80 FR 15831 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Updating to Certain Phlx Rules

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 57 (March 25, 2015)

Page Range		15831-15834
FR Document		2015-06711

Federal Register, Volume 80 Issue 57 (Wednesday, March 25, 2015)

[Federal Register Volume 80, Number 57 (Wednesday, March 25, 2015)]
[Notices]
[Pages 15831-15834]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-06711]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74533; File No. SR-Phlx-2015-023]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Updating to
Certain Phlx Rules

March 19, 2015.
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 March 12, 2015, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule 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 amend Rules 50 entitled ``Failure to Pay
Dues, Fees and Other Charges;'' 53, entitled ``Liability for Dues Until
Transfer or Military Service;'' 99 entitled ``Back-Up Trading
Arrangements;'' and 443 entitled ``Employees.'' The Exchange proposes
to delete Rules 51 entitled ``Enforcement of Capital Funding Fees;'' 54
entitled ``Service Fee;'' 55 entitled ``Claims by Formed or Deceased
Members;'' and 442 entitled ``Communications.''
The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.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 purpose of this proposed rule change is to update certain Phlx
rules related to the payment of fees to harmonize the Exchange's
Rulebook text and modernize Exchange rules. The Exchange proposes to
amend rule text, make minor technical amendments to certain rules and
to delete other rules. Each proposed rule change is discussed in
greater detail below.
Amendment to Certain Exchange Rules
The Exchange proposes to amend Rule 50, entitled ``Failure to Pay
Dues, Fees and Other Charges.'' The Exchange proposes to conform Rule
50(a) to NASDAQ Stock Market LLC (``Nasdaq'') Rule 9553 and NASDAQ OMX
BX, Inc. (``BX'') Rule 9553(a). The Exchange is proposing to adopt rule
text similar to Nasdaq Rule 9553 and BX Rule 9553 in place of the
current rule text in Rule 50(a), (d) and (f). The Exchange is also
proposing to modify the headers to match those of Nasdaq Rule 9553 and
BX Rule 9553. The word ``termination'' in the Phlx rule is replaced
with the word ``cancellation or bar.'' The Exchange's amendments are
not substantive in nature. The amendments

[[Page 15832]]

