Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Affiliated Entity Program and Relocate Certain Rules, 70879-70882 [2021-26859]

Download as PDF Federal Register / Vol. 86, No. 236 / Monday, December 13, 2021 / Notices The retention period for the recordkeeping requirement under Rule 17Ad–13 is three years following the date of a report prepared pursuant to the rule. The recordkeeping requirement under this rule is mandatory to assist the Commission and other regulatory agencies with monitoring transfer agents and ensuring compliance with the rule. This rule does not involve the collection of confidential information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following website: www.reginfo.gov. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to (i) www.reginfo.gov/public/do/ PRAMain and (ii) David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/o John R. Pezzullo, 100 F Street NE, Washington, DC 20549, or by sending an email to: PRA_Mailbox@sec.gov. Dated: December 7, 2021. J. Matthew DeLesDernier, Assistant Secretary. The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting. The subject matter of the closed meeting will consist of the following topics: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; Resolution of litigation claims; and Other matters relating to examinations and enforcement proceedings. At times, changes in Commission priorities require alterations in the scheduling of meeting agenda items that may consist of adjudicatory, examination, litigation, or regulatory matters. CONTACT PERSON FOR MORE INFORMATION: For further information; please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551–5400. Authority: 5 U.S.C. 552b. Dated: December 9, 2021. Vanessa A. Countryman, Secretary. [FR Doc. 2021–26999 Filed 12–9–21; 11:15 am] BILLING CODE 8011–01–P [FR Doc. 2021–26855 Filed 12–10–21; 8:45 am] SECURITIES AND EXCHANGE COMMISSION BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–93729; File No. SR–Phlx– 2021–71] Sunshine Act Meetings 2:00 p.m. on Thursday, December 16, 2021. PLACE: The meeting will be held via remote means and/or at the Commission’s headquarters, 100 F Street NE, Washington, DC 20549. STATUS: This meeting will be closed to the public. MATTERS TO BE CONSIDERED: Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the closed meeting. Certain staff members who have an interest in the matters also may be present. In the event that the time, date, or location of this meeting changes, an announcement of the change, along with the new time, date, and/or place of the meeting will be posted on the Commission’s website at https:// www.sec.gov. khammond on DSKJM1Z7X2PROD with NOTICES TIME AND DATE: VerDate Sep<11>2014 16:50 Dec 10, 2021 Jkt 256001 Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange’s Affiliated Entity Program and Relocate Certain Rules December 7, 2021. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’),2 and Rule 19b–4 thereunder,3 notice is hereby given that on December 1, 2021, Nasdaq PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) 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 Exchange. The Commission is publishing this notice to 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 70879 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 at Options 7, Section 1, General Provisions, and Section 2, Collection of Exchange Fees and Other Claims. While the changes proposed herein are effective upon filing, the Exchange has designated the amendments become operative on December 1, 2021. 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 Phlx proposes to amend its Pricing Schedule at Options 7, Section 1, General Provisions. Specifically, Phlx proposes to amend the way it administers its Affiliated Entity program. The Exchange also proposes to relocate rule text within Options 7, Section 1 and Section 2, Collection of Exchange Fees and Other Claims. As a result of these rule text relocations, the Exchange also proposes to update citations within Options 7, Section 3, Rebates and Fees for Adding and Removing Liquidity in SPY; Options 7, Section 4, Multiply Listed Options Fees (Includes options overlying equities, ETFs, ETNs and indexes which are Multiply Listed) (Excludes SPY); Options 7, Section 6, Other Transaction Fees; and Options 7, Section 7, Routing Fees. Each change will be described below. E:\FR\FM\13DEN1.SGM 13DEN1 70880 Federal Register / Vol. 86, No. 236 / Monday, December 13, 2021 / Notices Affiliated Entity The Exchange proposes to amend the way Exchange member organizations indicate their participation in the Affiliated Entity Program. Specifically, the Exchange proposes to amend the description of ‘‘Affiliated Entity’’ within