81 FR 35074 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules 900.1, 910, and 921

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 105 (June 1, 2016)

Page Range		35074-35075
FR Document		2016-12778
Federal Register, Volume 81 Issue 105 (Wednesday, June 1, 2016)
[Federal Register Volume 81, Number 105 (Wednesday, June 1, 2016)]
[Notices]
[Pages 35074-35075]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-12778]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77916; File No. SR-Phlx-2016-38]


Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Rules 
900.1, 910, and 921

May 25, 2016.
    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 May 12, 2016, NASDAQ PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the following Rules: 900.1, General 
Powers and Duties of Membership Department; 910, Qualifications [sic] 
as Member Organization; and 921, Qualifications [sic]; Designation of 
Executive Representative.
    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 Exchange proposes to modify certain Phlx membership rules in 
order to harmonize them with Nasdaq and BX rules and to modernize the 
Exchange's Rulebook. Specifically, Exchange proposes to amend Rule 
900.1 entitled, ``General Powers and Duties of Membership Department'' 
by eliminating sections (b) and (d) which are the provisions regarding 
partnerships as distinct membership classifications. The exchange also 
proposes to eliminate the provisions regarding partnerships from Rule 
910(j), Qualifications [sic] as Member Organization. The Exchange will 
reserve those sections of the rules in order to allow for future 
membership needs. Sections of each of these Rules were more relevant to 
the Phlx membership review process prior to demutualization in 2004 and 
specifically related to the review of partnerships and no longer 
reflect the information needed as part of the membership review. These 
provisions were retained following changes to the Exchange Bylaws in 
2009, yet no longer were relevant to the regulatory needs of the 
Exchange. The proposed changes related to ownership structures of 
partnerships that the Exchange no longer needs as discussed in greater 
detail below. An additional amendment relates to the organizational 
changes that occurred following demutualization such that 
responsibilities that formerly were handled by the Board of Directors 
are now a responsibility of the Membership Department. The final change 
to Rule 921 entitled, ``Qualification; Designation of Executive 
Representative'' is proposed to align Phlx rules with existing NASDAQ 
and BX rule 1150.
    The membership distinctions in Rule 900.1(b) and (d) and Rule 
910(j) were applicable when Phlx offered seats to its members, prior to 
demutualization, yet remained in the rules after this was concluded in 
2004. Before demutualization, Phlx seats conveyed ownership of the 
Exchange, in addition to access, which created a greater obligation on 
Phlx to gather information on the members' legal business structure. 
Specifically, Phlx was obligated to maintain a heighted vigilance on 
the structure, ownership, and change of control in a partnership in 
order to ensure the financial integrity of its ownership and members 
ability to honor their trades and obligations. Rule 900.1(b) and 
900.1(d) articulates obligations of partners and general partners as 
they relate to the Exchange that are no longer relevant as the 
partnership no longer conveys specific obligations that are distinct 
from any other member organization. Rule 910(j) relates to liabilities 
that were unique to the partnership, as a member, which are no longer 
applicable today.
    Today, permits are issued to Exchange members and member 
organizations. The Exchange no longer needs to differentiate among 
types of entities because the permit structure conveys no ownership to 
the member. These membership rules related to partnerships are no 
longer applicable today. The distinctions regarding the admission of a 
member or member organization as a partnership, as compared to another 
ownership structure, are no longer relevant.
    The Exchange also proposes to replace the references to the ``Board 
of Directors'' with the ``Membership Department'' as part of Rule 
910(h). The responsibilities of the Board of Directors have changed. 
Consequently, the Board of Directors is no longer actively involved in 
the membership process, which is now operated in the same way as 
Nasdaq's and BX's and the review of the qualifications of Member 
Organizations is handled by the Membership Department, as defined in 
Rule 1(p). This rule has become outdated and no longer reflects current 
business practices.
    The final change relates to Rule 921(b); Phlx seeks to harmonize 
921(b) with the existing Nasdaq and BX Rule 1150 by not requiring an 
executive representative to provide evidence of their acceptance of 
designation in writing. The membership form will continue to require 
the designation of the Executive Representative, but will no longer 
require the designated person to provide their signature. The 
elimination of the evidence of acceptance provision of 921(b) does not 
impose any burden on competition rather it aligns the requirements of 
PHLX with that of Nasdaq and BX.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b)

[[Page 35075]]

of the Act \3\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \4\ in particular, in that it is designed to protect 
investors and the public interest by streamlining various aspects of 
the membership process. The Exchange believes that the provisions 
identified in Rule 900.1, 910, and 921 are outdated and unnecessary. 
These rules regarding partnerships and changes to the partnership rules 
no longer serves the needs of the Exchange.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As described above PHLX's former ownership required the Exchange to 
be vigilant of the ownership structure of its members in case of 
financial distress or bankruptcy as the seat structure was vital to the 
financial condition of the Exchange and the relationships among 
members. Before demutualization, members had an ownership interest in 
the Exchange. Today, permits convey no ownership and therefore such 
vigilance as to the ownership structure of members is no longer 
warranted.
    The removal of Rules 900.1(b) and (d), Rule 910(j) and part of 
921(b) will promote just and equitable principles of trade, and foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities by removing burdensome requirements so that 
members and member organizations may properly focus on other relevant 
requirements which benefit the marketplace.

