[Federal Register Volume 83, Number 249 (Monday, December 31, 2018)]
[Notices]
[Pages 67760-67762]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28386]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84938; File No. SR-Phlx-2018-82]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend General 8
December 21, 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 19, 2018, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule
[[Page 67761]]
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.
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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 delete the Exchange's existing rules on
colocation, connectivity, and direct connectivity (the ``Existing
Connectivity Rules''), under General 8, and incorporate by reference
into General 8 The Nasdaq Stock Market LLC's (``Nasdaq's'') rules on
colocation, connectivity, and direct connectivity, which are located in
General 8 of the Nasdaq rulebook shell structure.\3\
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\3\ Recently, the six exchanges affiliated with Nasdaq, Inc.
(The Nasdaq Stock Market LLC, Nasdaq BX, Inc., Nasdaq PHLX LLC,
Nasdaq ISE, LLC, Nasdaq GEMX, LLC, and Nasdaq MRX, LLC
(collectively, the ``Affiliated Exchanges'')) added shell structures
to their respective rulebooks with the purpose of improving
efficiency and readability and to align their respective rules.
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The text of the proposed rule change is available on the Exchange's
website at http://nasdaqbx.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 proposes to delete its Existing Connectivity Rules,
currently under General 8, and incorporate by reference the
corresponding Nasdaq rules, at General 8 of Nasdaq's rulebook. The
Exchange proposes to remove the current rule text from General 8 and
replace it with the following text:
General 8 Connectivity
The rules contained in The Nasdaq Stock Market LLC General 8, as
such rules may be in effect from time to time (the ``General 8
Rules''), are hereby incorporated by reference into this Nasdaq PHLX
General 8, and are thus Nasdaq PHLX Rules and thereby applicable to
Nasdaq PHLX Members. Nasdaq PHLX Members shall comply with the
General 8 Rules as though such rules were fully set forth herein.
All defined terms, including any variations thereof, contained in
the General 8 Rules shall be read to refer to the Nasdaq PHLX
related meaning of such term. Solely by way of example, and not in
limitation or in exhaustion: the defined term ``Exchange'' in the
General 8 Rules shall be read to refer to the Nasdaq PHLX Exchange;
the defined term ``Rule'' in the General 8 Rules shall be read to
refer to the Nasdaq PHLX Rule.\4\
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\4\ The Exchange shall include a hyperlink to Nasdaq's General 8
for ease of reference.
Over the past year, the Affiliated Exchanges each took steps to
harmonize their respective rules on colocation, connectivity, and
direct connectivity, first by relocating them to General 8 of their
respective rulebooks, and then by eliminating substantive differences
among the rules. The Affiliated Exchanges harmonized these rules
because the Affiliated Exchanges offer colocation, connectivity, and
direct connectivity services and related products to their customers on
a shared basis with one another,\5\ and to do so, the rules and fees
governing such shared products and services should be the same for all
of the Affiliated Exchanges.
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\5\ The offering of products and services on a shared basis
means that a customer purchases colocation, connectivity, and direct
connectivity products and services once to gain access to any or all
of the Affiliated Exchanges to which the customer is otherwise
entitled to receive access under the respective rules of the
Affiliated Exchanges. In other words, the Affiliated Exchanges only
charge customers once for these shared products and services, even
to the extent that a customer uses the products and services to
connect to more than one of the Affiliated Exchanges. Likewise, the
rules provide for connectivity to third-party services and market
data feeds on a shared basis, meaning that a firm need only purchase
a subscription to these services once, regardless of whether the
firm is a member or member organization, as applicable, of multiple
Affiliated Exchanges.
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Because the text of the Exchange's General 8 is already
substantively identical \6\ to Nasdaq's General 8, the proposal will
not effect any substantive changes to the Exchange's General 8.
Instead, the proposal will merely adopt language indicating that the
Exchange is incorporating by reference Nasdaq's General 8 and it will
make conforming cross-reference changes.
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\6\ A small number of minor differences exist among the Section
8s of the Affiliated Exchanges. However, these differences, such as
the use of the word ``the'' before the phrase ``Nasdaq Data Center''
in one version of the Rulebook and not in the others, are technical
and do result in substantive variations in the meanings of the
Rulebooks.
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This proposal is the penultimate step in the harmonization process.
The Exchange plans to file with the Commission a request to exempt it
from Section 19(b) of the Act with respect to General 8, as amended
herein, so that the Exchange will not need to file a proposed rule
change whenever Nasdaq amends its General 8 rules. The Exchange
proposes that this rule change become operative at such time as it
receives approval for this exemption from the Commission, pursuant to
its authority under Section 36 of the Act \7\ and Rule 0-12
thereunder.\8\
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\7\ 15 U.S.C. 78mm.
\8\ See 17 CFR 240.0-12; Exchange Act Release No. 39624
(February 5, 1998), 63 FR 8101 (February 18, 1998).
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The Exchange's General 8 and Nasdaq's General 8 are regulatory in
nature.\9\ Should any rules which impact trading behavior be added to
Nasdaq General 8 in the future, those rules shall not become subject to
the incorporation by reference and shall be placed elsewhere within the
Exchange's Rulebook. The Exchange notes that as a condition of any
exemption approved by the Commission, the Exchange agrees to provide
written notice to its members whenever Nasdaq proposes a change to its
General 8 Rules.\10\ Such notice will alert Exchange members to the
proposed Nasdaq rule change and give them an opportunity to comment on
the proposal. The Exchange will similarly inform its members in writing
when the Commission approves any such proposed change.
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\9\ The General 8 Rules are categories of rules that are not
trading rules. See 17 CFR 200.30-3(a)(76) (contemplating such
requests). In addition, several other SROs incorporate by reference
certain regulatory rules of another SRO and have received from the
Commission similar exemptions from Section 19(b) of the Exchange
Act. See e.g., Securities Exchange Act Release Nos. 57478 (March 12,
2008), 73 FR 14521 (March 18, 2008), 53128 (January 13, 2006), 71 FR
3550 (January 23, 2006); 49260 (February 17, 2004), 69 FR 8500
(February 24, 2004).
\10\ The Exchange will provide such notice via a posting on the
same website location where it posts its own rule filings pursuant
to Rule 19b-4 within the timeframe required by such Rule. The
website posting will include a link to the location on the Nasdaq
website where the applicable proposed rule change is posted.
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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
[[Page 67762]]
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that harmonizing the Existing Connectivity
Rules with the colocation, connectivity, and direct connectivity rules
of Nasdaq will improve efficiency and reduce the burden on firms as
they only will need to be familiar with a single set of rules going
forward governing colocation, connectivity, and direct connectivity.
Because the text of the Existing Connectivity Rules and Nasdaq General
8 are already the same, the proposed change will have no substantive
impact on firms that colocate with or connect to the Exchange.
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 does
not make any substantive change to Exchange General 8 and will not
impact competition.
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)(iii) of the Act \13\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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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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-2018-82 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-2018-82. 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; 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-2018-82 and should be
submitted on or before January 22, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-28386 Filed 12-28-18; 8:45 am]
BILLING CODE 8011-01-P