[Federal Register Volume 85, Number 79 (Thursday, April 23, 2020)]
[Notices]
[Pages 22762-22767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08591]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88676; File No. SR-Phlx-2020-22]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 6,
Section 5, Titled Transfer of Positions
April 17, 2020.
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 April 16, 2020, 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 22763]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Options 6, Section 5, titled
``Transfer of Positions.'' The Exchange also proposes to update certain
citations.
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 proposes to amend Options 6, Section 5, titled
``Transfer of Positions.'' The Exchange also proposes to update certain
citations. This proposed rule would continue to permit market
participants to move positions from one account to another without
first exposure of the transaction on the Phlx. The proposed rule change
is similar to Cboe Rule 6.7.\3\
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\3\ See Securities and Exchange Act Release No. 88424 (March 19,
2020), 85 FR 16981 (March 25, 2020) (SR-Cboe-2019-035) (Notice of
Filing of Amendment Nos. 1 and 2 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1
and 2, Regarding Off-Floor Position Transfers).
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Options 6, Section 5 specifies the circumstances under which a
member or member organization may effect transfers of positions to
permit market participants to move positions from one account to
another and to permit transfers upon the occurrence of significant,
non-recurring events. The proposed rule change is similar to Cboe Rule
6.7.
Current Phlx Options 6, Section 5 lists the circumstances in which
a member or member organization may transfer positions off the floor in
any class of options listed on its books. The circumstances currently
listed include: (1) The dissolution of a joint account in which the
remaining member or member organization assumes the positions of the
joint account; (2) the dissolution of a corporation or partnership in
which a former nominee of that corporation or partnership assumes the
positions; (3) positions transferred as part of a member or member
organization's capital contribution to a new joint account,
partnership, or corporation; (4) the donation of positions to a not-
for-profit corporation; (5) the transfer of positions to a minor under
the Uniform Gifts to Minors Act; (6) a merger or acquisition resulting
in a continuity of ownership or management; or (7) consolidation of
accounts within a member or member organization.
The Exchange proposes to amend Options 6, Section 5(a) which
currently provides, ``A member or member organization may transfer
positions off the floor in any class of options listed on its books if
the transfer involves one or more of the following events. . . .'' The
Exchange proposes to instead state, ``Existing positions in options
listed on the Exchange of a member or member organization or non-member
or non-member organization that are to be transferred on, from, or to
the books of a Clearing Member may be transferred off the Exchange if
the transfer involves on or more of the following events. . . .'' The
proposed rule text intends to clarify that Options 6, Section 5 does
not apply to products other than options listed on the Exchange,
consistent with the Exchange's other trading rules.\4\ This new rule
text also clarifies that a member or member organization must be on at
least one side of the transfer. The proposed rule change also clarifies
that transferred positions must be on, from, or to the books of a
Clearing Member. This language is consistent with how transfers are
currently effected. The proposed rule change also clarifies that
existing positions of a member or member organization or a non-member
or non-member organization may be subject to a transfer, except under
specified circumstances in which a transfer may only be effected for
positions of a member or member organization.\5\
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\4\ Proposed paragraph (h) also clarifies that the transfer
procedure only applies to positions in options listed on the
Exchange, and that transfers of non-Exchange-listed options and
other financial instruments are not governed by Options 6, Section
5.
\5\ See proposed subparagraphs (a)(5) and (7).
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The Exchange notes transfers of positions in Exchange-listed
options may also be subject to applicable laws, rules, and regulations,
including rules of other self-regulatory organizations.\6\ Except as
explicitly provided in the proposed rule text, the proposed rule change
is not intended to exempt position transfers from any other applicable
rules or regulations, and proposed paragraph (g) makes this clear in
the rule.
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\6\ See proposed paragraph (h).
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The proposed rule change adds four events where an transfer would
be permitted to occur.
Proposed subparagraph (a)(1) permits an transfer to occur
if it, pursuant to Options 9, Section 1 is an adjustment or transfer in
connection with the correction of a bona fide error in the recording of
a transaction or the transferring of a position to another account,
provided that the original trade documentation confirms the error.