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 delete certain 
unnecessary rules which today burden partnerships over corporations. 
The deletions of the Rules 900.1(b) and (d), Rule 910(j) will remove a 
current burden on competition which requires members and member 
organizations that are partnerships to disclose unnecessary information 
as compared to other corporate entities not structured as a 
partnership.

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 \5\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\6\
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(3)(a)(iii) [sic].
    \6\ 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.
---------------------------------------------------------------------------

    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 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 [email protected]. Please include 
File Number SR-Phlx-2016-38 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-2016-38. 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, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-Phlx-2016-38 and should be 
submitted on or before June 22, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2016-12778 Filed 5-31-16; 8:45 am]
BILLING CODE 8011-01-P
35074 Federal Register / Vol. 81, No. 105 / Wednesday, June 1, 2016 / Notices

BY: lllllllllllllllllll the proposed rule change and discussed obligation on Phlx to gather information
NEW YORK STOCK EXCHANGE LLC any comments it received on the on the members’ legal business
BY: lllllllllllllllllll proposed rule change. The text of these structure. Specifically, Phlx was
NYSE ARCA, INC. statements may be examined at the obligated to maintain a heighted
BY: lllllllllllllllllll places specified in Item IV below. The vigilance on the structure, ownership,
NYSE MKT LLC
Exchange has prepared summaries, set and change of control in a partnership
forth in sections A, B, and C below, of in order to ensure the financial integrity
BY: lllllllllllllllllll
the most significant aspects of such of its ownership and members ability to
[TOPAZ EXCHANGE, LLC statements. honor their trades and obligations. Rule
BY: lllllllllllllllll] 900.1(b) and 900.1(d) articulates
A. Self-Regulatory Organization’s
[FR Doc. 2016–12779 Filed 5–31–16; 8:45 am] obligations of partners and general
Statement of the Purpose of, and
BILLING CODE 8011–01–P partners as they relate to the Exchange
Statutory Basis for, the Proposed Rule
that are no longer relevant as the
Change
partnership no longer conveys specific
SECURITIES AND EXCHANGE 1. Purpose obligations that are distinct from any
COMMISSION The Exchange proposes to modify other member organization. Rule 910(j)
[Release No. 34–77916; File No. SR–Phlx– certain Phlx membership rules in order relates to liabilities that were unique to
2016–38] to harmonize them with Nasdaq and BX the partnership, as a member, which are
rules and to modernize the Exchange’s no longer applicable today.
Self-Regulatory Organizations; Rulebook. Specifically, Exchange Today, permits are issued to Exchange
NASDAQ PHLX LLC; Notice of Filing proposes to amend Rule 900.1 entitled, members and member organizations.
and Immediate Effectiveness of ‘‘General Powers and Duties of The Exchange no longer needs to
Proposed Rule Change To Amend Membership Department’’ by differentiate among types of entities
Rules 900.1, 910, and 921 eliminating sections (b) and (d) which because the permit structure conveys no
are the provisions regarding ownership to the member. These
May 25, 2016.
partnerships as distinct membership membership rules related to
Pursuant to Section 19(b)(1) of the partnerships are no longer applicable
Securities Exchange Act of 1934 classifications. The exchange also
proposes to eliminate the provisions today. The distinctions regarding the
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 admission of a member or member
notice is hereby given that, on May 12, regarding partnerships from Rule 910(j),
Qualifications [sic] as Member organization as a partnership, as
2016, NASDAQ PHLX LLC (‘‘Phlx’’ or compared to another ownership
‘‘Exchange’’) filed with the Securities Organization. The Exchange will reserve
those sections of the rules in order to structure, are no longer relevant.
and Exchange Commission The Exchange also proposes to
(‘‘Commission’’) the proposed rule allow for future membership needs.
Sections of each of these Rules were replace the references to the ‘‘Board of
change as described in Items I, II, and Directors’’ with the ‘‘Membership
III, below, which Items have been more relevant to the Phlx membership
review process prior to demutualization Department’’ as part of Rule 910(h). The
prepared by the Exchange. The responsibilities of the Board of Directors
Commission is publishing this notice to in 2004 and specifically related to the
review of partnerships and no longer have changed. Consequently, the Board
solicit comments on the proposed rule of Directors is no longer actively
change from interested persons. reflect the information needed as part of
the membership review. These involved in the membership process,
I. Self-Regulatory Organization’s provisions were retained following which is now operated in the same way
Statement of the Terms of Substance of changes to the Exchange Bylaws in as Nasdaq’s and BX’s and the review of
the Proposed Rule Change 2009, yet no longer were relevant to the the qualifications of Member
regulatory needs of the Exchange. The Organizations is handled by the
The Exchange proposes to amend the
proposed changes related to ownership Membership Department, as defined in
following Rules: 900.1, General Powers
structures of partnerships that the Rule 1(p). This rule has become
and Duties of Membership Department;
Exchange no longer needs as discussed outdated and no longer reflects current
910, Qualifications [sic] as Member
in greater detail below. An additional business practices.
Organization; and 921, Qualifications
[sic]; Designation of Executive amendment relates to the organizational The final change relates to Rule
Representative. changes that occurred following 921(b); Phlx seeks to harmonize 921(b)
The text of the proposed rule change demutualization such that with the existing Nasdaq and BX Rule
is available on the Exchange’s Web site responsibilities that formerly were 1150 by not requiring an executive
at http:// handled by the Board of Directors are representative to provide evidence of
nasdaqomxphlx.cchwallstreet.com/, at now a responsibility of the Membership their acceptance of designation in
the principal office of the Exchange, and Department. The final change to Rule writing. The membership form will
at the Commission’s Public Reference 921 entitled, ‘‘Qualification; Designation continue to require the designation of
Room. of Executive Representative’’ is the Executive Representative, but will
proposed to align Phlx rules with no longer require the designated person
II. Self-Regulatory Organization’s existing NASDAQ and BX rule 1150. to provide their signature. The
Statement of the Purpose of, and The membership distinctions in Rule elimination of the evidence of
Statutory Basis for, the Proposed Rule 900.1(b) and (d) and Rule 910(j) were acceptance provision of 921(b) does not
sradovich on DSK3TPTVN1PROD with NOTICES

