[Federal Register Volume 81, Number 51 (Wednesday, March 16, 2016)]
[Notices]
[Pages 14160-14163]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-05856]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77341; File No. SR-Phlx-2015-94]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing of Amendment No. 1 and Order Granting Accelerated Approval of 
Proposed Rule Change, as Modified by Amendment No. 1, to Make Permanent 
the Pilot Program Eliminating Minimum Value Sizes for Opening 
Transactions in New Series of FLEX Options

March 10, 2016.

I. Introduction

    On November 25, 2015, NASDAQ OMX PHLX LLC (``Phlx'' 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 make permanent its pilot program (``Pilot 
Program'') eliminating minimum value sizes for requests for quotes 
(``RFQs'') for opening transactions in new series of flexible exchange 
options (``FLEX Options'' or ``FLEX''). The proposed rule change was 
published for comment in the Federal Register on December 14, 2015.\3\ 
The Commission received no comments on the proposal. On January 28, 
2016, 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.\4\ The Exchange filed Amendment No. 1 to the proposed rule 
change on February 22, 2016, in order to transmit an updated pilot 
report that supplements Exhibit 3 to the filing, and to provide 
additional information regarding transactions covered by the Pilot 
Program and FLEX Option trading on the Exchange.\5\ The Commission is 
publishing this notice to solicit comments on Amendment No. 1 from 
interested persons and is approving the proposed rule change, as 
modified by Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 76593 (December 8, 
2015), 80 FR 77399 (``Notice'').
    \4\ See Securities Exchange Act Release No. 76989, 81 FR 5811 
(February 3, 2016). The Commission designated March 13, 2016, as the 
date by which it should approve, disapprove, or institute 
proceedings to determine whether to disapprove the proposed rule 
change.
    \5\ The Exchange attached an Exhibit 3 to its proposed rule 
change that contains an initial report summarizing pilot data 
collected for the period December 1, 2014 through July 31, 2015. 
Specifically, the report summarizes the trading volume and 
underlying value of opening transactions in new series of FLEX 
Options with a size below the minimum value thresholds in force 
before the pilot, as well as the types of customers initiating such 
transactions. In Amendment No. 1, the Exchange submitted an updated 
report as an amendment to Exhibit 3 that supplements the original 
Exhibit 3 with summary pilot data for the period August 1, 2015 
through December 31, 2015 (together with the initial report, ``Pilot 
Report''). In addition, in Amendment No. 1 the Exchange compares the 
total volume and value of opening transactions in new series of FLEX 
Options covered by the Pilot Program during the period December 2014 
through December 2015 to the total volume and value of all opening 
FLEX Option transactions in new series during the same period. 
Further, in Amendment No. 1 the Exchange also compares the 
Exchange's FLEX Option trading volume to the Exchange's overall, 
combined trading volume for standardized options and FLEX Options.
---------------------------------------------------------------------------

II. Description of the Amended Proposal

    FLEX Options, unlike traditional standardized options, allow 
investors to customize basic option terms, including size, expiration 
date, exercise style, and certain exercise prices.\6\ Pursuant to 
Commentary .01 to Rule 1079, the Exchange currently has in place a 
Pilot Program under which the minimum size requirements set forth in 
Rules 1079(a)(8)(A)(i) and (ii), which apply to RFQs for opening 
transactions in new series of FLEX Options, are eliminated.\7\ Prior to 
the Pilot Program, pursuant to Rules 1079(a)(8)(A)(i) and (ii), the 
minimum value size for a RFQ for an

[[Page 14161]]

opening transaction in a FLEX series in which there was no open 
interest at the time the RFQ was submitted was: (i) For FLEX index 
options, $10 million underlying equivalent value with respect to FLEX 
market index options and $5 million underlying equivalent value with 
respect to FLEX industry index options; and (ii) for FLEX equity 
options, the lesser of 250 contracts or the number of contracts 
overlying $1 million in the underlying securities.\8\
---------------------------------------------------------------------------

    \6\ See Notice; see also Phlx Rule (``Rule'') 1079. FLEX equity, 
FLEX index, and FLEX currency options are traded on the Exchange, 
but the Pilot Program encompasses only FLEX equity and FLEX index 
options, and does not encompass FLEX currency options. See Notice; 
Commentary .01 to Rule 1079; References to ``FLEX Options'' or 
``FLEX'' for purposes of this filing are meant to refer only to FLEX 
equity and FLEX index options.
    \7\ See Commentary .01 to Rule 1079; see also Securities 
Exchange Act Release Nos. 62900 (September 13, 2010), 75 FR 57098 
(September 17, 2010) (SR-Phlx-2010-123) (establishing Pilot 
Program); and 77153 (February 17, 2016) 81 FR 9039 (February 23, 
2016) (SR-Phlx-2016-19) (extending Pilot Program until the earlier 
of March 15, 2016, or approval of the Pilot Program on a permanent 
basis). The term ``request for quotes'' is defined in Rule 
1079(a)(11).
    \8\ See Rules 1079(a)(8)(A)(i) and (ii). The term ``underlying 
equivalent value'' is defined in Rule 1079(a)(8)(D).
---------------------------------------------------------------------------

