[Federal Register Volume 83, Number 213 (Friday, November 2, 2018)]
[Notices]
[Pages 55210-55214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-23963]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84495; File No. SR-Phlx-2018-66]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Relocate the
Pricing Schedule Rules
October 29, 2018.
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 October 18, 2018, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``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 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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[[Page 55211]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to (a) relocate rules from the Phlx's Pricing
Schedule (``Pricing Schedule'') and current Rule 909 to the Exchange's
rulebook's (``Rulebook'') shell structure,\3\ (b) eliminate the Pricing
Schedule's Table of Contents, obsolete text, and reserved rules; and
(c) make conforming cross-reference changes throughout the Rulebook.
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\3\ In 2017, the Exchange added a shell structure to its
Rulebook with the purpose of improving efficiency and readability
and to align its rules closer to those of its five sister exchanges,
The Nasdaq Stock Market LLC; Nasdaq BX, Inc.; Nasdaq GEMX, LLC;
Nasdaq ISE, LLC; and Nasdaq MRX, LLC (``Affiliated Exchanges''). See
Securities Exchange Act Release No. 82169 (November 29, 2017), 82 FR
57508 (December 5, 2017) (SR-Phlx-2017-97).
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The text of the proposed rule change is available on the Exchange's
website at http://nasdaqphlx.cchwallstreet.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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange, as part of its continued effort to promote efficiency
and the conformity of its processes with those of the Affiliated
Exchanges, and the goal of harmonizing and uniformizing its rules,
proposes to relocate the Pricing Schedule rules and Rule 909 to the
Exchange's shell structure. Specifically, the Exchange will relocate
the Pricing Schedule rules described below respectively into the Equity
7 and Options 7 sections of the shell structure (both named ``Pricing
Schedule'').
In addition, the Exchange proposes to delete the current Pricing
Schedule's Table of Contents and the obsolete term ``Phlx XL II'' at
current Chapter VI., A. Moreover, the Exchange proposes not to relocate
current Chapters X, XI, and XII, since these are reserved rules that do
not contain any rule text. Finally, the Exchange proposes to make
conforming cross-reference changes throughout the Rulebook.
(a) Table of Contents
The Exchange proposes to eliminate the existing Table of Contents
in the Phlx Pricing Schedule. The Table of Contents is unnecessary. The
website where the Phlx rules are listed \4\ contains hyperlinks and a
skeleton of the available rules within the site and enables market
participants to view all rules in that section.
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\4\ Phlx rules are located at: http://nasdaqphlx.cchwallstreet.com.
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(b) Relocation of Equity Rules
The Exchange proposes to adopt, under Equity 7, Section 1
(``General Provisions'') a modified version of the current introductory
text in the Pricing Schedule. Proposed Equity 7, Section 1(a) will
refer to the calculation of fees in the Exchange, with a specific
reference to the exception concerning disputes of Nasdaq PSX fees and
proprietary data feed fees. The Exchange notes that the relocated text
will not include the reference to disputes concerning fees for co-
location services. The co-location services rule was recently moved to
the General 8 section of the Rulebook \5\ and the rules of the proposed
Pricing Schedule will not apply to co-location services.\6\
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\5\ See Securities Exchange Act Release No. 83465 (June 19,
2018), 83 FR 29594 (June 25, 2018) (SR-Phlx-2018-46).
\6\ See proposed Equity 7, Section 1(a): ``Policy for amending
billing information: Corrections submitted after trade date and
prior to the issuance of an invoice by the exchange must be
submitted to the Exchange in writing and must be accompanied by
supporting documentation. Only members may submit trade corrections.
All billing disputes must be submitted to the Exchange in
writing and must be accompanied by supporting documentation. All
disputes must be submitted no later than sixty (60) days after
receipt of a billing invoice, except for disputes concerning Nasdaq
PSX fees and proprietary data feed fees. The Exchange calculates
fees on a trade date basis. Only members may submit billing
disputes.''
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The Exchange proposes also to relocate to Equity 7, Section 1(b)
the portion of the Pricing's Schedule's Preface that applies only to
equities. This will include the paragraph that reads ``For PSX
Equities.'' The relocated text has no application to transactions in
options and, therefore, will not be included in Options 7, Section 1(b)
described below.
The Exchange proposes also to relocate and renumber Phlx Rule 909
under both Equity 7, Section 2 and Options 7, Section 2 (both named
``Collection of Exchange Fees and Other Claims''). Rule 909 permits
Phlx to collect undisputed or final fees, fines, charges and/or other
monetary sanctions or other monies due and owing to the Exchange or
other charges related to Rule 924.\7\ The Exchange believes that,
unlike other rules in the 900 Rules Series (``Membership''), which
generally refer to the powers of the Board of Directors and the
authority it delegates to Senior Management of the Exchange, the direct
debit process established in Rule 909 will be better situated among the
relocated rules in the Equity 7 and Options 7 titles.