seek to align these rules with Nasdaq rules.
The Exchange proposes to amend Rule 53, entitled ``Liability for
Dues Until Transfer or Military Service'' to delete the current rule
text and adopt the language in Nasdaq IM-1002 and BX IM-1002-2. This
rule allows associated persons to be placed on inactive status, thereby
preserving their registration, while serving in the Armed Forces of the
United States.\3\ The current rule describes the liability for dues of
a member that is active in the military or naval service. The current
rule notes that the member's liability continues unless the permit is
transferred or the Board of Directors waives dues and assessments. The
proposed rule text permits a member serving in the military to retain
eligibility to receive transaction related compensation, provided they
do not perform the duties of a registered person while inactive. The
inactive military member would not be subject to fees or be required to
complete Regulatory or Firm Elements requirements. The rule provides
similar relief for sole proprietorships that are active in the Armed
Forces. Finally, the rule affords relief to persons currently not
registered with a member or member organization and subsequently is
active in the Armed Forces within two years after the date a person
ceases to be registered with a member or member organization with
respect to registration requirements provided notice is given within a
specified time.\4\ If a person placed upon inactive status while
serving in the Armed Forces of the United States ceases to be
registered with a member or member organization, Phlx will defer the
lapse of registration requirements during the pendency of his or her
active service in the Armed Forces of the United States.
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\3\ See Nasdaq IM-1002 and BX IM-1002-2.
\4\ Phlx must be properly notified of the person's period of
active military service within 90 days following his or her
completion of active service or upon his or her re-registration with
a member or member organization, whichever occurs first. The
deferral will terminate 90 days following the person's completion of
active service in the Armed Forces of the United States.
Accordingly, if such person does not re-register with a member or
member organization within 90 days following his or her completion
of active service in the Armed Forces of the United States, the
amount of time in which the person must become re-registered with a
member or member organization without being subject to the
qualification examination requirements shall consist of the standard
two-year period provided in Phlx Rules 611, 613, and 3228 reduced by
the period of time between the person's Phlx is properly notified of
the person's period of active military service within 90 days
following his or her completion of active service or upon his or her
re-registration with a member or member organization, whichever
occurs first. The deferral will terminate 90 days following the
person's completion of active service in the Armed Forces of the
United States.
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Nasdaq based its adoption of the rule on a National Association of
Securities Dealers (hereinafter ``FINRA'') rule. FINRA tolled the two-
year licensing expiration provisions under its rule for a person
previously registered with a member who commences active military duty
within two years after he or she has ceased to be registered with the
member, and also tolled the expiration provisions for a person placed
upon ``inactive'' status, who, while serving in the Armed Forces of the
United States, ceases to be registered with a member.\5\
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\5\ See Securities Exchange Act Release No. 53182 (January 26,
2006), 71 FR 5391 (February 1, 2006) (SR-NASD-2005-135).
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NASD's Rule IM-1000-2 relieves active duty professionals from
continuing education requirements. With respect to the Firm Element
requirement of continuing education, FINRA provides that only persons
who have ``direct contact with customers'' in the conduct of securities
activities are subject to the Firm Element requirement.\6\ active duty
professionals are excluded from the Firm Element requirement because
they do not have contact with customers. FINRA's rule expressly states
that active duty professionals are not required to complete either of
the Regulatory or Firm Elements of the continuing education
requirements during the pendency of such inactive status.\7\ The
proposed rule change will harmonize the Phlx rule with the Nasdaq and
BX rules as well as FINRA's rule.
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\6\ See FINRA Rule 1250(b)(1).
\7\ Id.
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The Exchange proposes to amend Rule 99, entitled ``Back-Up Trading
Arrangements,'' to make technical conforming amendments to the rule
text. This rule change is not substantive in nature; rather, the rule
text amendments seek to conform the word usage within the text of this
rule.
The Exchange proposes to amend Rule 443, entitled ``Employees'' by
renaming the rule ``Trading Floor Admittance'' and making minor rule
amendments to clarify the rule text. Rule 443 states, '' [n]o employee
of a member or member organization shall be admitted to the floor
unless he is registered with and approved by the Exchange, which may in
its discretion require the payment of a fee with respect to each
employee so approved, and may at any time in its discretion withdraw
any approval so given.'' The Exchange proposes to reference Options
Regulation 5 regarding non-member visitors within this rule to add
clarity to admittance to the options trading floor for non-members. The
other amendments to this rule are technical in nature. There are no
substantive changes proposed to current Phlx Rule 443.
Deleted Rules
The Exchange proposes to delete Rule 51 entitled ``Enforcement of
Capital Funding Fees.'' This rule is no longer applicable today. This
rule permits the Exchange to take certain specified measures if an
owner of a membership fails to pay (or have paid on its behalf) any
capital funding fee imposed by the Exchange when due. The rule
specifies what enforcement action may be taken against an owner for
failure to pay any capital funding fee imposed by the Exchange. The
rule delineates the remedies that shall be taken by the Board if the
capital funding fee is not paid and allows for a variety of remedies
ranging from the imposition of a late fee to reversion and sale by the
Exchange of the equitable title to a membership. The remedies are set
forth in such a way as to apply the less onerous remedies (i.e., like
fees) first and the more serious remedies (i.e., suspension of right to
trade or lease and reversion of membership) only after the Exchange has
not received payment within 90 days after the date of the original
invoice (or such longer period for which a lease agreement is in effect
as a result of the election by a lessee to continue paying the capital
funding fee). By allowing this graduated scale of remedies, the owners
are put on notice as to what remedies will be imposed if payment is not
received in a timely manner, with the more serious remedies being
applied after a longer period of time. In addition, the rule delineates
the Board's responsibilities and authority for handling instances in
which an owner fails to pay the capital funding fee when due.\8\
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\8\ See Securities and Exchange Commission 44872 (September 28,
2001), 66 FR 51084 (October 5, 2001) (SR-Phlx-99-52).
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The rule was designed to protect innocent lessees from being
unexpectedly dispossessed from their memberships and trading rights in
the event of a nonpayment by their lessors. This was important in the
days when Phlx had seats, prior to demutualization; there are no longer
any seats, owners or lessors. Today permits are issued to members and
member organizations. Permits provide trading rights \9\ today and the
Exchange collects fees via direct debit.\10\ This rule is

[[Page 15833]]

