The Exchange proposes to add two new definitions, ``Floor
Transaction'' and ``Remote FBMS Transaction'' to Options 8, Section 2.
The Exchange proposes to define ``Floor Transaction'' as a transaction
that is effected in open outcry on the Exchange's Trading Floor. This
term is currently defined within Phlx Options 7, Section 1 for the
purposes of pricing. The Exchange also proposes to define ``Remote FBMS
Transaction.'' The Exchange recently amended Options 8, Section 28,
``Responsibilities of Floor Brokers'' at subsection (g) and Section 30,
``Crossing, Facilitation and Solicited Orders'' at subsection (e) to
permit Floor Brokers to utilize the Options Floor Based Management
System (``FBMS''),\3\ remotely,\4\ to enter certain orders that do not
require exposure in open outcry.\5\ At this time the Exchange proposes
to define a ``Remote FBMS Transaction'' as a transaction that is
effected by a Floor Broker, while not physically present on the Trading
Floor, by submitting limit, market or stop orders pursuant to Options
8, Section 28(g) and Floor Qualified Contingent Cross Orders pursuant
to Options 8, Section 30(e) to the electronic order book, through FBMS,
pursuant to Options 8, Sections 28 and 30, respectively, in accordance
with the Prior Rule Change. Further, the Exchange proposes to specify
that members and member organizations must comply with certain
regulatory requirements, unless the member or member organization is
otherwise exempt from the requirements in accordance with Supplementary
Material .08 to Options 10, Section 6 \6\ or Phlx General 4, Rule
1230.\7\ The Exchange proposes to state that in order to conduct remote
FBMS transactions, unless exempt from such requirements, Floor Brokers
are subject to the following regulatory requirements: (1) Compliance
with branch office requirements as described in Supplementary Material
.08 to Options 10, Section 6, as well as supervision of such branch
office as described in Phlx General 9, Section 20; and (2) compliance
with applicable registration requirements described in Phlx General
4.\8\ Finally, the Exchange proposes to make clear that all uses of
FBMS involving open outcry must be conducted while physically present
on the Trading Floor. The proposed definition would describe and cite
to the types of orders that may be submitted remotely by a Floor Broker
for ease of location in the Options 8 Rules. Further, the proposed rule
indicates the various existing Phlx Rules that are relevant today for
regulatory compliance when transacting Remote FBMS Transactions. The
last sentence of the proposed rule indicates that open outcry
transactions may only be effected while physically present on the
Exchange's Trading Floor and therefore uses of FBMS involving open
outcry must be conducted while physically present on the Trading Floor.
Today, Floor Brokers must comply with these regulatory requirements.
This proposed rule would serve as a guide for Floor Brokers conducting
Remote FBMS Transactions.
---------------------------------------------------------------------------
\3\ FBMS, an order management system, is the gateway for the
electronic execution of equity, equity index and U.S. dollar-settled
foreign currency option orders represented by Floor Brokers on the
Exchange's Options Floor. Floor Brokers contemporaneously upon
receipt of an order and prior to the representation of such an order
in the trading crowd, record all options orders represented by such
Floor Broker to FBMS, which creates an electronic audit trail. The
execution of orders to Phlx's electronic trading system also occurs
via FBMS. The FBMS application is available on hand-held tablets and
stationary desktops.
\4\ Utilizing FBMS while not physically present on the Trading
Floor would be considered remote access.
\5\ See Securities Exchange Act Release No. 90909 (January 13,
2021), 86 FR 6389 (January 21, 2021) (SR-Phlx-2021-02) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Modify Phlx Options 8, Section 28, ``Responsibilities of Floor
Brokers'' and Section 30, ``Crossing, Facilitation and Solicited
Orders'') (``Prior Rule Change'').
\6\ Supplementary Material .08(i)-(vii) to Options 10, Section 6
describe branch office exclusions.