Change applicable when Phlx offered seats to its impose any burden on competition
In its filing with the Commission, the members, prior to demutualization, yet rather it aligns the requirements of
Exchange included statements remained in the rules after this was PHLX with that of Nasdaq and BX.
concerning the purpose of and basis for concluded in 2004. Before 2. Statutory Basis
demutualization, Phlx seats conveyed
1 15 U.S.C. 78s(b)(1). ownership of the Exchange, in addition The Exchange believes that its
2 17 CFR 240.19b–4. to access, which created a greater proposal is consistent with Section 6(b)

VerDate Sep<11>2014 21:59 May 31, 2016 Jkt 238001 PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 E:\FR\FM\01JNN1.SGM 01JNN1
Federal Register / Vol. 81, No. 105 / Wednesday, June 1, 2016 / Notices 35075

of the Act 3 in general, and furthers the III. Date of Effectiveness of the rules/sro.shtml). Copies of the
objectives of Section 6(b)(5) of the Act 4 Proposed Rule Change and Timing for submission, all subsequent
in particular, in that it is designed to Commission Action amendments, all written statements
protect investors and the public interest Because the foregoing proposed rule with respect to the proposed rule
by streamlining various aspects of the change does not: (i) Significantly affect change that are filed with the
membership process. The Exchange the protection of investors or the public Commission, and all written
believes that the provisions identified in interest; (ii) impose any significant communications relating to the
Rule 900.1, 910, and 921 are outdated burden on competition; and (iii) become proposed rule change between the
and unnecessary. These rules regarding operative for 30 days from the date on Commission and any person, other than
which it was filed, or such shorter time those that may be withheld from the
partnerships and changes to the
as the Commission may designate, it has public in accordance with the
partnership rules no longer serves the
provisions of 5 U.S.C. 552, will be
needs of the Exchange. become effective pursuant to Section
available for Web site viewing and
As described above PHLX’s former 19(b)(3)(A)(iii) of the Act 5 and
printing in the Commission’s Public
subparagraph (f)(6) of Rule 19b–4
ownership required the Exchange to be Reference Room, 100 F Street NE.,
thereunder.6
vigilant of the ownership structure of its At any time within 60 days of the Washington, DC 20549, on official
members in case of financial distress or filing of the proposed rule change, the business days between the hours of
bankruptcy as the seat structure was Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the
vital to the financial condition of the temporarily suspend such rule change if filing also will be available for
Exchange and the relationships among it appears to the Commission that such inspection and copying at the principal
members. Before demutualization, action is: (i) Necessary or appropriate in office of the Exchange. All comments
members had an ownership interest in received will be posted without change;
the public interest; (ii) for the protection
the Exchange. Today, permits convey no the Commission does not edit personal
of investors; or (iii) otherwise in
ownership and therefore such vigilance identifying information from
furtherance of the purposes of the Act.
submissions. You should submit only
as to the ownership structure of If the Commission takes such action, the
information that you wish to make
members is no longer warranted. Commission shall institute proceedings
available publicly. All submissions
The removal of Rules 900.1(b) and (d), to determine whether the proposed rule
should refer to File Number SR–Phlx–
Rule 910(j) and part of 921(b) will should be approved or disapproved.
2016–38 and should be submitted on or