outdated and the Exchange proposes to remove it from the Rulebook.
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\9\ See Rule 908.
\10\ See Rule 909.
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The Exchange also proposes to delete Rule 54 entitled ``Service
Fee'' because the rule is outdated. The rule provides, ``[m]embers and
member organizations who are not also members of a subsidiary of the
Exchange but who use or benefit from the facilities or services of such
subsidiary, may be required by the Board of Directors to pay fees or
charges to the Exchange for such use or benefit; provided, however,
that such fees or charges may be imposed only if they are similar in
structure and rate to those imposed by such subsidiary on its own
members using or benefiting from the same facilities or services.'' The
Exchange does not have any active subsidiaries today.\11\ This rule is
therefore not applicable and should be deleted from the Rulebook. The
Exchange also proposes to remove the reference to Rule 54 from Rule
3202, entitled ``Application of Other rules of the Exchange.'' Rule
3202 adopts certain rules into the equity rules. The Exchange proposes
to remove the reference to Rule 54 from Rule 3202 as well.
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\11\ Phlx's only subsidiary is the Stock Clearing Corporation of
Philadelphia. This subsidiary is inactive.
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The Exchange proposes to delete Rule 55, entitled ``Claims by
Formed or Deceased Members.'' This rule states, ``[w]hen a member is in
debt to another member the death of the creditor member shall not
affect the rights of such creditor or member, his organization or
estate in respect of such debt.'' As noted above, the Exchange issues
permits today for access to trading on the Exchange. At the time, prior
to demutualization, when the Exchange issued seats, those seats could
be leased. This is no longer the case. Members are not indebted to
other members in the same manner today. This rule is no longer
applicable and should be removed from the Rulebook. The Exchange also
proposes to remove the reference to Rule 55 from Rule 3202, entitled
``Application of Other Rules of the Exchange.'' Rule 3202 adopts
certain rules into the equity rules. The Exchange proposes to remove
the reference to Rule 55 from Rule 3202 as well.
The Exchange proposes to delete Rule 442, entitled
``Communications.'' This rule provides that ``[c]ommunications shall
not be read to the Exchange nor posted on the bulletin board without
the consent of the Secretary.'' This rule is outdated. Today, the
Exchange uses electronic means such as email, electronic alerts and its
Web site to issue communications. There is no longer a bulletin board
on the Exchange's trading floor as there was when the rule was enacted.
The Exchange proposes removing this outdated rule from the Rulebook.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \12\ in general, and furthers the objectives of Section
6(b)(5) of the Act \13\ in particular, in that it is 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 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. The Exchange believes that
these proposed rule changes will harmonize the text of its rules and
modernize the Phlx Rulebook. The Exchange is updating certain rules in
order to ensure consistency in the rule text. The Exchange is proposing
to delete other rules because they are outdated.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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The proposed rule change to Rule 53 seeks to harmonize this rule
with Nasdaq and BX Rules. The proposed new rules addresses not only
fees, which are addressed by the current rule, but also registration,
compensation, Regulatory and Firm Element requirements, sole proprietor
members and formerly registered persons. The proposed rule states that
a registered person placed on inactive status shall not be included
within the scope of fees, whereas the Phlx rule indicates a member
serving in the military in active status is liable for dues to the
Exchange. The Exchange desires to conform the treatment of members
serving in the military to that of other exchanges. The NASDAQ, BX and
NASD rules provide inactive members serving in the military with a
reprieve from certain obligations registration and other
requirements.\14\ The Exchange desires to adopt a similar treatment of
these members, which it believes will foster cooperation and
coordination with persons engaged in facilitating transactions in
securities.
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\14\ See Nasdaq IM-1002, BX IM-1002-2 and NASD IM-1002-2.
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The remaining rule amendment proposals either modernize the rule
text and add clarity or delete outdated rule text. The Exchange
believes that these proposals will benefit members and member
organizations by bringing additional clarity to the Rulebook.

B. Self-Regulatory Organization's Statement on Burden on Competition

The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. The Exchange's proposed amendments seek to harmonize the
Rulebook by conforming the text of certain rules throughout the rule
and also deleting certain unnecessary rules. These rule amendments do
not place an undue burden on competition but rather bring clarity to
the Rulebook.
The proposed amendments to Rule 53 will provide members with a rule
similar to rules on Nasdaq and BX. The Exchange's amendment will
conform the treatment of members serving in the military to that of
other exchanges. The Exchange believes that adopting the Nasdaq and BX
rules will provide members and member organizations with processes
similar to other self-regulatory organizations and therefore does not
create an undue burden on either intra-market or inter-market
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)(ii) of the Act \15\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(a)(ii).
\16\ 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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection

[[Page 15834]]

of investors; or (iii) 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 rule-comments@sec.gov. Please include
File Number SR-Phlx-2015-023 on the subject line.

Paper Comments

Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2015-023. 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 Web site (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 Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549-1090, on official business days between the hours
of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be
available for inspection and copying at the principal offices 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-2015-023, and should be submitted on or before April 15, 2015.

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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Brent J. Fields,
Secretary.
[FR Doc. 2015-06711 Filed 3-24-15; 8:45 am]
BILLING CODE 8011-01-P