Options 7, Section 1, General Provisions. Currently, the term ‘‘Affiliated Entity’’ is described as, a relationship between an Appointed MM and an Appointed OFP for purposes of qualifying for certain pricing specified in the Pricing Schedule. Market Makers or Lead Market Makers, and OFPs are required to send an email to the Exchange to appoint their counterpart, at least 3 business days prior to the last day of the month to qualify for the next month. The Exchange will acknowledge receipt of the emails and specify the date the Affiliated Entity is eligible for applicable pricing, as specified in the Pricing Schedule. Each Affiliated Entity relationship will commence on the 1st of a month and may not be terminated prior to the end of any month. An Affiliated Entity relationship will terminate after a one (1) year period, unless either party terminates earlier in writing by sending an email to the Exchange at least 3 business days prior to the last day of the month to terminate for the next month. Affiliated Entity relationships must be renewed annually. Members and member organizations under Common Ownership may not qualify as a counterparty comprising an Affiliated Entity. Each member or member organization may qualify for only one (1) Affiliated Entity relationship at any given time. khammond on DSKJM1Z7X2PROD with NOTICES Today, member organizations are required to annually renew their Affiliate Entity relationship at the end of one year if they desire to continue the relationship. The parties must both send an email to the Exchange to avoid termination of the relationship, provided the relationship was not terminated earlier in the year. The Exchange believes that this process is burdensome for member organizations that desire to remain in the program. The consequence of not renewing is termination. The Exchange desires to remove the administrative burden associated with the requirement to annually renew and instead provide that the Affiliated Entity relationship will automatically renew each month, unless otherwise terminated. The proposed new rule text would provide, The term ‘‘Affiliated Entity’’ is a relationship between an Appointed MM and an Appointed OFP for purposes of qualifying for certain pricing specified in the Pricing Schedule. Market Makers or Lead Market Makers, and OFPs are required to send an email to the Exchange to appoint their counterpart, at least 3 business days prior to the last day of the month to qualify for the next month. The Exchange will acknowledge receipt of the emails and specify the date the VerDate Sep<11>2014 16:50 Dec 10, 2021 Jkt 256001 Affiliated Entity is eligible for applicable pricing, as specified in the Pricing Schedule. Each Affiliated Entity relationship will commence on the 1st of a month and may not be terminated prior to the end of any month. An Affiliated Entity relationship will automatically renew each month until or unless either party terminates earlier in writing by sending an email to the Exchange at least 3 business days prior to the last day of the month to terminate for the next month. Members and member organizations under Common Ownership may not qualify as a counterparty comprising an Affiliated Entity. Each member or member organization may qualify for only one (1) Affiliated Entity relationship at any given time. As is the case today, parties to the Affiliated Entity relationship may decide to terminate the relationship during any month by sending an email to the Exchange at least 3 business days prior to the last day of the month to terminate for the next month. Cboe Exchange, Inc. (‘‘Cboe’’) has a similar automatic renewal process for its Appointed OFP and Appointed MarketMaker Program.4 The Exchange believes that this amendment will streamline the workflow for member organizations by not requiring member organizations to renew each year to continue the affiliated relationship. Rule Text Relocations The Exchange proposes to relocate rule text to reorganize the Options 7 rules. Specifically, the Exchange proposes to relocate rule text within current Options 7, Section 2, Collection of Exchange Fees and Other Claims, into Options 7, Section 1, General Provisions, without change. The Exchange proposes to add an ‘‘(e)’’ and the title ‘‘Collection of Fees and Other Claims’’ before the relocated rule text. Also, the Exchange proposes to add a ‘‘(c)’’ before the descriptions of market participants and a ‘‘(d)’’ before the 4 See Cboe’s Fees Schedule at footnote 23 ‘‘A Market-Maker may designate an Order Flow Provider (‘‘OFP’’) as its ‘‘Appointed OFP’’ and an OFP may designate a Market-Maker to be its ‘‘Appointed Market-Maker’’ for purposes of qualifying for credits under AVP. In