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\7\ See Securities Exchange Act Release No. 61405 (January 21,
2010), 75 FR 4888 (January 29, 2010) (SR-Phlx-2009-101) (Order
Approving a Proposed Rule Change Relating to Collection of Exchange
Fees).
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Next, the Exchange proposes to relocate and renumber current
Pricing Schedule's Chapter VIII (``NASDAQ PSX FEES'') as Equity 7,
Section 3 in the shell structure. The text of this rule will not be
substantively changed other than to update the capitalization of its
title.
Today, Chapter VI of the Phlx Pricing Schedule consists of rule
text applicable to both equities and options. Specifically, references
to floor pricing apply to the options market, as only that market has a
trading floor. In Chapter VI, A. (``Permit and Registration Fees''),
the paragraph that describes PSX Only Permit Fees describes an equity
fee. The ``Application Fee,'' ``Application Fee for Lapsed
Applications,'' ``Transfer of Affiliation Fee,'' ``Account Fee,''
``Initiation Fee'' and ``Permit Fees'' apply to both equities and
options. Finally, the ``Inactive Nominee Fee'' and the ``Clerk Fee''
are floor fees and therefore apply to options only.\8\
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\8\ As explained later, the Exchange is proposing to adopt a
parallel rule under the Options 7, Section 8 (``Membership Fees''),
with fees applicable to both options and equities and relocate only
the subsections from Chapter VI that apply to options.
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The Exchange proposes to adopt Equity 7, Section 4 (``Membership
Fees''), A. (``Permit and Registration Fees'') by adapting text from
current Chapter VI, A. of the Pricing Schedule. Specifically, as
previously noted, Equity 7, Section 4, A. will consist of the following
fees: ``Application Fee,'' ``Application Fee for Lapsed Applications,''
``Transfer of Affiliation Fee,'' ``Account Fee,'' ``Initiation Fee,''
and ``Permit Fees.'' Proposed Equity 7, Section 4 will also include
text from the current rule which is only applicable to PSX
transactions; thus, the Exchange proposes to relocate the text under
the subheading ``PSX Only Permit Fees.''
Additionally, the Exchange will relocate the callout (``*'') and
respective
[[Page 55212]]
footnote that accompany the ``Application Fee,'' ``Application Fee for
Lapsed Applications,'' ``Account Fee,'' and ``Initiation Fee''
subheadings; this is because the footnote is exclusively applicable to
those who only apply for PSX membership, and therefore should be moved
to the Equity 7 title.
The Exchange notes that it will not relocate the obsolete term
``Phlx XL II'' used in the footnote described above; the term is a
legacy reference and its removal will not affect the rights of
prospective or existing members of the Exchange.
The Exchange will thus relocate and renumber the above-referenced
rules as follows:
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Equity 7--Pricing schedule (Proposed) Schedule of fees (Current)
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Section 1. General Provisions--(a) Pricing Schedule's Introduction
Section 1. General Provisions--(b) PREFACE
Section 2. Collection of Exchange Fees and Other Claims Rule 909. Collection of Exchange Fees and Other Claims
Section 3. Nasdaq PSX Fees VIII. Nasdaq PSX Fees
Section 4. Membership Fees VI. Membership Fees
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(c) Relocation of Options Rules
The Exchange proposes to adopt, under Options 7, Section 1(a), a
modified version of the current introductory section in the Pricing
Schedule. Proposed Options 7, Section 1(a) will refer to the
calculation of fees in the Exchange, with a specific reference to the
exception concerning disputes of proprietary data fees, which applies
to transactions in options. The Exchange believes that this change will
improve the readability of the rules relocated under the Options 7
title.
The Exchange also proposes to adopt under Options 7, Section 1(b)
the text from the Pricing Schedule's Preface that applies only to
transactions in options. Specifically, proposed Options 7, Section 1(b)
will contain the text that opens with ``For Phlx Options''; the
definitions of ``Customer''; ``Specialist''; ``ROT, SQT and RSQT'';
``Market Maker''; ``Registered Option Trader''; ``Streaming Quote
Trader''; ``Remote Streaming Quote Trader''; ``Firm'';
``Professional''; ``Broker-Dealer''; ``Joint Back Office''; ``Common
Ownership''; and ``Non-Customer''; and the rules that apply to options
transactions fees or rebates described under the subsection ``For
Purposes of Common Ownership Aggregation of Activity of Affiliated
Members and Member Organizations,'' including the terms ``Appointed
MM,'' ``Appointed OFP,'' and ``Affiliated Entity.''
The Exchange additionally proposes that Subsections A and B
(respectively, ``Mini Options Fees'' and ``Customer Rebate Program'')
in the Pricing Schedule's Preface remain unchanged and be relocated to
proposed Options 7, Section 1(b).
As previously explained, the Exchange proposes also to adopt a
rule, under Options 7, Section 2, for the collection of undisputed fees
or other monies identical to current Phlx Rule 909 (``Collection of
Exchange Fees and Other Claims''), which will parallel the rule under
Equity 7, Section 2.