Federal Register / Vol. 80, No. 57 / Wednesday, March 25, 2015 / Notices 15831

of the Act and Rule 19b–4(f)(6) provisions of 5 U.S.C. 552, will be entitled ‘‘Employees.’’ The Exchange
thereunder.8 available for Web site viewing and proposes to delete Rules 51 entitled
At any time within 60 days of the printing in the Commission’s Public ‘‘Enforcement of Capital Funding Fees;’’
filing of such proposed rule change, the Reference Room, 100 F Street NE., 54 entitled ‘‘Service Fee;’’ 55 entitled
Commission summarily may Washington, DC 20549, on official ‘‘Claims by Formed or Deceased
temporarily suspend such rule change if business days between the hours of Members;’’ and 442 entitled
it appears to the Commission that such 10:00 a.m. and 3:00 p.m. Copies of the ‘‘Communications.’’
action is necessary or appropriate in the filing also will be available for The text of the proposed rule change
public interest, for the protection of inspection and copying at the NYSE’s is available on the Exchange’s Web site
investors, or otherwise in furtherance of principal office and on its Internet Web at http://
the purposes of the Act. If the site at www.nyse.com. All comments nasdaqomxphlx.cchwallstreet.com/, at
Commission takes such action, the received will be posted without change; the principal office of the Exchange, and
Commission shall institute proceedings the Commission does not edit personal at the Commission’s Public Reference
under Section 19(b)(2)(B) of the Act 9 to identifying information from Room.
determine whether the proposed rule submissions. You should submit only
change should be approved or information that you wish to make II. Self-Regulatory Organization’s
disapproved. available publicly. All submissions Statement of the Purpose of, and
should refer to File Number SR– Statutory Basis for, the Proposed Rule
IV. Solicitation of Comments NYSEMKT–2015–18 and should be Change
Interested persons are invited to submitted on or before April 15, 2015.
In its filing with the Commission, the
submit written data, views, and For the Commission, by the Division of Exchange included statements
arguments concerning the foregoing, Trading and Markets, pursuant to delegated concerning the purpose of and basis for
including whether the proposed rule authority.10
the proposed rule change and discussed
change is consistent with the Act. Brent J. Fields, any comments it received on the
Comments may be submitted by any of Secretary. proposed rule change. The text of these
the following methods: [FR Doc. 2015–06713 Filed 3–24–15; 8:45 am] statements may be examined at the
Electronic Comments BILLING CODE 8011–01–P places specified in Item IV below. The
Exchange has prepared summaries, set
• Use the Commission’s Internet
forth in sections A, B, and C below, of
comment form (http://www.sec.gov/ SECURITIES AND EXCHANGE the most significant aspects of such
rules/sro.shtml); or COMMISSION
• Send an email to rule-comments@ statements.
sec.gov. Please include File Number SR– [Release No. 34–74533; File No. SR–Phlx– A. Self-Regulatory Organization’s
NYSEMKT–2015–18 on the subject line. 2015–023]
Statement of the Purpose of, and
Paper Comments Self-Regulatory Organizations; Statutory Basis for, the Proposed Rule
NASDAQ OMX PHLX LLC; Notice of Change
• Send paper comments in triplicate
Filing and Immediate Effectiveness of 1. Purpose
to Brent J. Fields, Secretary, Securities
Proposed Rule Change Updating to
and Exchange Commission, 100 F Street The purpose of this proposed rule
Certain Phlx Rules
NE., Washington, DC 20549–1090. change is to update certain Phlx rules
All submissions should refer to File March 19, 2015. related to the payment of fees to
Number SR–NYSEMKT–2015–18. This Pursuant to Section 19(b)(1) of the harmonize the Exchange’s Rulebook text
file number should be included on the Securities Exchange Act of 1934 and modernize Exchange rules. The
subject line if email is used. To help the (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Exchange proposes to amend rule text,
Commission process and review your notice is hereby given that on March 12, make minor technical amendments to
comments more efficiently, please use 2015, NASDAQ OMX PHLX LLC certain rules and to delete other rules.
only one method. The Commission will (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Each proposed rule change is discussed
post all comments on the Commission’s Securities and Exchange Commission in greater detail below.
Internet Web site (http://www.sec.gov/ (‘‘SEC’’ or ‘‘Commission’’) the proposed Amendment to Certain Exchange
rules/sro.shtml). Copies of the rule change as described in Items I, II, Rules
submission, all subsequent and III, below, which Items have been
The Exchange proposes to amend
amendments, all written statements prepared by the Exchange. The
Rule 50, entitled ‘‘Failure to Pay Dues,
with respect to the proposed rule Commission is publishing this notice to
Fees and Other Charges.’’ The Exchange
change that are filed with the solicit comments on the proposed rule
proposes to conform Rule 50(a) to
Commission, and all written change from interested persons.
NASDAQ Stock Market LLC (‘‘Nasdaq’’)
communications relating to the I. Self-Regulatory Organization’s Rule 9553 and NASDAQ OMX BX, Inc.
proposed rule change between the Statement of the Terms of Substance of (‘‘BX’’) Rule 9553(a). The Exchange is
Commission and any person, other than the Proposed Rule Change proposing to adopt rule text similar to
those that may be withheld from the Nasdaq Rule 9553 and BX Rule 9553 in
public in accordance with the The Exchange proposes to amend
Rules 50 entitled ‘‘Failure to Pay Dues, place of the current rule text in Rule
50(a), (d) and (f). The Exchange is also
rljohnson on DSK3VPTVN1PROD with NOTICES