order to effectuate the appointment, the parties would need to submit the Appointed Affiliate Form to the Exchange by 3:00 p.m. CST on the first business day of the month in order to be eligible to qualify for credits under AVP for that month. The Exchange will recognize only one such designation for each party once every calendar month, which designation will automatically renew each month until or unless the Exchange receives an email from either party indicating that the appointment has been terminated. A Market-Maker that has both an Affiliate OFP and Appointed OFP will only qualify based upon the volume of its Appointed OFP. The volume of an OFP that has both an Affiliate MarketMaker and Appointed Market-Maker will only count towards qualifying the Appointed MarketMaker. Volume executed in open outcry is not eligible to receive a credit under AVP.’’ PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 Affiliate Entity program.5 The new lettering will make it easier to reference a specific section within Options 7, Section 1. The Exchange believes that the policy for the collection of fees should be within Options 7, Section 1 which describes other billing practices. The Exchange proposes to delete Section A of Options 7, Section 1, which is currently reserved. The Exchange proposes to relocate Section B, Customer Rebate Program, to Options 7, Section 2 with the title, ‘‘Customer Rebate Program,’’ without change. The Exchange believes that the Customer Rebates should be relocated to their own section for easy reference. As a result of that relocation, the Exchange proposes to update references to the Customer Rebate Program from ‘‘Section B’’ to ‘‘Options 7, Section 2’’ within Options 7, Section 3, Rebates and Fees for Adding and Removing Liquidity in SPY; Options 7, Section 4, Multiply Listed Options Fees (Includes options overlying equities, ETFs, ETNs and indexes which are Multiply Listed) (Excludes SPY); Options 7, Section 6, Other Transaction Fees; and Options 7, Section 7, Routing Fees. The amendments to relocate rule text are non-substantive amendments that are intended solely to reorganize the current rule text. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,6 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,7 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. Affiliated Entity The Exchange’s proposal to amend the way Exchange member organizations indicate their participation in the Affiliated Entity Program is reasonable. Today, member organizations are required to annually renew their Affiliated Entity relationship at the end of one year if they desire to continue the relationship. The parties must both send an email to the Exchange to avoid termination of the relationship, provided the relationship was not terminated earlier in the year. The Exchange believes that this process 5 The Exchange also proposes to re-letter and renumber the subparagraphs in new ‘‘(d)’’ to align with other lettering and numbering. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(4) and (5). E:\FR\FM\13DEN1.SGM 13DEN1 Federal Register / Vol. 86, No. 236 / Monday, December 13, 2021 / Notices is burdensome for member organizations that desire to remain in the program. The consequence of not renewing is termination of their participation in the program. The Exchange desires to remove the administrative burden associated with the requirement to annually renew and instead provide that the Affiliated Entity relationship will automatically renew each month, unless otherwise terminated. As is the case today, parties to the Affiliated Entity relationship may decide to terminate the relationship during any month by sending an email to the Exchange at least 3 business days prior to the last day of the month to terminate for the next month. Also, Cboe has a similar automatic renewal process for its Appointed OFP and Appointed Market-Maker Program.8 The Exchange believes that this amendment will streamline the workflow for member organizations by not requiring member organizations to renew each year to continue the affiliated relationship. The Exchange’s proposal to amend the way Exchange member organizations indicate their participation in the Affiliated Entity Program is equitable and not unfairly discriminatory. Today, any member organization may participate in the Affiliated Entity Program. The proposed changes would impact all member organizations that voluntarily elect to participate in the Affiliated Entity Program in a uniform manner. Rule Text Relocations khammond on DSKJM1Z7X2PROD with NOTICES The Exchange’s proposal to relocate rule text to reorganize the Options 7 rules is reasonable. The relocation of rule text within current Options 