\7\ Phlx General 4 Rules are incorporated by reference to the
General 4 Rules of The Nasdaq Stock Market LLC. General 4, Rule 1230
describes associated persons exempt from registration.
\8\ General 4 Rules describe registration, qualification and
continuing education requirements. Phlx floor members are required
to comply with Phlx General 4 Rules. If a member is no longer
present on a trading floor, the member would not be subject to the
exemption associated with effecting transactions on the floor of
another national securities exchange. A Floor Broker conducting a
Remote FBMS Transaction would therefore need to comply with General
4 registration requirements, including but not limited to, the
Series 57 registration.
---------------------------------------------------------------------------
[[Page 38379]]
Options 8, Sections 8 and 12
The Exchange proposes to update cross citations to General 4 Rules
within Options 8, Section 8, Trading Floor Registration and Options 8,
Section 12, Clerks to reflect The Nasdaq Stock Market LLC's
(``Nasdaq'') General 4 rule numbering that was amended.\9\ These
amendments are non-substantive.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 90577 (December 7,
2020), 85 FR 80202 (December 11, 2020) (SR-NASDAQ-2020-079) (Notice
of Filing and Immediate Effectiveness of Proposed Rule Change To
Relocate Its Equity and General Rules From Its Current Rulebook Into
Its New Rulebook Shell).
---------------------------------------------------------------------------
The Exchange proposes to amend Options 8, Section 12, Clerks, at
subparagraph (c) to remove the phrase ``or assigned to their employer's
clearing firm.'' Previously, Clearing Members operated posts on the
Trading Floor. Member organizations were able to assign clerks to
operate from those posts. Clearing Member posts no longer exist on the
Trading Floor and therefore this language is obsolete.
Options 8, Section 22
The Exchange proposes to update a citation to Options 8, Section
22(a)(3). The citation is incorrect and should instead refer to Options
8, Section 22(a)(2). There is no Options 8, Section 22(a)(3). Similar
changes are also proposed for Options 8, Section 28(e)(2) and Options
8, Section 39 at C-2 to correct improper citations.
Options 8, Section 28
The Exchange proposes to amend Options 8, Section 28,
Responsibilities of Floor Brokers, at subsection (g) to replace the
word ``limit'' with ``electronic'' before the term ``order book.'' The
term ``electronic order book'' makes clear the order book is being
described. Also, the Exchange notes that, today, Floor Brokers may
enter limit,\10\ market,\11\ stop-limit or stop orders \12\ into the
electronic order book. Options 8, Section 28(g) only refers to limit
orders when it should have also noted market, stop-limit and stop
orders. With respect to remotely entering limit orders into the
electronic order book through FBMS, the Prior Rule Change stated that
this capability exists to enable Floor Brokers to access electronic
liquidity and/or to clear priority orders on the limit order book prior
to transacting an order in the trading crowd through FBMS.\13\ Placing
limit orders on the electronic order book does not require exposure in
open outcry and allows Floor Brokers the ability to clear resting
Customer orders from the limit order book for their customers in the
event that a Customer order had priority on the limit order book that
would otherwise prevent a Floor Qualified Contingent Cross Order from
being entered in compliance with Options 8, Section 30(e).\14\ The
Exchange notes that Floor Brokers may also utilize market, stop-limit
and stop orders to clear resting Customers' orders from the electronic
order book. Also, placing market, stop-limit and stop orders on the
electronic order book does not require exposure in open outcry today.
---------------------------------------------------------------------------
\10\ A Limit Order is an order to buy or sell a stated number of
option contracts at a specified price, or better. See Options 8,
Section 32(a)(2).
\11\ A Market Order is an order to buy or sell a stated number
of option contracts and is to be executed at the best price
obtainable when the order reaches the post. See Options 8, Section
32(a)(1).