Proposed subparagraph (a)(2) permits an transfer if it is
a transfer of positions from one account to another account where there
is no change in ownership involved (i.e., the accounts are for the same
Person),\7\ provided the accounts are not in separate aggregation units
or otherwise subject to information barrier or account segregation
requirements. The proposed rule change provides market participants
with flexibility to maintain positions in accounts used for the same
trading purpose in a manner consistent with their businesses. Such
transfers are not intended to be transactions among different market
participants, as there would be no change in ownership permitted under
the provision, and would also not permit transfers among different
trading units for which accounts are otherwise required to be
maintained separately.\8\
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\7\ The Exchange proposes to define the term ``Person'' within
this proposed Rule 1058 as ``For purposes of this rule, the term
``Person'' shall be defined as an individual, partnership (general
or limited), joint stock company, corporation, limited liability
company, trust or unincorporated organization, or any governmental
entity or agency or political subdivision thereof.'' This definition
is identical to Cboe Rule 1.1.
\8\ Various rules (for example, Regulation SHO in certain
circumstances) require accounts to be maintained separately, and the
proposed rule change is consistent with those rules.
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Proposed subparagraph (a)(3) similarly permits an transfer
if it is a consolidation of accounts \9\ where no change in ownership
is involved.
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\9\ This refers to the consolidation of entire accounts (e.g.,
combining two separate accounts (including the positions in each
account into a single account)).
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Proposed subparagraph (a)(10) permits an transfer if it is
a transfer of positions through operation of law from death,
bankruptcy, or otherwise. This provision is consistent with applicable
[[Page 22764]]
laws, rules, and regulations that legally require transfers in certain
circumstances. This proposed rule change is consistent with the
purposes of other circumstances in the current rule, such as the
transfer of positions to a minor or dissolution of a corporation.
The Exchange believes these proposed events have similar purposes
as those in current Options 6, Section 5, which is to permit market
participants to move positions from one account to another and to
permit transfers upon the occurrence of significant, non-recurring
events.\10\ As noted above, the proposed rule change is consistent with
current Exchange guidance or rules of other self-regulatory
organizations.
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\10\ See proposed paragraph (g).
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The proposed rule change renumbers current subparagraphs (a)(1)
through (5) to be proposed subparagraphs (a)(5) through (9) and moves
current subparagraph (a)(6) to proposed subparagraph (a)(3), with non-
substantive changes.
Proposed Options 6, Section (b) codifies Exchange guidance
regarding certain restrictions on permissible transfers related to
netting of open positions and to margin and haircut treatment.\11\ No
position may net against another position (``netting''), and no
position transfer may result in preferential margin or haircut
treatment.\12\ Netting occurs when long positions and short positions
in the same series ``offset'' against each other, leaving no or a
reduced position. For example, if a member or member organization
wanted to transfer 100 long calls to another account that contained
short calls of the same options series as well as other positions, even
if the transfer is permitted pursuant to one of the 10 permissible
events listed in the proposed Rule, the member or member organization
could not transfer the offsetting series, as they would net against
each other and close the positions.\13\
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\11\ See Phlx Options 6, Section 5(c).
\12\ For example, positions may not transfer from a customer,
joint back office, or firm account to a Market Maker account.
However, positions may transfer from a Market Maker account to a
customer, joint back office, or firm account (assuming no netting of
positions occurs).
\13\ See Cboe Rule 6.7(b).
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However, netting is permitted for transfers on behalf of a Market
Maker account for transactions in multiply listed options series on
different options exchanges, but only if the Market Maker nominees are
trading for the same member or member organization, and the options
transactions on the different options exchanges clear into separate
exchange-specific accounts because they cannot easily clear into the
same Market Maker account at the Clearing Corporation. In such
instances, all Market Maker positions in the exchange-specific accounts
for the multiply listed class would be automatically transferred on
their trade date into one central Market Maker account (commonly
referred to as a ``universal account'') at the Clearing Corporation.