7, Section 2, Collection of Exchange Fees and Other Claims, into Options 7, Section 1, General Provisions, without 8 See Cboe’s Fees Schedule at footnote 23 ‘‘A Market-Maker may designate an Order Flow Provider (‘‘OFP’’) as its ‘‘Appointed OFP’’ and an OFP may designate a Market-Maker to be its ‘‘Appointed Market-Maker’’ for purposes of qualifying for credits under AVP. In order to effectuate the appointment, the parties would need to submit the Appointed Affiliate Form to the Exchange by 3:00 p.m. CST on the first business day of the month in order to be eligible to qualify for credits under AVP for that month. The Exchange will recognize only one such designation for each party once every calendar month, which designation will automatically renew each month until or unless the Exchange receives an email from either party indicating that the appointment has been terminated. A Market-Maker that has both an Affiliate OFP and Appointed OFP will only qualify based upon the volume of its Appointed OFP. The volume of an OFP that has both an Affiliate MarketMaker and Appointed Market-Maker will only count towards qualifying the Appointed MarketMaker. Volume executed in open outcry is not eligible to receive a credit under AVP.’’ VerDate Sep<11>2014 16:50 Dec 10, 2021 Jkt 256001 change, and the re-lettering of rule text does not substantively amend the current rules. Also, the proposal to delete Section A of Options 7, Section 1 is non-substantive as the section is currently reserved. Finally, the proposal to relocate Section B, Customer Rebate Program, to Options 7, Section 2, without change, does not substantively amend the current rules. These relocations and updates to citations will make the current rules easier to reference. The Exchange’s proposal to relocate rule text to reorganize the Options 7 rules is equitable and not unfairly discriminatory as the amendments are non-substantive and are intended solely to reorganize the current rule text for easy reference. 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. Cboe has a similar automatic renewal process for its Appointed OFP and Appointed MarketMaker Program 9 as proposed herein for the Affiliated Entity Program. Also, the rule relocation amendments are nonsubstantive. Intra-Market Competition The Exchange’s proposal to amend the way Exchange member organizations indicate their participation in the Affiliated Entity Program does not impose an undue burden on competition. Today, any member organization may participate in an Affiliated Entity relationship. The proposed changes would impact all member organizations that voluntarily elect to participate in the Affiliated Entity Program in a uniform manner. The Exchange’s proposal to relocate rule text to reorganize the Options 7 rules does not impose an undue burden on competition as the amendments are non-substantive and are intended solely to reorganize the current rule text for easy reference. 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. 9 Id. PO 00000 Frm 00068 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.10 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–2021–71 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–2021–71. 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, 10 15 Fmt 4703 Sfmt 4703 70881 E:\FR\FM\13DEN1.SGM U.S.C. 78s(b)(3)(A)(ii). 13DEN1 70882 Federal Register / Vol. 86, No. 236 / Monday, December 13, 2021 / Notices 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–2021–71, and should be submitted on or before January 3, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 J. Matthew DeLesDernier, Assistant Secretary. BILLING CODE 8011–01–P [Release No. 34–93734; File Nos. SR–MIAX– 2021–43, SR–EMERALD–2021–31] Self-Regulatory Organizations; Miami International Securities Exchange LLC, MIAX Emerald, LLC; Notice of Withdrawal of Proposed Rule Changes To Amend the Fee Schedules To Adopt a Tiered-Pricing Structure for Additional Limited Service MIAX and MIAX Emerald Express Interface Ports December 7, 2021. khammond on DSKJM1Z7X2PROD with NOTICES On September 28, 2021, Miami International Securities Exchange LLC, LLC (‘‘MIAX’’) and MIAX Emerald, LLC (‘‘MIAX Emerald’’) (collectively, the ‘‘Exchanges’’) each 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 (File Numbers SR–MIAX–2021–43 and SR–EMERALD–2021–31) to adopt a tiered-pricing structure for additional limited service express interface ports. The proposed rule changes were immediately effective upon filing with the Commission pursuant to Section 19(b)(3)(A) of the Act.3 The proposed 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). A proposed rule change may take effect upon filing with the Commission if it is designated