\12\ A Stop-Limit Order is a contingency order to buy or sell at
a limited price when a trade or quote on the Exchange for a
particular option contract reaches a specified price. A Stop-Limit
Order to buy becomes a Limit Order executable at the limit price or
better when the option contract trades or is bid on the Exchange at
or above the stop-limit price. A Stop-Limit Order to sell becomes a
Limit Order executable at the limit price or better when the option
contract trades or is offered on the Exchange at or below the stop-
limit price.
A Stop Order is a contingency order to buy or sell when a trade
or quote on the Exchange for a particular option contract reaches a
specified price. A Stop Order to buy becomes a Market Order when the
option contract trades or is bid on the Exchange at or above the
stop price. A Stop Order to sell becomes a Market Order when the
option contract trades or is offered on the Exchange at or below the
stop price.
Notwithstanding the foregoing, a Stop or Stop-Limit Order shall
not be elected by a trade that is reported late or out of sequence.
See Options 8, Section 32(b)(1) and (2).
\13\ See Securities Exchange Act Release No. 68960 (February 20,
2013), 78 FR 13132, 13134 (February 26, 2013) (SR-Phlx-2013-09)
(Notice of Filing of Proposed Rule Change To Enhance the
Functionality Offered on Its Options Floor Broker Management System
(``FBMS'') by, Among Other Things, Automating Functions Currently
Performed by Floor Brokers). This filing provided the following
explanation, ``For example, if a Floor Broker enters a two-sided
order through the new FBMS and there is an order on the book at a
price that prevents the Floor Broker's order from executing, FBMS
will indicate to the Floor Broker how many contracts need to be
satisfied before the Floor Broker's order can execute at the agreed-
upon price. If the Floor Broker agrees to satisfy that order,
consistent with the order placed in his care, he can cause FBMS to
send a portion of one of his orders to Phlx XL to trade against the
order on the book, thereby clearing it and permitting the remainder
of the Floor Broker's order to trade. This functionality is optional
in the sense that the Floor Broker can decide not to trade against
the book, consistent with order instructions he has been given, and
therefore not execute his two-sided order at that particular
price.'' Phlx XL refers to the electronic order book.
\14\ See supra note 5.
---------------------------------------------------------------------------
Options 10, Section 20
The Exchange proposes to update a reference to Phx Rule 1049 within
Options 10, Section 20, Options Communications. Phlx Rule 1049 was the
prior reference to Options 10, Section 20.\15\ At this time the
Exchange proposes to replace ``Nasdaq PHLX Rule 1049'' with ``Options
10, Section 20.'' In addition the Exchange proposes to replace ``Nasdaq
PHLX'' throughout this rule with ``Phlx'' to conform the reference to
the Exchange to the remainder of the Rulebook.
---------------------------------------------------------------------------
\15\ See Securities Exchange Act Release No. 88213 (February 14,
2020), 85 FR 9859 (February 20, 2020) (SR-Phlx-2020-03) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To
Relocate Rules From Its Current Rulebook Into Its New Rulebook
Shell).
---------------------------------------------------------------------------
2. Statutory Basis
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 and to protect investors
and the public interest.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Options 8, Section 2
The Exchange's proposal to alphabetize the existing definitions
within Options 8, Section 2 is consistent with the Act as the
definitions will become easier to locate. Amending the definition of a
Presiding Exchange Official at current Options 8, Section 2(a)(4) to
add ``/her'' next to ``his'' in two places is a non-substantive rule
change. These amendments are intended to bring greater clarity to the
Options 8 Rules.
The proposal to define ``Floor Transaction'' as a transaction that
is effected in open outcry on the Exchange's Trading Floor is
consistent with the Act. This term is currently defined within Phlx
Options 7, Section 1 for the purposes of pricing. The defined term is
consistent with the use of that term in the current rules. This defined
term will bring greater clarity to the Options 8 Rules.
