[Federal Register Volume 82, Number 51 (Friday, March 17, 2017)]
[Notices]
[Pages 14238-14240]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05341]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80226; File No. SR-Phlx-2017-22]


Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the Data 
Collection Requirements in Rule 3317

March 13, 2017.
    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 February 28, 2017, NASDAQ PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I and II, below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit

[[Page 14239]]

comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 3317 to modify the date of 
Appendix B Web site data publication pursuant to the Regulation NMS 
Plan to Implement a Tick Size Pilot Program (``Plan'').
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqphlx.cchwallstreet.com/ com/, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Rule 3317(b) (Compliance with Data Collection Requirements) \3\ 
implements the data collection and Web site publication requirements of 
the Plan.\4\ Commentary .08 to Rule 3317 provides, among other things, 
that the requirement that the Exchange make certain data publicly 
available on the Exchange Web site pursuant to Appendix B and C to the 
Plan shall commence at the beginning of the Pilot Period,\5\ and that 
Phlx shall make data for the Pre-Pilot Period publicly available on the 
Exchange Web site pursuant to Appendix B and C to the Plan by February 
28, 2017.\6\
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    \3\ See Rule 3317(b). See also Securities Exchange Act Release 
No. 77458 (March 28, 2016), 81 FR 18919 (April 1, 2016) (SR-Phlx-
2016-39).
    \4\ The Participants filed the Plan to comply with an order 
issued by the Commission on June 24, 2014. See Letter from Brendon 
J. Weiss, Vice President, Intercontinental Exchange, Inc., to 
Secretary, Commission, dated August 25, 2014 (``SRO Tick Size Plan 
Proposal''). See Securities Exchange Act Release No 72460 (June 24, 
2014), 79 FR 36840 (June 30, 2014); see also Securities Exchange Act 
Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13, 2015).
    \5\ Unless otherwise defined herein, capitalized terms have the 
meaning ascribed to them in Rule 3317.
    \6\ On November 30, 2016, the SEC granted exemptive relief to 
the Participants to, among other things, delay the publication of 
Web site data pursuant to Appendices B and C to the Plan until 
February 28, 2017, and to delay the ongoing Web site publication by 
ninety days such that data would be published within 120 calendar 
days following the end of the month. See Letter from David S. 
Shillman, Associate Director, Division of Trading and Markets, 
Commission, to Marcia E. Asquith, Senior Vice President and 
Corporate Secretary, FINRA, dated November 30, 2016; see also 
Securities Exchange Act Release No. 79545 (December 14, 2016), 81 FR 
92916 (December 20, 2016) (SR-Phlx-2016-118).
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    Phlx is proposing amendments to Commentary .08 to Rule 3317 to 
delay the date by which Pre-Pilot and Pilot Appendix B data is to be 
made publicly available on the Exchange's Web site from February 28, 
2017, until April 28, 2017. Appendix C data for the Pre-Pilot Period 
through the month of January 2017 will be published on the Exchange's 
Web site on February 28, 2017, and, thereafter, on the original 30-day 
schedule.\7\ As some of the data reporting requirements set forth in 
Rule 3317 require members to report data to their Designated Examining 
Authority (``DEA''), which may not be Phlx, the Exchange is also 
proposing to add references in Commentary .08 to reflect the fact that 
the Exchange or the DEA may be publishing such data.
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    \7\ Since, under Rule 3317(b)(4), Phlx is not independently 
publishing Market Maker profitability data collected pursuant to 
Item I of Appendix C of the Plan, no corresponding change to the 
language of Rule 3317(b)(4) relating to the timing of the 
publication of Appendix C data for the Pilot Period is needed.
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    In the SRO Tick Size Plan Proposal, the Participants stated that 
the public data will be made available for free ``on a disaggregated 
basis by trading center'' on the Web sites of the Participants and the 
Designated Examining Authorities.\8\ However, market participants have 
expressed confidentiality concerns regarding this approach for over-
the-counter (``OTC'') data.\9\ Thus, Phlx is filing the instant 
proposed rule change to provide additional time to assess a means of 
addressing the confidentiality concerns raised in connection with the 
publication of Appendix B data related to OTC activity in furtherance 
of the objectives of the Plan.\10\ Pursuant to this amendment, Appendix 
B data publication will be delayed until April 28, 2017. The 
Participants anticipate filing additional proposed rule changes to 
address Appendix B data publication.
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    \8\ See Securities Exchange Act Release No. 73511 (November 3, 
2014), 79 FR 66423 (November 7, 2014) (Notice of Filing of Proposed 
National Market System Plan to Implement a Tick Size Pilot Program 
on a One-Year Pilot Basis, File No. 4-657) (``Tick Size Plan 
Proposal'').
    \9\ See letters from Adam C. Cooper, Senior Managing Director 
and Chief Legal Officer, Citadel Securities, to Brent J. Fields, 
Secretary, Commission, dated December 21, 2016 (``Citadel letter''); 
and William Hebert, Managing Director, Financial Information Forum, 
to Robert W. Errett, Deputy Secretary, Commission, dated December 
21, 2016 (``FIF letter'').
    \10\ In connection with its filing to implement a similar change 
in its rules, the Financial Industry Regulatory Authority, Inc. is 
also is submitting an exemptive request to the SEC on behalf of all 
Plan Participants requesting relief from the relevant requirements 
of the Plan.
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    Phlx has filed the proposed rule change for immediate 
effectiveness. The operative date of the proposed rule change will be 
the date of filing.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\12\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest. Phlx also believes that the proposal is consistent with 
Section 6(b)(8) of the Act,\13\ which requires that Exchange rules not 
impose any burden on competition that is not necessary or appropriate.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 15 U.S.C. 78f(b)(8).
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    The Plan is designed to allow the Commission, market participants, 
and the public to study and assess the impact of increment conventions 
on the liquidity and trading of the common stock of small-
capitalization companies. Phlx believes that this proposal is 
consistent with the Act because it is in furtherance of the objectives 
of Section VII(A) of the Plan in that it is designed to provide the 
Exchange with additional time to assess a means of addressing the 
confidentiality concerns raised in connection with the publication of 
Appendix B data, to comply with the Plan's requirements that the data 
made publicly available will not identify the trading center that 
generated the data.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change 
implements the provisions of the Plan.