    By proposing to make the Pilot Program permanent, the Exchange is 
seeking to establish a one-contract minimum size for RFQs for opening 
transactions in new series of FLEX Options.\9\ Specifically, the 
Exchange's proposal would make the Pilot Program permanent by amending 
Rules 1079(a)(8)(A)(i) and (ii) to replace the current minimum sizes 
specified therein with a one contract minimum size for all FLEX 
Options,\10\ and by eliminating the Pilot Program rule text set forth 
in Commentary .01 to Rule 1079.\11\ In connection with its proposal to 
make the Pilot Program permanent, the Exchange submitted to the 
Commission a Pilot Report summarizing Pilot Program data collected for 
the period December 2014 through December 2015.\12\ In addition, the 
Exchange states that its proposal to make the Pilot Program permanent 
and thereby eliminate the minimum size requirements applicable to RFQs 
for opening transactions in new FLEX series on the Exchange is similar 
to rule changes by NYSE Arca and CBOE adopting similar pilot programs 
on a permanent basis.\13\
---------------------------------------------------------------------------

    \9\ The Commission notes, as originally proposed, that the pilot 
program set forth no minimum contract sizes for opening 
transactions. In proposing to permanently approve the pilot, the 
Exchange is adopting a one contract size minimum, which essentially 
is the same as having no minimum contract size.
    \10\ The new one contract minimum size would apply to FLEX 
market index options (which are designed to be representative of a 
stock market as a whole or a range of companies in unrelated 
industries), FLEX industry index options (which are designed to be 
representative of a particular industry or a group of related 
industries), and FLEX equity options. See Rule 1000A (providing 
definitions for market and industry indexes). Because, as noted 
above (see supra note 6), the Pilot Program did not encompass FLEX 
currency options, such options would continue to have the 50-
contract minimum size requirement set forth in Rule 
1079(a)(8)(A)(iii). See Notice.
    \11\ See Notice; see also proposed Rules 1079(a)(8)(A)(i) and 
(ii).
    \12\ See supra note 5. Specifically, as noted above, the Pilot 
Report contains data and analysis on open interest and trading 
volume, and as well as on the types of investors that initiated 
opening FLEX Options transactions (i.e., institutional, high net 
worth, or retail) in new FLEX Option series. Id. As is also noted 
above, Amendment No. 1 contains additional data regarding 
transactions covered by the Pilot Program and FLEX Option trading on 
the Exchange. Id.
    \13\ See Notice (citing Securities Exchange Act Release Nos. 
72537 (July 3, 2014), 79 FR 39442 (July 10, 2014) (SR-NYSEArca-2014-
25) (order approving NYSE Arca's proposal to make permanent its 
pilot program eliminating minimum value sizes for FLEX Options) and 
67624 (August 8, 2012), 77 FR 48580 (August 14, 2012) (order 
approving CBOE's proposal to make permanent its pilot program 
eliminating minimum value sizes for FLEX Options)).
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as amended, is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\14\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(5) of the Act,\15\ 
which requires, among other things, that the rules of a national 
securities exchange be designed to prevent fraudulent and manipulative 
acts and practices, to promote just and equitable principles of trade, 
to foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect to, 
and facilitating transactions in securities, to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest; and not be designed to permit unfair discrimination between 
customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

    \14\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    FLEX Options were originally designed for use by institutional and 
high net worth customers, rather than retail investors.\16\ In 
approving CBOE's pilot eliminating minimum value sizes for FLEX 
Options, which was the first such pilot to be approved on a permanent 
basis, the Commission noted that it had received several comment 
letters stating that the proposal would assist institutional customers, 
but it also noted that the elimination of the minimum value size 
requirements raised the possibility that retail customers would access 
the FLEX Options market.\17\ One of the risks to retail investors 
outlined in the ODD \18\ is that, because of the customized nature of 
FLEX Options and lack of continuous quotes, trading in FLEX Options is 
often less deep and liquid than trading in standardized options on the 
same underlying interest.\19\ Additionally, the Commission notes in the 
CBOE Permanent Approval Order that reducing the minimum value size for 
opening FLEX Option transactions increases the potential for the FLEX 
Options market to act as a surrogate for the standardized options 
market, and expressed concern in this regard because the standardized 
market contains certain protections for investors not present in the 
FLEX Options market.\20\ The Commission stated that, in the event CBOE 
proposed making its pilot program permanent, information regarding the 
types of customers initiating opening FLEX Option transactions during 
the pilot would enable the Commission to evaluate how market 
participants have responded to CBOE's pilot program and what types of 
customers are using the FLEX Options market.\21\ For these same 
reasons, at the Commission's request, the Exchange included in its 
Pilot Report information regarding the types of customers that 
initiated opening FLEX Option transactions under its Pilot Program.\22\
---------------------------------------------------------------------------