The Exchange's proposal to define ``Remote FBMS Transaction'' is
consistent with the Act. The Exchange recently amended Options 8,
Section 28, ``Responsibilities of Floor Brokers'' at subsection (g) and
Section 30, ``Crossing, Facilitation and Solicited Orders'' at
subsection (e) to permit Floor Brokers to utilize the FBMS
remotely,\18\ to enter certain orders that do not require exposure in
open outcry.\19\ The proposed term ``Remote FBMS Transaction'' would
serve to provide members and member organizations a description of the
manner in which a Floor Broker may remotely transact
[[Page 38380]]
certain orders while not physically present on the Trading Floor. This
defined term provides the citations to the applicable rules and further
makes clear the current regulatory requirements that apply to such
remote activity. Today, Floor Brokers must comply with these regulatory
requirements provided they are not exempt from those requirements
pursuant to Supplementary Material .08 to Options 10, Section 6 or Phlx
General 4, Rule 1230. Also, the defined term makes clear that all uses
of FBMS involving open outcry must be conducted while physically
present on the Trading Floor. This proposed rule would serve as a guide
for Floor Brokers conducting Remote FBMS Transactions.
---------------------------------------------------------------------------
\18\ See supra note 4.
\19\ See supra note 5.
---------------------------------------------------------------------------
Options 8, Sections 8 and 12
The Exchange's proposal to update cross citations to Nasdaq General
4 Rules within Options 8, Section 8, Trading Floor Registration and
Options 8, Section 12, Clerks is consistent with the Act. These
amendments are non-substantive and will clarify the rules.
The Exchange's proposal to amend Options 8, Section 12, Clerks at
subparagraph (c) to remove the phrase ``or assigned to their employer's
clearing firm'' is consistent with the Act. Previously, Clearing
Members operated posts on the Trading Floor. Member organizations were
able to assign clerks to operate from those posts. Clearing Member
posts no longer exist on the Trading Floor and therefore this language
is obsolete.
Options 8, Section 22
The Exchange's proposal to update citations to Options 8, Section
22(a)(3) within Options 8, Section 22(a)(2)(E)(i), Options 8, Section
28(e)(2), and Options 8, Section 39 at C-2 is consistent with the Act
as the rule text corrects improper citations. Citations to Options 8,
Section 22(a)(3) should instead refer to Options 8, Section 22(a)(3).
Options 8, Section 22(a)(3) does not exist.
Options 8, Section 28
The Exchange's proposal to amend Options 8, Section 28,
Responsibilities of Floor Brokers, to replace the word ``limit'' with
``electronic'' before the term ``order book'' is consistent with the
Act. The term ``electronic order book'' makes clear that specific order
book being described.
The Exchange's proposal to amend Options 8, Section 28 to provide
that Floor Brokers may enter limit, market, stop-limit or stop orders
into the electronic order book is consistent with the Act. Currently,
Options 8, Section 28 only refers to limit orders when it should have
also noted market, stop-limit and stop orders. With respect to remotely
entering limit orders into the electronic order book through FBMS, the
Prior Rule Change stated that this capability exists to enable Floor
Brokers to access electronic liquidity and/or to clear priority orders
on the limit order book prior to transacting an order in the trading
crowd through FBMS.\20\ Placing limit orders on the electronic order
book does not require exposure in open outcry and allows Floor Brokers
the ability to clear resting Customers orders from the limit order book
for their customers in the event that a Customer order had priority on
the limit order book that would otherwise prevent a Floor Qualified
Contingent Cross Order from being entered in compliance with Options 8,
Section 30(e).\21\ Today, Floor Brokers may also utilize market, stop-
limit and stop orders to clear resting Customers orders from the
electronic order book. Also, placing market, stop-limit and stop orders
on the electronic order book does not require exposure in open outcry.
---------------------------------------------------------------------------
\20\ See supra note 10.
\21\ See supra note 5.
---------------------------------------------------------------------------
Options 10, Section 20
The Exchange proposes to update a reference to Phx Rule 1049 within
Options 10, Section 20, Options Communications, and replace ``Nasdaq
PHLX'' throughout this rule with ``Phlx'' are non-substantive
amendments that will clarify the Rulebook.