Positions cleared into a universal account would automatically net
against each other. Options exchanges permit different naming
conventions with respect to Market Maker account acronyms (for example,
lettering versus numbering and number of characters), which are used
for accounts at the Clearing Corporation. A Market Maker may have a
nominee with an appointment in class XYZ on Phlx, and have another
nominee with an appointment in class XYZ on ISE, but due to account
acronym naming conventions, those nominees may need to clear their
transactions into separate accounts (one for Phlx transactions and
another for ISE transactions) at the Clearing Corporation rather into a
universal account (in which account the positions may net). The
proposed rule change permits transfers from these separate exchange-
specific accounts into the Market Maker's universal account in this
circumstance to achieve this purpose.
Transfer Price
Currently Options 6, Section 5(c) provides, in part, that ``members
and member organizations must transfer positions pursuant to this Rule
at the same prices that appear on the books of the transferring member
or member organization, and the transfer must indicate the date when
the original trade was made. In the course of transferring positions,
no position shall net itself against another position.'' The Exchange
instead proposes to state within Options 6, Section 5(c) that the
transfer price, to the extent it is consistent with applicable laws,
rules, and regulations, including rules of other self-regulatory
organizations, and tax and accounting rules and regulations, at which
an transfer is effected may be: (1) The original trade prices of the
positions that appear on the books of the trading Clearing Member, in
which case the records of the transfer must indicate the original trade
dates for the positions; provided, transfers to correct bona fide
errors pursuant to proposed subparagraph (a)(1) must be transferred at
the correct original trade prices; (2) mark-to-market prices of the
positions at the close of trading on the transfer date; (3) mark-to-
market prices of the positions at the close of trading on the trade
date prior to the transfer date; \14\ or (4) the then-current market
price of the positions at the time the transfer is effected.\15\ The
proposed rule text regarding permissible transfer prices provides
market participants with flexibility to determine the transfer price at
which the transfer may be effected. The Exchange proposes the four
options noted above with respect to the transfer price.
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\14\ For example, for a transfer that occurs on a Tuesday, the
transfer price may be based on the closing market price on Monday.
\15\ See Cboe Rule 6.7(c).
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This proposed rule change provides market participants that effect
transactions with flexibility to select a transfer price based on
circumstances of the transfer and their business. However, for
corrections of bona fide errors, because those transfers are necessary
to correct processing errors that occurred at the time of transaction,
those transfers would occur at the original transaction price, as the
purpose of the transfer is to create the originally intended result of
the transaction.
Prior Written Notice
Current Phlx Options 6, Section 5(b) provides, ``members and member
organizations must notify the Exchange in writing prior to effecting an
off the floor transfer. The written notification must indicate the
positions to be transferred and the reason for the transfer.'' Proposed
Options 6, Section 5(d) requires a member or member organization and
its Clearing Member (to the extent that the member or member
organization is not self-clearing) to submit to the Exchange, in a
manner determined by the Exchange, written notice prior to effecting an
transfer from or to the account of a member or member
organization(s).\16\ The notice must indicate: The Exchange-listed
options positions to be transferred; the nature of the transaction; the
enumerated provision(s) under proposed paragraph (a) pursuant to which
the positions are being transferred; the name of the counterparty(ies);
the anticipated transfer date; the method for determining the transfer
price; and any other information requested by the Exchange.\17\ The
proposed notice will continue to ensure the Exchange is
[[Page 22765]]
aware of all transfers so that it can monitor and review them
(including the records that must be retained pursuant to proposed
paragraph (e)) to determine whether they are effected in accordance
with the Rules. The proposed rule text requires additional information
with respect to the prior written notification that is required to
effect a transfer.
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\16\ This notice provision applies only to transfers involving a
member's or member organization's positions and not to positions of
non-member and non-member organization parties, as they are not
subject to the Rules. In addition, no notice would be required to
effect transfers to correct bona fide errors pursuant to proposed
subparagraph (a)(1).
\17\ See Cboe Rule 6.7(d).