by the exchange as ‘‘establishing or changing a due, fee, or other charge imposed by the self-regulatory organization on any person, whether or not the person is a member of the self-regulatory organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Sep<11>2014 16:50 Dec 10, 2021 Jkt 256001 [FR Doc. 2021–26863 Filed 12–10–21; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–93731; File No. SR– NASDAQ–2021–066] SECURITIES AND EXCHANGE COMMISSION 1 15 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 J. Matthew DeLesDernier, Assistant Secretary. SECURITIES AND EXCHANGE COMMISSION [FR Doc. 2021–26859 Filed 12–10–21; 8:45 am] 11 17 rule changes were published for comment in the Federal Register on October 5, 2021.4 On November 22, 2021, the Commission temporarily suspended the proposed rule changes and instituted proceedings under Section 19(b)(2)(B) of the Act 5 to determine whether to approve or disapprove the proposed rule changes.6 On December 1, 2021, the Exchanges withdrew the proposed rule changes (SR–MIAX–2021–43 and SR– EMERALD–2021–31). Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of the Valkyrie XBTO Bitcoin Futures Fund Under Nasdaq Rule 5711(g) December 7, 2021. On August 23, 2021, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘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 list and trade shares (‘‘Shares’’) of the Valkyrie XBTO Bitcoin Futures Fund (‘‘Trust’’) under Nasdaq Rule 5711(g). On August 25, 2021, Nasdaq filed Amendment No. 1 to the proposed rule change. The proposed rule change, as modified by Amendment No. 1, was 4 See Securities Exchange Act Release Nos. 93185 (September 29, 2021), 86 FR 55093 (SR–MIAX– 2021–43); 93188 (September 29, 2021), 86 FR 55052 (SR–EMERALD–2021–31). Comments received on the proposed rule changes are available on the Commission’s website at: https://www.sec.gov/ comments/sr-miax-2021-43/srmiax202143.htm (SR–MIAX–2021–43); https://www.sec.gov/ comments/sr-emerald-2021-31/ sremerald202131.htm (SR–EMERALD–2021–31). 5 15 U.S.C. 78s(b)(2)(B). 6 See Securities Exchange Act Release No. 93640, 86 FR 67745 (November 29, 2021). 7 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 published for comment in the Federal Register on September 9, 2021.3 On September 29, 2021, pursuant to Section 19(b)(2) of the Act,4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.5 The Commission has received no comments on the proposed rule change. This order institutes proceedings under Section 19(b)(2)(B) of the Act 6 to determine whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1. I. Summary of the Proposal As described in more detail in the Notice,7 the Exchange proposes to list and trade the Shares of the Trust under Nasdaq Rule 5711(g), which governs the listing and trading of Commodity Futures Trust Shares on the Exchange. The investment objective of the Trust is for the Shares to reflect the performance of bitcoin as represented by the CME CF Bitcoin Reference Rate (‘‘CME CF BRR’’), less the Trust’s liabilities and expenses.8 The CME CF BRR aggregates the trade flow of major bitcoin spot platforms during a specific calculation window into a one-a-day reference rate of the U.S. dollar price of bitcoin.9 The Trust pursues its investment objective primarily by investing in bitcoin futures (‘‘Bitcoin Futures’’) that are cash-settled and traded on commodity exchanges registered with the Commodity Futures Trading Commission (‘‘CFTC’’).10 At 3 See Securities Exchange Act Release No. 92865 (Sept. 2, 2021), 86 FR 50570 (Sept. 9, 2021) (‘‘Notice’’). 4 15 U.S.C. 78s(b)(2). 5 See Securities Exchange Act Release No. 93172, 86 FR 55071 (Oct. 5, 2021). The Commission designated December 8, 2021, as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change. 6 15 U.S.C. 78s(b)(2)(B). 7 See Notice, supra note 3. 8 See id. at 50574. Valkyrie Funds LLC (‘‘Sponsor’’) serves as the Trust’s sponsor and commodity pool operator; Vident Investment Advisory, LLC (‘‘Sub-Advisor’’) serves as the Trust’s sub-advisor and commodity trading advisor; and XBTO Trading, LLC is the research provider for the Sponsor and the Sub-Advisor. Delaware Trust Company serves as the trustee for the Trust. The Sponsor is currently considering third-party service providers for the roles of administrator, transfer agent, custodian, and marketing agent. See id. at 50571. 9 See id. at 50573 n.8. According to the Exchange, calculation rules are geared toward maximum transparency and real-time replicability in underlying spot markets, including Bitstamp, Coinbase, Gemini, itBit, and Kraken. See id. 10 See id. at 50574. The Exchange also represents that it will pursue its investment objective solely by E:\FR\FM\13DEN1.SGM 13DEN1