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.
Options 8, Section 2
The Exchange's proposal to alphabetize the existing definitions
within Options 8, Section 2 does not impose an undue burden on
competition as the definitions will become easier to locate. Amending
the definition of a Presiding Exchange Official at current Options 8,
Section 2(a)(4) to add ``/her'' next to ``his'' in two places is a non-
substantive rule change. These amendments are intended to bring greater
clarity to the Options 8 Rules.
The proposal to define ``Floor Transaction'' as a transaction that
is effected in open outcry on the Exchange's Trading Floor does not
impose an undue burden on competition. This term is currently defined
within Phlx Options 7, Section 1 for the purposes of pricing. The
defined term is consistent with the use of that term in the current
rules. This defined term will bring greater clarity to the Options 8
Rules. The Exchange's proposal to define ``Remote FBMS Transaction''
does not impose an undue burden on competition. The proposed term
``Remote FBMS Transaction'' would serve to provide members and member
organizations a description of the manner in which a Floor Broker may
remotely transact certain orders while not physically present on the
Trading Floor. This defined term provides the citations to the
applicable rules and further makes clear the current regulatory
requirements that apply to such remote activity. Today, Floor Brokers
must comply with these regulatory requirements. Also, the defined term
makes clear that all uses of FBMS involving open outcry must be
conducted while physically present on the Trading Floor.
Options 8, Sections 8 and 12
The Exchange's proposal to update cross citations to Nasdaq General
4 Rules within Options 8, Section 8, Trading Floor Registration and
Options 8, Section 12, Clerks does not impose an undue burden on
competition. These amendments are non-substantive and would clarify the
current rules.
The Exchange's proposal to amend Options 8, Section 12, Clerks at
subparagraph (c) to remove the phrase ``or assigned to their employer's
clearing firm'' does not impose an undue burden on competition.
Previously, Clearing Members operated posts on the Trading Floor.
Member organizations were able to assign clerks to operate from those
posts. Clearing Member posts no longer exist on the Trading Floor and
therefore this language is obsolete.
Options 8, Section 22
The Exchange's proposal to update citations to Options 8, Section
22(a)(3) within Options 8, Section 22(a)(2)(E)(i), Options 8, Section
28(e)(2), and Options 8, Section 39 at C-2 does not impose an undue
burden on competition as the rule text corrects improper citations.
Citations to Options 8, Section 22(a)(3) should instead refer to
Options 8, Section 22(a)(3). Options 8, Section 22(a)(3) does not
exist.
Options 8, Section 28
The Exchange's proposal to amend Options 8, Section 28,
Responsibilities of Floor Brokers, at subsection (g) to replace the
word ``limit'' with ``electronic'' before the term ``order book'' does
not impose an undue
[[Page 38381]]
burden on competition. The term ``electronic order book'' makes clear
that specific order book being described.
The Exchange's proposal to amend Options 8, Section 28(g) to
provide that Floor Brokers may enter limit, market, stop-limit or stop
orders into the electronic order book does not impose an undue burden
on competition. Currently, Options 8, Section 28(g) only refers to
limit orders when it should have also noted market, stop-limit and stop
orders. The Exchange notes that Floor Brokers may also utilize market,
stop-limit and stop orders to clear resting Customers orders from the
electronic order book. Today, placing market, stop-limit and stop
orders on the electronic order book does not require exposure in open
outcry.
Options 10, Section 20
The Exchange proposes to update a reference to Phx Rule 1049 within
Options 10, Section 20, Options Communications, and replace ``Nasdaq
PHLX'' throughout this rule with ``Phlx'' are non-substantive
amendments that will clarify the Rulebook.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \22\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\23\
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78s(b)(3)(A)(iii).
\23\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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 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-2021-41 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-2021-41. 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-2021-41 and should be submitted on
or before August 10, 2021.
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. 2021-15339 Filed 7-19-21; 8:45 am]
BILLING CODE 8011-01-P