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Additionally, requiring notice from the member or member
organization(s) and its Clearing Member(s) will ensure both parties are
in agreement with respect to the terms of the transfer. As noted in
proposed subparagraph (d)(2), receipt of notice of an transfer does not
constitute a determination by the Exchange that the transfer was
effected or reported in conformity with the requirements of proposed
Section 10(b). Notwithstanding submission of written notice to the
Exchange, member or member organizations and Clearing Members that
effect transfers that do not conform to the requirements of proposed
Section 10(b) will be subject to appropriate disciplinary action in
accordance with the Rules.
Records
Current Phlx Rule at Options 6, Section 5(c) provides, in part,
Each member or member organization that is a party to a transfer of
positions must make and retain records stating the nature of the
transaction, the name of the counter-party, and any other information
required by the Exchange. Proposed Options 6, Section 5(e) requires
each member or member organization and each Clearing Member that is a
party to a transfer must make and retain records of the information
provided in the written notice to the Exchange pursuant to proposed
subparagraph (e)(1), as well as information on the actual Exchange-
listed options that are ultimately transferred, the actual transfer
date, and the actual transfer price (and the original trade dates, if
applicable), and any other information the Exchange may request the
member or member organization or Clearing Member provide.\18\ The
records requirement is enhanced to require additional information that
must be maintained by members, member organizations and each Clearing
Member that is a party to a transfer.
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\18\ See Cboe Rule 6.7(e).
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Presidential Exemption
Proposed paragraph (f) provides exemptions approved by the
Exchange's Chief Executive Officer or President (or senior-level
designee). Specifically, this provision is in addition to the
exemptions set forth in proposed paragraph (a). The Exchange proposes
that the Exchange Chief Executive Officer or President (or senior-level
designee) may grant an exemption from the requirement of this proposed
Rule, on his or her own motion or upon application of the member or
member organization (with respect to the member's or member
organization's positions) or a Clearing Member (with respect to
positions carried and cleared by the Clearing Members). The Chief
Executive Officer, the President or his or her designee, may permit an
a transfer if necessary or appropriate for the maintenance of a fair
and orderly market and the protection of investors and is in the public
interest, including due to unusual or extraordinary circumstances. For
example, an exemption may be granted if the market value of the
Person's positions would be compromised by having to comply with the
requirement to trade on the Exchange pursuant to the normal auction
process or when, in the judgment of the Chief Executive Officer,
President or his or her designee, market conditions make trading on the
Exchange impractical.\19\
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\19\ See Cboe Rule 6.7(f).
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Routine, Recurring Transfers
The Exchange proposes within Options 6, Section 5(g) that that the
transfer procedure set forth in Options 6, Section 5 is intended to
facilitate non-routine, nonrecurring movements of positions.\20\ The
transfer procedure is not to be used repeatedly or routinely in
circumvention of the normal auction market process.
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\20\ See Cboe Rule 6.7(g).
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Exchange-Listed Options
The Exchange proposes within Options 6, Section 5(h) notes that the
transfer procedure set forth in Options 6, Section 5 is only applicable
to positions in options listed on the Exchange. Transfers of positions
in Exchange-listed options may also be subject to applicable laws,
rules, and regulations, including rules of other self-regulatory
organizations. Transfers of non-Exchange listed options and other
financial instruments are not governed by this Rule.\21\
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\21\ See Cboe Rule 6.7(h).
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Updating Citations
The Exchange recently relocated its rules into a new Rulebook
Shell.\22\ Certain rule citations within General 2, Section 4; Options
2, Section 6; Options 7, Section 4; Options 8, Section 28; Section 39,
B-6 and C-2 were inadvertently not updated. The Exchange proposes to
update those citations and also remove an unnecessary header within
General 9, Section 58.\23\
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\22\ See Securities Exchange Act Release No. 88213 (February 14,
2020), 85 FR 9859 (February 20, 2020) (SR-Phlx-2020-03) (``Phlx
Rulebook Relocation Rule Change'').