Agencies

[Federal Register Volume 86, Number 236 (Monday, December 13, 2021)]
[Notices]
[Pages 70879-70882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26859]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93729; File No. SR-Phlx-2021-71]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Exchange's Affiliated Entity Program and Relocate Certain Rules

December 7, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on December 1, 2021, Nasdaq PHLX LLC (``Phlx'' or 
``Exchange'') 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 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\ 15 U.S.C. 78a.
    \3\ 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's Pricing Schedule at Options 
7, Section 1, General Provisions, and Section 2, Collection of Exchange 
Fees and Other Claims.
    While the changes proposed herein are effective upon filing, the 
Exchange has designated the amendments become operative on December 1, 
2021.
    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
    Phlx proposes to amend its Pricing Schedule at Options 7, Section 
1, General Provisions. Specifically, Phlx proposes to amend the way it 
administers its Affiliated Entity program.
    The Exchange also proposes to relocate rule text within Options 7, 
Section 1 and Section 2, Collection of Exchange Fees and Other Claims. 
As a result of these rule text relocations, the Exchange also proposes 
to update citations within Options 7, Section 3, Rebates and Fees for 
Adding and Removing Liquidity in SPY; Options 7, Section 4, Multiply 
Listed Options Fees (Includes options overlying equities, ETFs, ETNs 
and indexes which are Multiply Listed) (Excludes SPY); Options 7, 
Section 6, Other Transaction Fees; and Options 7, Section 7, Routing 
Fees. Each change will be described below.

[[Page 70880]]

Affiliated Entity
    The Exchange proposes to amend the way Exchange member 
organizations indicate their participation in the Affiliated Entity 
Program. Specifically, the Exchange proposes to amend the description 
of ``Affiliated Entity'' within Options 7, Section 1, General 
Provisions. Currently, the term ``Affiliated Entity'' is described as,

a relationship between an Appointed MM and an Appointed OFP for 
purposes of qualifying for certain pricing specified in the Pricing 
Schedule. Market Makers or Lead Market Makers, and OFPs are required 
to send an email to the Exchange to appoint their counterpart, at 
least 3 business days prior to the last day of the month to qualify 
for the next month. The Exchange will acknowledge receipt of the 
emails and specify the date the Affiliated Entity is eligible for 
applicable pricing, as specified in the Pricing Schedule. Each 
Affiliated Entity relationship will commence on the 1st of a month 
and may not be terminated prior to the end of any month. An 
Affiliated Entity relationship will terminate after a one (1) year 
period, unless either party terminates earlier in writing by sending 
an email to the Exchange at least 3 business days prior to the last 
day of the month to terminate for the next month. Affiliated Entity 
relationships must be renewed annually. Members and member 
organizations under Common Ownership may not qualify as a 
counterparty comprising an Affiliated Entity. Each member or member 
organization may qualify for only one (1) Affiliated Entity 
relationship at any given time.

    Today, member organizations are required to annually renew their 
Affiliate Entity relationship at the end of one year if they desire to 
continue the relationship. The parties must both send an email to the 
Exchange to avoid termination of the relationship, provided the 
relationship was not terminated earlier in the year. The Exchange 
believes that this process is burdensome for member organizations that 
desire to remain in the program. The consequence of not renewing is 
termination. The Exchange desires to remove the administrative burden 
associated with the requirement to annually renew and instead provide 
that the Affiliated Entity relationship will automatically renew each 
month, unless otherwise terminated. The proposed new rule text would 
provide,

    The term ``Affiliated Entity'' is a relationship between an 
Appointed MM and an Appointed OFP for purposes of qualifying for 
certain pricing specified in the Pricing Schedule. Market Makers or 
Lead Market Makers, and OFPs are required to send an email to the 
Exchange to appoint their counterpart, at least 3 business days 
prior to the last day of the month to qualify for the next month. 
The Exchange will acknowledge receipt of the emails and specify the 
date the Affiliated Entity is eligible for applicable pricing, as 
specified in the Pricing Schedule. Each Affiliated Entity 
relationship will commence on the 1st of a month and may not be 
terminated prior to the end of any month. An Affiliated Entity 
relationship will automatically renew each month until or unless 
either party terminates earlier in writing by sending an email to 
the Exchange at least 3 business days prior to the last day of the 
month to terminate for the next month. Members and member 
organizations under Common Ownership may not qualify as a 
counterparty comprising an Affiliated Entity. Each member or member 
organization may qualify for only one (1) Affiliated Entity 
relationship at any given time.