promote just and equitable principles of IV. Solicitation of Comments before June 22, 2016.
trade, and foster cooperation and Interested persons are invited to For the Commission, by the Division of
coordination with persons engaged in submit written data, views and Trading and Markets, pursuant to delegated
facilitating transactions in securities by arguments concerning the foregoing, authority.7
removing burdensome requirements so including whether the proposed rule Brent J. Fields,
that members and member organizations change is consistent with the Act. Secretary.
may properly focus on other relevant Comments may be submitted by any of [FR Doc. 2016–12778 Filed 5–31–16; 8:45 am]
requirements which benefit the the following methods: BILLING CODE 8011–01–P
marketplace.
Electronic Comments
B. Self-Regulatory Organization’s • Use the Commission’s Internet SECURITIES AND EXCHANGE
Statement on Burden on Competition comment form (http://www.sec.gov/ COMMISSION
The proposed rule change does not rules/sro.shtml); or
[Release No. 34–77906; File No. SR–
• Send an email to rule-comments@ BatsEDGA–2016–10]
impose any burden on competition that sec.gov. Please include File Number SR–
is not necessary or appropriate in Phlx–2016–38 on the subject line.
furtherance of the purposes of the Act. Self-Regulatory Organizations; Bats
Paper Comments EDGA Exchange, Inc.; Notice of Filing
The Exchange’s proposed amendments
and Immediate Effectiveness of a
seek to delete certain unnecessary rules • Send paper comments in triplicate Proposed Rule Change to Rule 11.7,
which today burden partnerships over to Secretary, Securities and Exchange Opening Process
corporations. The deletions of the Rules Commission, 100 F Street NE.,
900.1(b) and (d), Rule 910(j) will remove Washington, DC 20549–1090. May 25, 2016.
a current burden on competition which All submissions should refer to File Pursuant to Section 19(b)(1) of the
requires members and member Number SR–Phlx–2016–38. This file Securities Exchange Act of 1934 (the
organizations that are partnerships to number should be included on the ‘‘Act’’),1 and Rule 19b–4 thereunder,2
disclose unnecessary information as subject line if email is used. To help the notice is hereby given that on May 13,
compared to other corporate entities not Commission process and review your 2016, Bats EDGA Exchange, Inc. (the
structured as a partnership. comments more efficiently, please use ‘‘Exchange’’ or ‘‘EDGA’’) filed with the
only one method. The Commission will Securities and Exchange Commission
C. Self-Regulatory Organization’s post all comments on the Commission’s (‘‘Commission’’) the proposed rule
Statement on Comments on the Internet Web site (http://www.sec.gov/ change as described in Items I and II
Proposed Rule Change Received From below, which Items have been prepared
sradovich on DSK3TPTVN1PROD with NOTICES

Members, Participants, or Others 5 15 U.S.C. 78s(b)(3)(a)(iii) [sic]. by the Exchange. The Exchange has
6 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– designated this proposal as a ‘‘non-
No written comments were either 4(f)(6) requires a self-regulatory organization to give controversial’’ proposed rule change
solicited or received. the Commission written notice of its intent to file pursuant to Section 19(b)(3)(A) of the
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
7 17 CFR 200.30–3(a)(12).
change, or such shorter time as designated by the
3 15 U.S.C. 78f(b). 1 15
Commission. The Exchange has satisfied this U.S.C. 78s(b)(1).
4 15 U.S.C. 78f(b)(5). requirement. 2 17 CFR 240.19b–4.

VerDate Sep<11>2014 21:59 May 31, 2016 Jkt 238001 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 E:\FR\FM\01JNN1.SGM 01JNN1
Document Created: 2018-02-08 07:26:57
Document Modified: 2018-02-08 07:26:57
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		81 FR 35074