\23\ The header ``SUPPLEMENTARY INFORMATION REGARDING RULE 605''
is unnecessary as the language which follows explains the text.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\24\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\25\ 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.
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\24\ 15 U.S.C. 78f(b).
\25\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes the proposed transfer rule is
consistent with the Section 6(b)(5) \26\ requirements that the rules of
an exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, 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.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \27\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\26\ 15 U.S.C. 78f(b)(5).
\27\ Id.
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The Exchange believes that permitting the transfers in very limited
circumstances, such as where there is no change in beneficial
ownership, a transfer by operation of law or an adjustment or transfer
in connection with the correction of a bona fide error, is reasonable
to allow a member or member organization to accomplish certain goals
efficiently. The Exchange currently permits transfers in situations
involving dissolutions of entities or accounts, for purposes of
donations or mergers. For example, a member or member organization that
is undergoing a structural change and a one-time movement of positions
may require a
[[Page 22766]]
transfer of positions or a member or member organization that is
leaving a firm that will no longer be in business may require a
transfer of positions to another firm. Also, a member or member
organization may require a transfer of positions to make a capital
contribution. The above-referenced circumstances are non-recurring
situations where the transferor continues to maintain some ownership
interest or manage the positions transferred. By contrast, repeated or
routine transfers between entities or accounts--even if there is no
change in beneficial ownership as a result of the transfer--is
inconsistent with the purposes for which the proposed rule was adopted.
Accordingly, the Exchange believes that such activity should not be
permitted under the rules and thus, seeks to adopt language in proposed
paragraph (f) to proposed Options 6, Section 5 that the transfer of
positions procedures set forth the proposed rule are intended to
facilitate non-recurring movements of positions.
The Exchange believes the proposed rule change benefits investors,
as it adds transparency to the Rules. The purpose of the additional
circumstances in which market participants may conduct transfers is
consistent with the purpose of the circumstances currently permitted in
the proposed rule. Therefore, the proposed rule change will provide
market participants that experience these limited, non-recurring events
with an efficient and effective means to transfer positions in these
situations. The Exchange believes the proposed rule change regarding
permissible transfer prices provides market participants with
flexibility to determine the price appropriate for their business,
which maintain cost bases in accordance with normal accounting
practices and removes impediments to a free and open market.
The proposed rule change which requires notice and maintenance of
records will ensure the Exchange is able to review transfers for
compliance with the Rules, which prevents fraudulent and manipulative
acts and practices. The requirement to retain records is consistent
with the requirements of Rule 17a-3 and 17a-4 under the Act.
Similar to Cboe Rule 6.7, the Exchange would permit a presidential
exemption. The Exchange believes that this exemption is consistent with
the Act because the Exchange's Chief Executive Officer or President (or
senior-level designee) would consider an exemption in very limited
circumstances. The transfer process is intended to facilitate non-
routine, nonrecurring movements of positions and, therefore, is not to
be used repeatedly or routinely in circumvention of the normal auction
market process. Proposed Options 6, Section 5(f) specifically provides
within the rule text that the Exchange's Chief Executive Officer or
President (or senior-level designee) may in his or her judgment allow a
transfer if it is necessary or appropriate for the maintenance of a
fair and orderly market and the protection of investors and is in the
public interest, including due to unusual or extraordinary
circumstances such as the market value of the Person's positions will
be comprised by having to comply with the requirement to trade on the
Exchange pursuant to the normal auction process or, when in the
judgment of President or his or her designee, market conditions make
trading on the Exchange impractical. These standards within proposed
Options 6, Section 5(f) are intended to provide guidance concerning the
use of this exemption which is intended to provide the Exchange with
the ability to utilize the exemption for the maintenance of a fair and
orderly market and the protection of investors and is in the public
interest. The Exchange believes that the exemption is consistent with
the Act because it would allow the Exchange's Chief Executive Officer
or President (or senior-level designee) to act in certain situations
which comply with the guidance within Options 6, Section 5(f) which are
intended to protect investors and the general public. While Cboe grants
an exemption to the President (or senior-level designee),\28\ the
Exchange has elected to grant an exemption to Exchange's Chief
Executive Officer or President (or senior-level designee), who are
similarly situated with the organization as senior-level individuals.