8 17 CFR 240.19b–4(f)(6). As required under Rule Fees and Other Charges;’’ 53, entitled
19b–4(f)(6)(iii), the Exchange provided the ‘‘Liability for Dues Until Transfer or proposing to modify the headers to
Commission with written notice of its intent to file Military Service;’’ 99 entitled ‘‘Back-Up match those of Nasdaq Rule 9553 and
the proposed rule change, along with a brief
Trading Arrangements;’’ and 443 BX Rule 9553. The word ‘‘termination’’
description and the text of the proposed rule in the Phlx rule is replaced with the
change, at least five business days prior to the date
of filing of the proposed rule change, or such 10 17 CFR 200.30–3(a)(12). word ‘‘cancellation or bar.’’ The
shorter time as designated by the Commission. 1 15 U.S.C. 78s(b)(1). Exchange’s amendments are not
9 15 U.S.C. 78s(b)(2)(B). 2 17 CFR 240.19b–4. substantive in nature. The amendments

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15832 Federal Register / Vol. 80, No. 57 / Wednesday, March 25, 2015 / Notices

seek to align these rules with Nasdaq his or her active service in the Armed admittance to the options trading floor
rules. Forces of the United States. for non-members. The other
The Exchange proposes to amend Nasdaq based its adoption of the rule amendments to this rule are technical in
Rule 53, entitled ‘‘Liability for Dues on a National Association of Securities nature. There are no substantive
Until Transfer or Military Service’’ to Dealers (hereinafter ‘‘FINRA’’) rule. changes proposed to current Phlx Rule
delete the current rule text and adopt FINRA tolled the two-year licensing 443.
the language in Nasdaq IM–1002 and BX expiration provisions under its rule for
Deleted Rules
IM–1002–2. This rule allows associated a person previously registered with a
persons to be placed on inactive status, member who commences active military The Exchange proposes to delete Rule
thereby preserving their registration, duty within two years after he or she 51 entitled ‘‘Enforcement of Capital
while serving in the Armed Forces of has ceased to be registered with the Funding Fees.’’ This rule is no longer
the United States.3 The current rule member, and also tolled the expiration applicable today. This rule permits the
describes the liability for dues of a provisions for a person placed upon Exchange to take certain specified
member that is active in the military or ‘‘inactive’’ status, who, while serving in measures if an owner of a membership
naval service. The current rule notes the Armed Forces of the United States, fails to pay (or have paid on its behalf)
that the member’s liability continues ceases to be registered with a member.5 any capital funding fee imposed by the
unless the permit is transferred or the NASD’s Rule IM–1000–2 relieves Exchange when due. The rule specifies
Board of Directors waives dues and active duty professionals from what enforcement action may be taken
assessments. The proposed rule text continuing education requirements. against an owner for failure to pay any
permits a member serving in the With respect to the Firm Element capital funding fee imposed by the
military to retain eligibility to receive requirement of continuing education, Exchange. The rule delineates the
transaction related compensation, FINRA provides that only persons who remedies that shall be taken by the
provided they do not perform the duties have ‘‘direct contact with customers’’ in Board if the capital funding fee is not
of a registered person while inactive. the conduct of securities activities are paid and allows for a variety of
The inactive military member would not subject to the Firm Element remedies ranging from the imposition of
be subject to fees or be required to requirement.6 active duty professionals a late fee to reversion and sale by the
complete Regulatory or Firm Elements are excluded from the Firm Element Exchange of the equitable title to a
requirements. The rule provides similar requirement because they do not have membership. The remedies are set forth
relief for sole proprietorships that are contact with customers. FINRA’s rule in such a way as to apply the less
active in the Armed Forces. Finally, the expressly states that active duty onerous remedies (i.e., like fees) first
rule affords relief to persons currently professionals are not required to and the more serious remedies (i.e.,
not registered with a member or member complete either of the Regulatory or suspension of right to trade or lease and
organization and subsequently is active Firm Elements of the continuing reversion of membership) only after the
in the Armed Forces within two years education requirements during the Exchange has not received payment
after the date a person ceases to be pendency of such inactive status.7 The within 90 days after the date of the
registered with a member or member proposed rule change will harmonize original invoice (or such longer period
organization with respect to registration the Phlx rule with the Nasdaq and BX for which a lease agreement is in effect
requirements provided notice is given rules as well as FINRA’s rule. as a result of the election by a lessee to
within a specified time.4 If a person The Exchange proposes to amend continue paying the capital funding fee).
placed upon inactive status while Rule 99, entitled ‘‘Back-Up Trading By allowing this graduated scale of
serving in the Armed Forces of the Arrangements,’’ to make technical remedies, the owners are put on notice
United States ceases to be registered conforming amendments to the rule as to what remedies will be imposed if
with a member or member organization, text. This rule change is not substantive payment is not received in a timely
Phlx will defer the lapse of registration in nature; rather, the rule text manner, with the more serious remedies
requirements during the pendency of amendments seek to conform the word being applied after a longer period of
usage within the text of this rule. time. In addition, the rule delineates the
3 See Nasdaq IM–1002 and BX IM–1002–2.
The Exchange proposes to amend Board’s responsibilities and authority
4 Phlx must be properly notified of the person’s Rule 443, entitled ‘‘Employees’’ by for handling instances in which an
period of active military service within 90 days renaming the rule ‘‘Trading Floor owner fails to pay the capital funding
following his or her completion of active service or Admittance’’ and making minor rule fee when due.8
upon his or her re-registration with a member or amendments to clarify the rule text. The rule was designed to protect
member organization, whichever occurs first. The
deferral will terminate 90 days following the Rule 443 states, ’’ [n]o employee of a innocent lessees from being
person’s completion of active service in the Armed member or member organization shall unexpectedly dispossessed from their
Forces of the United States. Accordingly, if such be admitted to the floor unless he is memberships and trading rights in the
person does not re-register with a member or registered with and approved by the event of a nonpayment by their lessors.
member organization within 90 days following his
or her completion of active service in the Armed Exchange, which may in its discretion This was important in the days when
Forces of the United States, the amount of time in require the payment of a fee with Phlx had seats, prior to
which the person must become re-registered with respect to each employee so approved, demutualization; there are no longer any
a member or member organization without being and may at any time in its discretion seats, owners or lessors. Today permits
subject to the qualification examination
requirements shall consist of the standard two-year withdraw any approval so given.’’ The are issued to members and member
period provided in Phlx Rules 611, 613, and 3228 Exchange proposes to reference Options organizations. Permits provide trading
rljohnson on DSK3VPTVN1PROD with NOTICES