    \16\ See Notice; see also Securities Exchange Act Release No. 
36841 (February 14, 1996), 61 FR 6666 (February 21, 1996) (order 
approving SR-PSE-95-24). As noted in the Options Disclosure Document 
(``ODD''), which explains the characteristics and risks of exchange-
traded options, flexibly structured options may be useful to 
sophisticated investors seeking to manage particular portfolio and 
trading risks. Rule 9b-1 under the Act requires that broker-dealers 
furnish the ODD to a customer before accepting an order from the 
customer to purchase or sell an option contract relating to an 
options class that is the subject of the ODD, or approving the 
customer's account for the trading of such option. See 17 CFR 
240.9b-1(d).
    \17\ See Securities Exchange Act Release No. 61439 (January 28, 
2010), 75 FR 5831 (February 4, 2010) (order approving SR-CBOE-2009-
087) (``CBOE Permanent Approval Order'').
    \18\ See supra note 16.
    \19\ In particular, the ODD states that because many of the 
terms of FLEX Options are not standardized, it is less likely that 
there will be an active secondary market in which holders and 
writers of such options will be able to close out their positions by 
offsetting sales and purchases. Also, the ODD states that certain 
margin requirements for positions in flexibly structured options may 
be significantly greater than the margin requirements applicable to 
similar positions in other options on the same underlying interest.
    \20\ See CBOE Permanent Approval Order, supra note 17. In 
particular, the Commission noted that continuous quotes may not 
always be available in the FLEX Options market and that FLEX Options 
do not have trading rotations at either the opening or closing of 
trading. Id.
    \21\ Id. The Exchange has submitted a Pilot Report to the 
Commission as Exhibit 3 to its filing, as well as other, 
confidential reports of data collected during the Pilot Program.
    \22\ See Exhibit 3 to the Exchange's rule filing, as amended by 
Amendment No. 1, supra note 5.
---------------------------------------------------------------------------

    The Commission believes that these considerations and concerns that 
informed its analysis of whether to permanently approve CBOE's pilot 
are

[[Page 14162]]

equally germane to its analysis here. As such, the Commission has 
carefully reviewed the Pilot Report data and other information that the 
Exchange provided to the Commission as Exhibit 3 to its rule filing, as 
amended by Amendment No. 1.\23\ The Pilot Report reflects that, for the 
period December 1, 2014 through December 31, 2015, there were 457 
opening transactions in new series of FLEX equity options initiated on 
the Exchange with small minimum value sizes made possible by the Pilot 
Program, 12 of which were initiated by retail customers, 37 of which 
were initiated by high net worth customers, and 409 of which were 
initiated by institutional customers.\24\ In addition, the Pilot Report 
reflects that there were 12 opening transactions in new series of FLEX 
index options initiated on the Exchange pursuant to the Pilot Program, 
none of which were initiated by retail customers, 5 of which were 
initiated by high net worth customers, and 7 of which were initiated by 
institutional customers.\25\ Overall, only a limited number of retail 
customers, as defined by the Exchange, appear to have availed 
themselves of the pilot and entered into opening transactions in new 
series of FLEX Options with small minimum value sizes. Moreover, the 
Exchange has stated that, during the period December 2014 through 
December 2015, the 457 opening transactions in new series of FLEX 
equity options covered by the Pilot Program accounted for approximately 
6.3% of the total volume and approximately 3.7% of the total value of 
all opening FLEX equity options transactions in new series--i.e., 
opening transactions covered by the Pilot Program as well as opening 
transactions with value sizes above the pre-pilot minimum.\26\ The 
Exchange has also stated that, during the period December 2014 through 
December 2015, the 12 opening transactions in new series of FLEX index 
options covered by the Pilot Program accounted for approximately 8.8% 
of the total volume and approximately 4.1% of the total value of all 
opening FLEX index option transactions in new series.\27\ Furthermore, 
it is the Commission's understanding that FLEX Option trading on the 
Exchange accounts for less than 1.37% of the Exchange's combined 
trading volume for standardized and FLEX options.\28\ Notably, the 
Exchange represents that it has not experienced any adverse market 
effects with respect to the Pilot Program.\29\
---------------------------------------------------------------------------

