[Federal Register Volume 83, Number 245 (Friday, December 21, 2018)]
[Notices]
[Pages 65773-65774]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27617]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84835; File No. SR-Phlx-2018-80]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the Pilot 
Period for the Exchange's Nonstandard Expirations Pilot Program

December 17, 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 December 11, 2018 Nasdaq PHLX LLC (``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 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 the pilot period for the Exchange's 
nonstandard expirations pilot program, currently set to expire on 
December 15, 2018.
    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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On December 15, 2017 the Commission approved a proposed rule change 
for the listing and trading on the Exchange, on a twelve month pilot 
basis, of p.m.-settled options on broad-based indexes with nonstandard 
expirations dates.\3\ The pilot program permits both Weekly Expirations 
and End of Month (``EOM'') expirations similar to those of the a.m.-
settled broad-based index options, except that the exercise settlement 
value of the options subject to the pilot are based on the index value 
derived from the closing prices of component stocks.
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    \3\ See Securities Exchange Act Release No. 82341 (December 15, 
2018), 82 FR 60651 (December 21, 2017) (approving SR-Phlx-2017-79).
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    Pursuant to subsection (b)(vii)(1), Weekly Expirations, to Rule 
1101A, the Exchange may open for trading Weekly Expirations on any 
broad-based index eligible for standard options trading to expire on 
any Monday, Wednesday, or Friday (other than the third Friday-of-the-
month or days that coincide with an EOM expiration). Weekly Expirations 
are be subject to all provisions of Exchange Rule 1101A and are treated 
the same as options on the same underlying index that expire on the 
third Friday of the expiration month. Unlike the standard monthly 
options, however, Weekly Expirations are p.m.-settled.
    Similarly, pursuant to subsection (b)(vii)(2), Weekly Expirations, 
to Rule 1101A, the Exchange may open for trading EOMs on any broad-
based index eligible for standard options trading to expire on the last 
trading day of the month. EOMs are subject to all provisions of Rule 
1101A and treated the same as options on the same underlying index that 
expire on the third Friday of the expiration month. However, the EOMs 
are p.m.-settled.
    The Exchange now proposes to amend Exchange Rule 1101A(b)(vii)(3) 
so that the duration of the pilot program for these nonstandard 
expirations will be through May 6, 2019. The Exchange continues to have 
sufficient systems capacity to handle p.m.-settled options on broad-
based indexes with nonstandard expirations dates and has not 
encountered any issues or adverse market effects as a result of listing 
them. Additionally, there is continued investor interest in these 
products. The Exchange will make public on its website any data and 
analysis it submits

[[Page 65774]]

to the Commission under the pilot program.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\4\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\5\ 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. 
The Exchange believes the proposed rule change will protect investors 
and the public interest by providing the Exchange, the Commission and 
investors the benefit of additional time to analyze nonstandard 
expiration options. By extending the pilot program, investors may 
continue to benefit from a wider array of investment opportunities. 
Additionally, both the Exchange and the Commission may continue to 
monitor the potential for adverse market effects of p.m.-settlement on 
the market, including the underlying cash equities market, at the 
expiration of these options.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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. Options with nonstandard 
expirations would be available for trading to all market participants.

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 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 if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b-4(f)(6) 
thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 under Rule 19b-4(f)(6) \8\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\9\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange states that 
such waiver will allow investors to continue to trade nonstandard 
expiration options listed by the Exchange as part of the pilot program 
on an uninterrupted basis. The Commission believes that waiving the 30-
day operative delay is consistent with the protection of investors and 
the public interest as it will allow the pilot program to continue 
uninterrupted, thereby avoiding investor confusion that could result 
from a temporary interruption in the pilot program. For this reason, 
the Commission designates the proposed rule change to be operative upon 
filing.\10\
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    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 17 CFR 240.19b-4(f)(6)(iii).
    \10\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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-2018-80 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-2018-80. 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 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-2018-80, and should be submitted on 
or before January 11, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27617 Filed 12-20-18; 8:45 am]
 BILLING CODE 8011-01-P