The Exchange proposes also to relocate, renumber, and add the word
``Section'' to each of the following chapters in the Pricing Schedule:
I (``Rebates and Fees for Adding and Removing Liquidity in SPY''); II
(``Multiply Listed Options Fees''), III (``Singly Listed Options''); IV
(``Other Transaction Fees''); V (``Routing Fees''); VII (``Other Member
Fees''); IX (``Proprietary Data Feed Fees''); and XIII (``Access and
Redistribution Fee'').
With respect to the text in current Chapter VI of the Pricing
Schedule, as previously explained, the Exchange proposes to adopt
Options 7, Section 8, A. (``Permit and Registration Fees'') which will
include text applicable to both equities and options (the ``Application
Fee,'' ``Application Fee for Lapsed Applications,'' ``Transfer of
Affiliation Fee,'' ``Account Fee,'' ``Initiation Fee,'' and ``Permit
Fees.'').
The Exchange proposes also to remove the callout (``*'') from the
Application, Account, and Initiation fees' subheadings since such
footnote is applicable to those who only apply for membership with PSX.
Moreover, the Exchange proposes to include under Options 7, Section
8, A. portions of text from Chapter VI which apply only to transactions
in options (namely, ``Phlx Permit Fees,'' ``Inactive Nominee Fee,'' and
``Clerk Fee''). The Exchange additionally proposes to relocate to
Options 7, Section 8, subsections B. (``Streaming Quote Trader Fees''),
C. (``Remote Market Maker Organization Fee'') and D. (``Remote
Specialist Fee'') from current Chapter VI.
The proposed relocation of options rules can be summarized as
follows:
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Options 7--Pricing schedule (Proposed) Schedule of fees (Current)
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Section 1. General Provisions--(a) Pricing Schedule's Introduction
Section 1. General Provisions--(b) PREFACE
Section 2. Collection of Exchange Fees and Other Claims A. Mini Option Fees
Section 3. Rebates and Fees for Adding and Removing B. Customer Rebate Program
Liquidity in SPY Rule 909. Collection of Exchange Fees and Other Claims
I. Rebates and Fees for Adding and Removing Liquidity
in SPY
Section 4. Multiply Listed Options Fees II. Multiply Listed Options Fees
Section 5. Singly Listed Options III. Singly Listed Options
Section 6. Other Transaction Fees IV. Other Transaction Fees
Section 7. Routing Fees V. Routing Fees
Section 8. Membership Fees VI. Membership Fees
Section 9. Other Member Fees VII. Other Member Fees
Section 10. Proprietary Data Feed Fees IX. Proprietary Data Feed Fees
Section 11. Access and Redistribution Fee XIII. Access and Redistribution Fee
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[[Page 55213]]
The Exchange believes that the changes previously explained are
non-substantive and that they will facilitate the use of the Rulebook
by Members \9\ of the Exchange, including those who are members of
other Affiliated Exchanges, and other market participants.
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\9\ Exchange Rule 100(a)(32).
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(d) Pricing Schedule Rules To Be Removed
The Exchange proposes Pricing Schedule's Chapters X, XI, and XII
not to be relocated to the shell structure and that they be removed
from the Rulebook. The aforementioned sections are currently marked as
``Reserved'' and their relocation to the shell structure is unnecessary
since the Exchange may amend and create new rules if needed.
(e) Cross-Reference Updates
In connection with the changes described above, the Exchange
proposes to update all cross-references in the Rulebook that direct the
reader to the current location of the Pricing Schedule rules and/or any
of their subsections.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\11\ 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, by promoting efficiency and the structural conformity of the
Exchange's processes with those of the Affiliated Exchanges and to make
the Exchange's Rulebook easier to read and more accessible to its
Members and market participants. The Exchange believes that the
relocation and renumbering of rules in the Equity 7 and Options 7
Pricing Schedules, related cross-reference updates, and the deletion of
the Table of Contents, the obsolete term ``Phlx XL II,'' and unused
Pricing Schedule chapters are of a non-substantive nature.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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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 changes do not
impose a burden on competition because, as previously stated, they (i)
are of a non-substantive nature, (ii) are intended to harmonize the
structure of the Exchange's rules with those of its Affiliated
Exchanges, and (iii) are intended to organize the Rulebook in a way
that it will ease the Members' and market participants' navigation and
reading of the Equities' and Options' Pricing Schedules.
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 \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \14\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \15\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay so
that the proposed rule change may become operative upon filing. Waiver
of the operative delay would allow the Exchange to promptly relocate
the Pricing Schedule rules, which the Exchange believes will improve
the organization and readability of the Exchange's Rulebook. Therefore,
the Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
Accordingly, the Commission hereby waives the operative delay and
designates the proposed rule change operative upon filing.\16\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ For purposes only of waiving the 30-day operative delay,
the Commission also 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 change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-Phlx-2018-66 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-2018-66. 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 (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official
[[Page 55214]]
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-2018-66, and should be submitted on or before November 23, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-23963 Filed 11-1-18; 8:45 am]
BILLING CODE 8011-01-P