    \23\ Id.
    \24\ Id. The Exchange categorized a trade as initiated by a 
retail customer if the option premium was less than $5,000, as 
initiated by a high net worth customer if the option premium was 
between $5,000 and $49,000, and as initiated by an institutional 
customer if the option premium was greater than $50,000. Id.
    \25\ Id.
    \26\ Id.
    \27\ Id. The Exchange notes that the Pilot Report covers only 
RFQs for opening transactions in new series of FLEX Options, as per 
the Pilot Program. The Pilot Report does not cover RFQs for 
transactions in currently-opened FLEX Option series or responsive 
quotes for FLEX Options pursuant to Rules 1079(a)(8)(B) or (C), 
respectively, as transactions in currently-opened FLEX Option series 
and responsive quotes were not part of the Pilot Program. See 
Notice.
    \28\ See Exhibit 3 to the Exchange's rule filing, as amended by 
Amendment No. 1, supra note 5.
    \29\ Id.
---------------------------------------------------------------------------

    On balance, the Commission believes that it is consistent with the 
Act to make the Pilot Program permanent and thus eliminate, on a 
permanent basis, the minimum value size requirements currently set 
forth in Rules 1079(a)(8)(A)(i) and (ii) for RFQs for opening 
transactions in new series of FLEX Options. The protections noted 
below, including heightened options suitability requirements, should 
help to address any concerns about the potential for retail 
participation in the Exchange's FLEX Options market in the future. 
Moreover, the Commission is not aware of any data or analysis to date 
suggesting that the trading of FLEX Options has acted as a surrogate 
for the trading of standardized options on the Exchange as a result of 
the Pilot Program. Indeed, as is stated above, the Commission 
understands that FLEX Option trading on the Exchange accounts for less 
than 1.37% of the Exchange's combined trading volume for standardized 
and FLEX options.\30\ In addition, the Exchange has indicated that 
Pilot Program FLEX Option trades account for a very small proportion of 
the total volume and total value of all FLEX Option trades.\31\ Thus, 
it appears that the Pilot Program has not caused significant trading 
interest to migrate from the Exchange's standardized options market to 
its FLEX Options market, nor caused, to the best of our knowledge, a 
large number of investors to use FLEX Options to avoid certain 
requirements in the standardized market. Based on the current data and 
size of the FLEX Options market, and the lack of any evidence to the 
contrary, it would appear that investors are using the FLEX Options 
market for its intended purpose--to be able to customize certain terms 
not available in the standardized options market. Further, the 
Commission notes that it is not aware of any problems resulting from 
the permanent approval of NYSE Arca's and CBOE's similar pilots 
eliminating FLEX Option minimum value sizes. As a result, the 
Commission believes that it is appropriate under the Act, and would 
promote just and equitable principles of trade, as well as remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, to permanently eliminate the current minimum 
value size requirements for RFQs for opening transactions in new series 
of FLEX Options and replace them with a one-contract minimum size.
---------------------------------------------------------------------------

    \30\ Id.
    \31\ Id.
---------------------------------------------------------------------------

    Existing safeguards--such as position reporting requirements and 
margin requirements--will continue to apply to FLEX Options.\32\ 
Further, as noted above, under Rule 9b-1 under the Act,\33\ all 
customers of a broker-dealer with options accounts approved to trade 
FLEX Options must receive the ODD, which contains specific disclosures 
about the characteristics and special risks of trading FLEX 
Options.\34\ In addition, similar to other options, FLEX Options are 
subject to Trading Permit Holder supervision and suitability 
requirements, such as in Rules 1025 and 1026, respectively.\35\ In 
addition to ensuring that FLEX Options are suitable for their 
customers, broker-dealers also must take into account the 
characteristics of the FLEX market, as compared to the standardized 
market, when satisfying their best execution obligations. The 
Commission believes that the safeguards in place are reasonably 
designed to help mitigate potential risks for retail investors and 
other market participants investing in FLEX Options.
---------------------------------------------------------------------------

    \32\ Certain position limit, aggregation and exercise limit 
requirements continue to apply to FLEX Options in accordance with 
Rule 1079(d) (Position Limits) and Rule 1079(e) (Exercise Limits). 
But the Commission notes that certain FLEX Options do not have 
position or exercise limits.
    \33\ 17 CFR 240.9b-1.
    \34\ See supra notes 16 and 19.
    \35\ See Notice.
---------------------------------------------------------------------------