reduced by the period of time between the person’s Regulation 5 regarding non-member rights 9 today and the Exchange collects
Phlx is properly notified of the person’s period of visitors within this rule to add clarity to fees via direct debit.10 This rule is
active military service within 90 days following his
or her completion of active service or upon his or
5 See Securities Exchange Act Release No. 53182 8 See Securities and Exchange Commission 44872
her re-registration with a member or member
organization, whichever occurs first. The deferral (January 26, 2006), 71 FR 5391 (February 1, 2006) (September 28, 2001), 66 FR 51084 (October 5,
will terminate 90 days following the person’s (SR–NASD–2005–135). 2001) (SR–Phlx–99–52).
6 See FINRA Rule 1250(b)(1). 9 See Rule 908.
completion of active service in the Armed Forces
of the United States. 7 Id. 10 See Rule 909.

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Federal Register / Vol. 80, No. 57 / Wednesday, March 25, 2015 / Notices 15833

outdated and the Exchange proposes to issue communications. There is no member organizations by bringing
remove it from the Rulebook. longer a bulletin board on the additional clarity to the Rulebook.
The Exchange also proposes to delete Exchange’s trading floor as there was
Rule 54 entitled ‘‘Service Fee’’ because B. Self-Regulatory Organization’s
when the rule was enacted. The
the rule is outdated. The rule provides, Statement on Burden on Competition
Exchange proposes removing this
‘‘[m]embers and member organizations outdated rule from the Rulebook. The proposed rule change does not
who are not also members of a impose any burden on competition that
subsidiary of the Exchange but who use 2. Statutory Basis is not necessary or appropriate in
or benefit from the facilities or services The Exchange believes that its furtherance of the purposes of the Act.
of such subsidiary, may be required by proposal is consistent with Section 6(b) The Exchange’s proposed amendments
the Board of Directors to pay fees or of the Act 12 in general, and furthers the seek to harmonize the Rulebook by
charges to the Exchange for such use or objectives of Section 6(b)(5) of the Act 13 conforming the text of certain rules
benefit; provided, however, that such in particular, in that it is designed to throughout the rule and also deleting
fees or charges may be imposed only if prevent fraudulent and manipulative certain unnecessary rules. These rule
they are similar in structure and rate to acts and practices, to promote just and amendments do not place an undue
those imposed by such subsidiary on its equitable principles of trade, to foster burden on competition but rather bring
own members using or benefiting from cooperation and coordination with clarity to the Rulebook.
the same facilities or services.’’ The persons engaged in facilitating The proposed amendments to Rule 53
Exchange does not have any active transactions in securities, to remove will provide members with a rule
subsidiaries today.11 This rule is impediments to and perfect the similar to rules on Nasdaq and BX. The
therefore not applicable and should be mechanism of a free and open market Exchange’s amendment will conform
deleted from the Rulebook. The and a national market system and, in the treatment of members serving in the
Exchange also proposes to remove the general, to protect investors and the military to that of other exchanges. The
reference to Rule 54 from Rule 3202, public interest. The Exchange believes Exchange believes that adopting the
entitled ‘‘Application of Other rules of that these proposed rule changes will Nasdaq and BX rules will provide
the Exchange.’’ Rule 3202 adopts certain harmonize the text of its rules and members and member organizations
rules into the equity rules. The modernize the Phlx Rulebook. The with processes similar to other self-
Exchange proposes to remove the Exchange is updating certain rules in regulatory organizations and therefore
reference to Rule 54 from Rule 3202 as order to ensure consistency in the rule does not create an undue burden on
well. text. The Exchange is proposing to either intra-market or inter-market