[[Page 14240]]

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) of the Act \14\ and Rule 19b-
4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of the filing. 
However, pursuant to Rule 19b-4(f)(6)(iii), the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has filed 
the proposed rule change for immediate effectiveness and has requested 
that the Commission waive the requirement that the proposed rule change 
not become operative for 30 days after the date of the filing so that 
it may become operative on February 28, 2017.
    The Exchange notes that the proposed rule change is intended to 
address confidentiality concerns raised in connection with the 
publication of OTC Appendix B data by permitting the Exchange to delay 
Web site publication of its Appendix B data from February 28, 2017 to 
April 28, 2017.\16\ The Exchange notes that the delay would provide 
additional time to assess a means of addressing the confidentiality 
concerns. The Exchange notes that it expects Participants to file 
proposed rule changes related to publishing Appendix B data.
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    \16\ See supra note 9. The Commission notes that FINRA has 
submitted a proposed rule change to delay the publication of OTC 
Appendix B data. See SR-FINRA-2017-005.
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it will allow the Exchange to delay publication of its Appendix 
B data until April 28, 2017. As noted above, commenters continue to 
raise concerns about the publication of OTC Appendix B data.\17\ 
Delaying publication of Exchange's Appendix B data \18\ will prevent 
the publication of partial (i.e., Exchange-only) Appendix B data 
required under the Plan. Therefore, the Commission hereby waives the 
30-day operative delay and designates the proposed rule change to be 
operative on February 28, 2017.\19\
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    \17\ The Commission notes that FINRA has filed a proposed rule 
change that is intended to mitigate confidentiality concerns raised 
by commenters regarding the publication of OTC Appendix B data. See 
SR-FINRA-2017-006.
    \18\ The Commission notes that other Participants have proposed 
to delay the publication of their Appendix B data until April 28, 
2017. See SR-BatsBYX-2017-05; SR-BatsBZX-2017-15; SR-BatsEDGA-2017-
05; SR-BatsEDGX-2017-13; SR-BX-2017-016; SR-CHX-2017-05; SR-FINRA-
2017-005; SR-IEX-2017-07; SR-NASDAQ-2017-024; SR-NYSE-2017-10; SR-
NYSEArca-2017-19; SR-NYSEMKT-2017-11.
    \19\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-Phlx-2017-22 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-2017-22. 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-2017-22, and should be 
submitted on or before April 7, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-05341 Filed 3-16-17; 8:45 am]
BILLING CODE 8011-01-P