As is the case today, parties to the Affiliated Entity relationship may 
decide to terminate the relationship during any month by sending an 
email to the Exchange at least 3 business days prior to the last day of 
the month to terminate for the next month. Cboe Exchange, Inc. 
(``Cboe'') has a similar automatic renewal process for its Appointed 
OFP and Appointed Market-Maker Program.\4\ The Exchange believes that 
this amendment will streamline the workflow for member organizations by 
not requiring member organizations to renew each year to continue the 
affiliated relationship.
---------------------------------------------------------------------------

    \4\ See Cboe's Fees Schedule at footnote 23 ``A Market-Maker may 
designate an Order Flow Provider (``OFP'') as its ``Appointed OFP'' 
and an OFP may designate a Market-Maker to be its ``Appointed 
Market-Maker'' for purposes of qualifying for credits under AVP. In 
order to effectuate the appointment, the parties would need to 
submit the Appointed Affiliate Form to the Exchange by 3:00 p.m. CST 
on the first business day of the month in order to be eligible to 
qualify for credits under AVP for that month. The Exchange will 
recognize only one such designation for each party once every 
calendar month, which designation will automatically renew each 
month until or unless the Exchange receives an email from either 
party indicating that the appointment has been terminated. A Market-
Maker that has both an Affiliate OFP and Appointed OFP will only 
qualify based upon the volume of its Appointed OFP. The volume of an 
OFP that has both an Affiliate Market-Maker and Appointed Market-
Maker will only count towards qualifying the Appointed Market-Maker. 
Volume executed in open outcry is not eligible to receive a credit 
under AVP.''
---------------------------------------------------------------------------

Rule Text Relocations
    The Exchange proposes to relocate rule text to reorganize the 
Options 7 rules. Specifically, the Exchange proposes to relocate rule 
text within current Options 7, Section 2, Collection of Exchange Fees 
and Other Claims, into Options 7, Section 1, General Provisions, 
without change. The Exchange proposes to add an ``(e)'' and the title 
``Collection of Fees and Other Claims'' before the relocated rule text.
    Also, the Exchange proposes to add a ``(c)'' before the 
descriptions of market participants and a ``(d)'' before the Affiliate 
Entity program.\5\ The new lettering will make it easier to reference a 
specific section within Options 7, Section 1. The Exchange believes 
that the policy for the collection of fees should be within Options 7, 
Section 1 which describes other billing practices.
---------------------------------------------------------------------------

    \5\ The Exchange also proposes to re-letter and re-number the 
subparagraphs in new ``(d)'' to align with other lettering and 
numbering.
---------------------------------------------------------------------------

    The Exchange proposes to delete Section A of Options 7, Section 1, 
which is currently reserved.
    The Exchange proposes to relocate Section B, Customer Rebate 
Program, to Options 7, Section 2 with the title, ``Customer Rebate 
Program,'' without change. The Exchange believes that the Customer 
Rebates should be relocated to their own section for easy reference. As 
a result of that relocation, the Exchange proposes to update references 
to the Customer Rebate Program from ``Section B'' to ``Options 7, 
Section 2'' within Options 7, Section 3, Rebates and Fees for Adding 
and Removing Liquidity in SPY; Options 7, Section 4, Multiply Listed 
Options Fees (Includes options overlying equities, ETFs, ETNs and 
indexes which are Multiply Listed) (Excludes SPY); Options 7, Section 
6, Other Transaction Fees; and Options 7, Section 7, Routing Fees.
    The amendments to relocate rule text are non-substantive amendments 
that are intended solely to reorganize the current rule text.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\7\ 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

Affiliated Entity
    The Exchange's proposal to amend the way Exchange member 
organizations indicate their participation in the Affiliated Entity 
Program is reasonable. Today, member organizations are required to 
annually renew their Affiliated Entity relationship at the end of one 
year if they desire to continue the relationship. The parties must both 
send an email to the Exchange to avoid termination of the relationship, 
provided the relationship was not terminated earlier in the year. The 
Exchange believes that this process