    The Exchange believes that permanently removing the minimum value 
size requirements for RFQs for opening transactions in new series of 
FLEX Options and replacing them with a one-contract minimum size will 
give investors a more viable, exchange-traded alternative to customized 
options in the OTC market, which are not subject to minimum value size 
requirements.\36\ Furthermore, the Exchange has represented that 
broker-dealers have indicated to the Exchange that the minimum value 
size requirements have prevented them from bringing transactions on the 
Exchange that are already taking place in the OTC

[[Page 14163]]

market.\37\ Therefore, it appears possible that eliminating the minimum 
value sizes for RFQs for opening transactions in new series of FLEX 
Options could further incent trading interest in customized options to 
move from the OTC market to the Exchange. To the extent investors 
choose to trade FLEX Options on the Exchange in lieu of the OTC market 
as a result of the permanent removal of the minimum value size 
requirements, such action should benefit investors. As the Commission 
has previously noted, there are certain benefits to trading on an 
exchange, such as enhanced efficiency in initiating and closing out 
positions, increased market transparency, and heightened contra-party 
creditworthiness due to the role of the Options Clearing Corporation as 
issuer and guarantor of FLEX Options.\38\
---------------------------------------------------------------------------

    \36\ Id.
    \37\ Id.
    \38\ See Securities Exchange Act Release No. 57429 (March 4, 
2008), 73 FR 13058 (March 11, 2008) (order approving SR-CBOE-2006-
36).
---------------------------------------------------------------------------

IV. Solicitation of Comments on Amendment No. 1

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether Amendment No. 1 
to the proposed rule change is consistent with the Act. Comments may be 
submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-Phlx-2015-94 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-2015-94. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-Phlx-2015-94 and should be 
submitted on or before April 6, 2016.

V. Accelerated Approval of Proposal, as Modified by Amendment No. 1

    In Amendment No. 1, the Exchange submitted additional Pilot Program 
data to supplement Exhibit 3 to the Exchange's rule filing, which 
initially contained a report of Pilot Program data for the period 
December 2014 through July 2015. Amendment No. 1 contains an updated 
pilot report that provides data regarding FLEX Option transactions 
under the Pilot Program for the period August 2015 through December 
2015, as well as additional information regarding transactions covered 
by the Pilot Program and FLEX Option trading on the Exchange.\39\ The 
Commission believes that the supplemental Pilot Program data set forth 
in Amendment No. 1 further supports approval of the Pilot Program 
because, collectively with the Pilot Program data initially submitted 
as Exhibit 3 to the rule filing, the data reflects that there is 
minimal usage of FLEX Options by retail customers on the Exchange, and 
that market participants appear to be utilizing FLEX Options for their 
intended purpose--i.e., customization of certain terms not available in 
the standardized options market--and not as a surrogate for 
standardized option trading. Accordingly, the Commission finds good 
cause, pursuant to Section 19(b)(2) of the Act,\40\ for approving the 
proposed rule change, as modified by Amendment No. 1, prior to the 
thirtieth day after the date of publication of notice in the Federal 
Register.
---------------------------------------------------------------------------

    \39\ See Exhibit 3 to the Exchange's rule filing, as amended by 
Amendment No. 1, supra note 5.
    \40\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

VI. Conclusion

    In summary, the Commission believes, for the reasons noted above, 
that the proposed rule change to permanently approve the Pilot Program, 
thereby permanently implementing a one-contract minimum size 
requirement in place of the pre-existing minimum size requirements for 
RFQs for opening transactions in new series of FLEX Options on the 
Exchange, is consistent with the Act and Section 6(b)(5) thereunder in 
particular, and should be approved, as amended. The Exchange has 
committed, and the Commission expects the Exchange, to continue to 
monitor the usage of FLEX Options, whether changes need to be made to 
its rules or the ODD to address any changes in retail FLEX Option 
participation, and for any other issues that may occur as a result of 
the elimination of the minimum value sizes on a permanent basis, 
including whether FLEX Option trades are being used as a surrogate for 
trading options in the standardized market.\41\
---------------------------------------------------------------------------

    \41\ See Notice (Exchange representing that it will continue to 
monitor the usage of FLEX Options and whether any changes to its 
rules or the ODD are necessary).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\42\ that the proposed rule change (SR-Phlx-2015-94) be, and it 
hereby is, approved, on an accelerated basis, as amended.
---------------------------------------------------------------------------

    \42\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\43\
---------------------------------------------------------------------------

    \43\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-05856 Filed 3-15-16; 8:45 am]
BILLING CODE 8011-01-P