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\28\ See Cboe Rule 6.7(f).
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Updating Citations
Updating rule citations and removing unnecessary text will bring
greater clarity to the Rulebook.
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 that is not necessary or appropriate
in furtherance of the purposes of the Act.
The Exchange does not believe the proposed rule change will impose
an undue burden on intra-market competition as the transfer procedure
may be utilized by any member or member organization and the rule will
apply uniformly to all members or member organizations. Use of the
transfer procedure is voluntary, and all members or member
organizations may use the procedure to transfer positions as long as
the criteria in the proposed rule are satisfied. With this change, a
member or member organization that experiences limited permissible,
non-recurring events would have an efficient and effective means to
transfer positions in these situations. The Exchange believes the
proposed rule change regarding permissible transfer prices provides
market participants with flexibility to determine the price appropriate
for their business, which determine prices in accordance with normal
accounting practices and removes impediments to a free and open market.
The Exchange does not believe the proposed notice and record
requirements are unduly burdensome to market participants. The Exchange
believes the proposed requirements are reasonable and will ensure the
Exchange is aware of transfers and would be able to monitor and review
the transfers to ensure the transfer falls within the proposed rule.
Adopting an exemption, similar to Cboe Rule 6.7, to permit the
Exchange's Chief Executive Officer or President (or senior-level
designee) to grant an exemption to Options 6, Section 5(a) prohibition
if, in his or her judgment, does not impose an undue burden on
competition. Circumstances where, due to unusual or extraordinary
circumstances such as the market value of the Person's positions would
be comprised by having to comply with the requirement to trade on the
Exchange pursuant to the normal auction process or, would be taken into
consideration in each case where, in the judgment of the Exchange's
Chief Executive Officer or President (or senior-level designee), market
conditions make trading on the Exchange impractical.
The Exchange does not believe the proposed rule change will impose
an undue burden on inter-market competition. The proposed position
transfer procedure is not intended to be a competitive trading tool.
The proposed rule change permits, in limited circumstances, a transfer
to facilitate non-routine, nonrecurring movements of positions. As
provided for in proposed Options 6, Section 5(g), it would not be used
repeatedly or routinely in circumvention of the normal auction market
process. Proposed Options 6, Section 5(a) specifically provides within
the rule text that the Exchange's Chief Executive Officer or President
(or senior-level designee) may in his or her judgment allow a transfer
for the maintenance of
[[Page 22767]]
a fair and orderly market and the protection of investors and is in the
public interest. The Exchange believes that the exemption does not
impose an undue burden on competition as the Exchange's Chief Executive
Officer or President (or senior-level designee) would apply the
exemption consistent with the guidance within Options 6, Section 5(f).
Additionally, as discussed above, the proposed rule change is similar
to Cboe Rule 6.7. The Exchange believes having similar rules related to
transfer positions to those of other options exchanges will reduce the
administrative burden on market participants of determining whether
their transfers comply with multiple sets of rules.
Updating Citations
The updates to the rule citations and removal of unnecessary rule
text are non-substantive rule changes.
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 \29\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\30\
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\29\ 15 U.S.C. 78s(b)(3)(A)(iii).
\30\ 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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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days from the date of filing. However, Rule
19b-4(f)(6)(iii) \31\ 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. The Commission notes that waiver of the
operative delay would provide members with the ability to request a
transfer, for limited, non-recurring types of transfers, without the
need for exposing those orders on the Exchange, similar to Cboe.\32\
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 waives the 30-day operative delay and
designates the proposed rule change operative upon filing.\33\
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\31\ 17 CFR 240.19b-4(f)(6)(iii).
\32\ See CBOE Rule 6.7.
\33\ 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-2020-22 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-2020-22. 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 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-2020-22 and should be submitted on
or before May 14, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
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\34\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-08591 Filed 4-22-20; 8:45 am]
BILLING CODE 8011-01-P