[Federal Register Volume 84, Number 208 (Monday, October 28, 2019)]
[Notices]
[Pages 57788-57789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23426]
[[Page 57788]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87381; File No. SR-Phlx-2019-43]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Extend the
Pilot Period for the Exchange's Nonstandard Expirations Pilot Program
October 22, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on October 11, 2019, Nasdaq PHLX LLC (``Phlx'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend the pilot period for the Exchange's
nonstandard expirations pilot program, currently set to expire on
November 4, 2019.
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
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.\5\ 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. This
pilot was extended through May 6, 2019 \6\ and then subsequently
extended through November 4, 2019.\7\
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\5\ See Securities Exchange Act Release No. 82341 (December 15,
2017), 82 FR 60651 (December 21, 2017) (approving SR-Phlx-2017-79)
(Order Approving a Proposed Rule Change, as Modified by Amendment
No. 1 and Granting Accelerated Approval of Amendment No. 2, of a
Proposed Rule Change To Establish a Nonstandard Expirations Pilot
Program).
\6\ See Securities Exchange Act Release No. 84835 (December 17,
2018), 83 FR 65773 (December 21, 2018) (SR-Phlx-2018-80) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
the Pilot Period for the Exchange's Nonstandard Expirations Pilot
Program).
\7\ See Securities Exchange Act Release No. 85669 (April 17,
2019), 84 FR 16913 (April 23, 2019) (SR-Phlx-2019-13) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
the Pilot Period for the Exchange's Nonstandard Expirations Pilot
Program).
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Pursuant to Phlx Rule 1101A(b)(5)(A) 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 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 Rule 1101A(b)(5)(B) the Exchange may open
for trading EOM expirations on any broad-based index eligible for
standard options trading to expire on the last trading day of the
month. EOM expirations 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 EOM expirations
are p.m.-settled.
The Exchange now proposes to amend Exchange Rule 1101A(b)(5)(C) so
that the duration of the pilot program for these nonstandard
expirations will be through May 4, 2020. 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 continue to make public on its website any
data and analysis it submits 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,\8\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\9\ 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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\8\ 15 U.S.C. 78f(b).
\9\ 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.
[[Page 57789]]
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, it has become effective pursuant to Section
19(b)(3)(A) of the Act \10\ and subparagraph (f)(6) of Rule 19b-4
thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule19b-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 \12\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \13\ 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 asked the Commission to waive the 30-day operative delay so that
investors may 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. Accordingly, the Commission hereby
waives the operative delay and designates the proposed rule change
operative upon filing.\14\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ 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-2019-43 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-2019-43. 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-2019-43 and should be submitted on
or before November 18, 2019.
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\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-23426 Filed 10-25-19; 8:45 am]
BILLING CODE 8011-01-P