[[Page 70881]]

is burdensome for member organizations that desire to remain in the 
program. The consequence of not renewing is termination of their 
participation in the program. The Exchange desires to remove the 
administrative burden associated with the requirement to annually renew 
and instead provide that the Affiliated Entity relationship will 
automatically renew each month, unless otherwise terminated. As is the 
case today, parties to the Affiliated Entity relationship may decide to 
terminate the relationship during any month by sending an email to the 
Exchange at least 3 business days prior to the last day of the month to 
terminate for the next month. Also, Cboe has a similar automatic 
renewal process for its Appointed OFP and Appointed Market-Maker 
Program.\8\ The Exchange believes that this amendment will streamline 
the workflow for member organizations by not requiring member 
organizations to renew each year to continue the affiliated 
relationship.
---------------------------------------------------------------------------

    \8\ See Cboe's Fees Schedule at footnote 23 ``A Market-Maker may 
designate an Order Flow Provider (``OFP'') as its ``Appointed OFP'' 
and an OFP may designate a Market-Maker to be its ``Appointed 
Market-Maker'' for purposes of qualifying for credits under AVP. In 
order to effectuate the appointment, the parties would need to 
submit the Appointed Affiliate Form to the Exchange by 3:00 p.m. CST 
on the first business day of the month in order to be eligible to 
qualify for credits under AVP for that month. The Exchange will 
recognize only one such designation for each party once every 
calendar month, which designation will automatically renew each 
month until or unless the Exchange receives an email from either 
party indicating that the appointment has been terminated. A Market-
Maker that has both an Affiliate OFP and Appointed OFP will only 
qualify based upon the volume of its Appointed OFP. The volume of an 
OFP that has both an Affiliate Market-Maker and Appointed Market-
Maker will only count towards qualifying the Appointed Market-Maker. 
Volume executed in open outcry is not eligible to receive a credit 
under AVP.''
---------------------------------------------------------------------------

    The Exchange's proposal to amend the way Exchange member 
organizations indicate their participation in the Affiliated Entity 
Program is equitable and not unfairly discriminatory. Today, any member 
organization may participate in the Affiliated Entity Program. The 
proposed changes would impact all member organizations that voluntarily 
elect to participate in the Affiliated Entity Program in a uniform 
manner.
Rule Text Relocations
    The Exchange's proposal to relocate rule text to reorganize the 
Options 7 rules is reasonable. The relocation of rule text within 
current Options 7, Section 2, Collection of Exchange Fees and Other 
Claims, into Options 7, Section 1, General Provisions, without change, 
and the re-lettering of rule text does not substantively amend the 
current rules. Also, the proposal to delete Section A of Options 7, 
Section 1 is non-substantive as the section is currently reserved. 
Finally, the proposal to relocate Section B, Customer Rebate Program, 
to Options 7, Section 2, without change, does not substantively amend 
the current rules. These relocations and updates to citations will make 
the current rules easier to reference.
    The Exchange's proposal to relocate rule text to reorganize the 
Options 7 rules is equitable and not unfairly discriminatory as the 
amendments are non-substantive and are intended solely to reorganize 
the current rule text for easy reference.

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. Cboe has a similar automatic renewal process for its 
Appointed OFP and Appointed Market-Maker Program \9\ as proposed herein 
for the Affiliated Entity Program. Also, the rule relocation amendments 
are non-substantive.
---------------------------------------------------------------------------

    \9\ Id.
---------------------------------------------------------------------------

Intra-Market Competition
    The Exchange's proposal to amend the way Exchange member 
organizations indicate their participation in the Affiliated Entity 
Program does not impose an undue burden on competition. Today, any 
member organization may participate in an Affiliated Entity 
relationship. The proposed changes would impact all member 
organizations that voluntarily elect to participate in the Affiliated 
Entity Program in a uniform manner.
    The Exchange's proposal to relocate rule text to reorganize the 
Options 7 rules does not impose an undue burden on competition as the 
amendments are non-substantive and are intended solely to reorganize 
the current rule text for easy reference.

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.\10\
---------------------------------------------------------------------------

    \10\ 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-2021-71 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-2021-71. 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,

[[Page 70882]]

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-2021-71, and should be 
submitted on or before January 3, 2022.
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-26859 Filed 12-10-21; 8:45 am]
BILLING CODE 8011-01-P
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