The Exchange proposes to delete Rule delete other rules because they are competition.
55, entitled ‘‘Claims by Formed or outdated. C. Self-Regulatory Organization’s
Deceased Members.’’ This rule states, The proposed rule change to Rule 53 Statement on Comments on the
‘‘[w]hen a member is in debt to another seeks to harmonize this rule with Proposed Rule Change Received From
member the death of the creditor Nasdaq and BX Rules. The proposed Members, Participants, or Others
member shall not affect the rights of new rules addresses not only fees,
No written comments were either
such creditor or member, his which are addressed by the current rule,
solicited or received.
organization or estate in respect of such but also registration, compensation,
debt.’’ As noted above, the Exchange Regulatory and Firm Element III. Date of Effectiveness of the
issues permits today for access to requirements, sole proprietor members Proposed Rule Change and Timing for
trading on the Exchange. At the time, and formerly registered persons. The Commission Action
prior to demutualization, when the proposed rule states that a registered Because the foregoing proposed rule
Exchange issued seats, those seats could person placed on inactive status shall change does not: (i) Significantly affect
be leased. This is no longer the case. not be included within the scope of fees, the protection of investors or the public
Members are not indebted to other whereas the Phlx rule indicates a interest; (ii) impose any significant
members in the same manner today. member serving in the military in active burden on competition; and (iii) become
This rule is no longer applicable and status is liable for dues to the Exchange. operative for 30 days from the date on
should be removed from the Rulebook. The Exchange desires to conform the which it was filed, or such shorter time
The Exchange also proposes to remove treatment of members serving in the as the Commission may designate, it has
the reference to Rule 55 from Rule 3202, military to that of other exchanges. The become effective pursuant to Section
entitled ‘‘Application of Other Rules of NASDAQ, BX and NASD rules provide 19(b)(3)(A)(ii) of the Act 15 and
the Exchange.’’ Rule 3202 adopts certain inactive members serving in the military subparagraph (f)(6) of Rule 19b–4
rules into the equity rules. The with a reprieve from certain obligations thereunder.16
Exchange proposes to remove the registration and other requirements.14 At any time within 60 days of the
reference to Rule 55 from Rule 3202 as The Exchange desires to adopt a similar filing of the proposed rule change, the
well. treatment of these members, which it Commission summarily may
The Exchange proposes to delete Rule believes will foster cooperation and temporarily suspend such rule change if
442, entitled ‘‘Communications.’’ This coordination with persons engaged in it appears to the Commission that such
rule provides that ‘‘[c]ommunications facilitating transactions in securities. action is: (i) Necessary or appropriate in
shall not be read to the Exchange nor The remaining rule amendment the public interest; (ii) for the protection
posted on the bulletin board without the proposals either modernize the rule text
rljohnson on DSK3VPTVN1PROD with NOTICES

consent of the Secretary.’’ This rule is and add clarity or delete outdated rule 15 15 U.S.C. 78s(b)(3)(a)(ii).
outdated. Today, the Exchange uses text. The Exchange believes that these 16 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
electronic means such as email, proposals will benefit members and 4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
electronic alerts and its Web site to the proposed rule change at least five business days
12 15U.S.C. 78f(b). prior to the date of filing of the proposed rule
11 Phlx’s 13 15U.S.C. 78f(b)(5).
only subsidiary is the Stock Clearing change, or such shorter time as designated by the
Corporation of Philadelphia. This subsidiary is 14 See Nasdaq IM–1002, BX IM–1002–2 and Commission. The Exchange has satisfied this
inactive. NASD IM–1002–2. requirement.

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15834 Federal Register / Vol. 80, No. 57 / Wednesday, March 25, 2015 / Notices

of investors; or (iii) otherwise in For the Commission, by the Division of designates May 5, 2015, as the date by
furtherance of the purposes of the Act. Trading and Markets, pursuant to delegated which the Commission shall either
If the Commission takes such action, the authority.17 approve or disapprove or institute
Commission shall institute proceedings Brent J. Fields, proceedings to determine whether to
to determine whether the proposed rule Secretary. disapprove the proposed rule change
should be approved or disapproved. [FR Doc. 2015–06711 Filed 3–24–15; 8:45 am] (File Number SR–NYSEArca-2015–01).
BILLING CODE 8011–01–P For the Commission, by the Division
IV. Solicitation of Comments of Trading and Markets, pursuant to
Interested persons are invited to delegated authority.6
submit written data, views, and SECURITIES AND EXCHANGE
Brent J. Fields,
arguments concerning the foregoing, COMMISSION
Secretary.
including whether the proposed rule [Release No. 34–74534; File No. SR– [FR Doc. 2015–06712 Filed 3–24–15; 8:45 am]
change is consistent with the Act. NYSEArca–2015–01]
BILLING CODE 8011–01–P
Comments may be submitted by any of
the following methods: Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Designation of a
Electronic Comments SECURITIES AND EXCHANGE
Longer Period for Commission Action
• Use the Commission’s Internet COMMISSION
on Proposed Rule Change Amending
comment form (http://www.sec.gov/ NYSE Arca Equities Rule 5.2(j)(3), [Release No. 34–74538; File No. SR–MIAX–
rules/sro.shtml); or Commentary .02 Relating to Listing of 2015–22]
• Send an email to rule-comments@ Investment Company Units Based on
sec.gov. Please include File Number SR– Municipal Bond Indexes Self-Regulatory Organizations; Miami
Phlx–2015–023 on the subject line. International Securities Exchange LLC;
March 19, 2015. Notice of Filing and Immediate
Paper Comments On January 16, 2015, NYSE Arca, Inc. Effectiveness of a Proposed Rule
• Send paper comments in triplicate filed with the Securities and Exchange Change by Miami International
to Brent J. Fields, Secretary, Securities Commission (‘‘Commission’’), pursuant Securities Exchange LLC To Amend Its
and Exchange Commission, 100 F Street to Section 19(b)(1) of the Securities Fee Schedule
NE., Washington, DC 20549–1090. Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule March 19, 2015.
All submissions should refer to File change to amend NYSE Arca Equities Pursuant to the provisions of Section
Number SR–Phlx–2015–023. This file Rule 5.2(j)(3), Commentary .02 relating 19(b)(1) of the Securities Exchange Act
number should be included on the to the listing of Investment Company of 1934 (‘‘Act’’) 1 and Rule 19b–4
subject line if email is used. To help the Units based on fixed income securities thereunder,2 notice is hereby given that
Commission process and review your indexes. The proposed rule change was on March 12, 2015, Miami International
comments more efficiently, please use published for comment in the Federal Securities Exchange LLC (‘‘MIAX’’ or
only one method. The Commission will Register on February 4, 2015.3 The ‘‘Exchange’’) filed with the Securities
post all comments on the Commission’s Commission has received no comment and Exchange Commission
Internet Web site (http://www.sec.gov/ letters on the proposed rule change. (‘‘Commission’’) a proposed rule change
rules/sro.shtml). Copies of the Section 19(b)(2) of the Act 4 provides as described in Items I, II, and III below,
submission, all subsequent that, within 45 days of the publication which Items have been prepared by the
amendments, all written statements of notice of the filing of a proposed rule Exchange. The Commission is
with respect to the proposed rule change, or within such longer period up publishing this notice to solicit
change that are filed with the to 90 days as the Commission may comments on the proposed rule change
Commission, and all written designate if it finds such longer period from interested persons.
communications relating to the to be appropriate and publishes its I. Self-Regulatory Organization’s
proposed rule change between the reasons for so finding or as to which the Statement of the Terms of Substance of
Commission and any person, other than self-regulatory organization consents, the Proposed Rule Change
those that may be withheld from the the Commission shall either approve the
public in accordance with the proposed rule change, disapprove the The Exchange is filing a proposal to
provisions of 5 U.S.C. 552, will be proposed rule change, or institute amend the MIAX Options Fee Schedule.
available for Web site viewing and proceedings to determine whether the The text of the proposed rule change
printing in the Commission’s Public proposed rule change should be is available on the Exchange’s Web site
Reference Room, 100 F Street NE., disapproved. The Commission is at http://www.miaxoptions.com/filter/
Washington, DC 20549–1090, on official extending this 45-day time period. The wotitle/rule_filing, at MIAX’s principal
business days between the hours of Commission finds that it is appropriate office, and at the Commission’s Public
10:00 a.m. and 3:00 p.m. Copies of such to designate a longer period within Reference Room.
filing also will be available for which to take action on the proposed II. Self-Regulatory Organization’s
inspection and copying at the principal rule change so that it has sufficient time Statement of the Purpose of, and
offices of the Exchange. All comments to consider the proposed rule change. Statutory Basis for, the Proposed Rule
received will be posted without change; Accordingly, the Commission, Change
the Commission does not edit personal pursuant to Section 19(b)(2) of the Act,5
rljohnson on DSK3VPTVN1PROD with NOTICES

In its filing with the Commission, the
identifying information from
Exchange included statements
submissions. You should submit only 17 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1). concerning the purpose of and basis for
information that you wish to make
2 17 CFR 240.19b–4. the proposed rule change and discussed
available publicly. All submissions 3 See Securities Exchange Act Release No. 74175
should refer to File Number SR–Phlx– (Jan. 29, 2015), 80 FR 6150. 6 17 CFR 200.30–3(a)(31).
2015–023, and should be submitted on 4 15 U.S.C. 78s(b)(2). 1 15 U.S.C. 78s(b)(1).
or before April 15, 2015. 5 Id. 2 17 CFR 240.19b–4.

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Document Created: 2018-02-21 09:49:20
Document Modified: 2018-02-21 09:49:20

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 15831