81_FR_9074 81 FR 9039 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the FLEX No Minimum Value Pilot

81 FR 9039 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the FLEX No Minimum Value Pilot

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 35 (February 23, 2016)

Page Range9039-9041
FR Document2016-03661

Federal Register, Volume 81 Issue 35 (Tuesday, February 23, 2016)
[Federal Register Volume 81, Number 35 (Tuesday, February 23, 2016)]
[Notices]
[Pages 9039-9041]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-03661]



[[Page 9039]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77153; File No. SR-Phlx-2016-19]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend 
the FLEX No Minimum Value Pilot

February 17, 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 February 2, 2016, 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 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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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange is filing with the Commission a proposal to amend Phlx 
Rule 1079 (FLEX Index, Equity and Currency Options) to extend a pilot 
program that eliminates minimum value sizes for opening transactions in 
new series of FLEX index options and FLEX equity options (together 
known as ``FLEX Options'').\3\
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    \3\ In addition to FLEX Options, FLEX currency options are also 
traded on the Exchange. These flexible index, equity, and currency 
options provide investors the ability to customize basic option 
features including size, expiration date, exercise style, and 
certain exercise prices, and may have expiration dates within five 
years. See Rule 1079. FLEX currency options traded on the Exchange 
are also known as FLEX FX Options. The pilot program discussed 
herein does not encompass FLEX currency options.
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    The text of the amended Exchange rule is set forth immediately 
below.
    Additions are in italics and deletions are [bracketed].

Rules of the Exchange

Options Rules

* * * * *

Rule 1079. FLEX Index, Equity and Currency Options

    A Requesting Member shall obtain quotes and execute trades in 
certain non-listed FLEX options at the specialist post of the non-
FLEX option on the Exchange. The term ``FLEX option'' means a FLEX 
option contract that is traded subject to this Rule. Although FLEX 
options are generally subject to the Rules in this section, to the 
extent that the provisions of this Rule are inconsistent with other 
applicable Exchange Rules, this Rule takes precedence with respect 
to FLEX options.
    (a)-(f) No Change.
       
Commentary:
    .01 Notwithstanding subparagraphs (a)(8)(A)(i) and (a)(8)(A)(ii) 
above, for a pilot period ending the earlier of [January 31] March 
15, 2016, or the date on which the pilot is approved on a permanent 
basis, there shall be no minimum value size requirements for FLEX 
options.
* * * * *
    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 amend Phlx Rule 1079 
(FLEX Index, Equity and Currency Options) to extend a pilot program 
that eliminates minimum value sizes for opening transactions in new 
series of FLEX Options (the ``Pilot Program'' or ``Pilot''). The 
Exchange has submitted a separate filing for permanent approval of the 
Pilot Program; \4\ and is submitting this extension proposal so the 
Pilot Program continues while the Commission considers such permanent 
approval.
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    \4\ See Securities Exchange Act Release No. 76593 (December 8, 
2015), 80 FR 77399 (December 14, 2015) (SR-Phlx-2015-94) (notice of 
amended proposal to make the Pilot Program permanent) (the 
``permanent approval filing'').
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    Rule 1079 deals with the process of listing and trading FLEX 
equity, index, and currency options on the Exchange. Rule 1079(a)(8)(A) 
currently sets the minimum opening transaction value size in the case 
of a FLEX Option in a newly established (opening) series if there is no 
open interest in the particular series when a Request-for-Quote 
(``RFQ'') is submitted (except as provided in Commentary .01 to Rule 
1079): (i) $10 million underlying equivalent value, respecting FLEX 
market index options, and $5 million underlying equivalent value 
respecting FLEX industry index options; \5\ (ii) the lesser of 250 
contracts or the number of contracts overlying $1 million in the 
underlying securities, with respect to FLEX equity options (together 
the ``minimum value size'').\6\
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    \5\ Market index options and industry index options are broad-
based index options and narrow-based index options, respectively. 
See Rule 1000A(b)(11) and (12).
    \6\ Subsection (a)(8)(A) also provides a third alternative: 
(iii) 50 contracts in the case of FLEX currency options. However, 
this alternative is not part of the Pilot Program.
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    Presently, Commentary .01 to Rule 1079 states that by virtue of the 
Pilot Program ending January 31, 2016, or the date on which the pilot 
is approved on a permanent basis, there shall be no minimum value size 
requirements for FLEX Options as noted in subsections (a)(8)(A)(i) and 
(a)(8)(A)(ii) of Rule 1079.\7\
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    \7\ See Securities Exchange Act Release No. 75794 (August 31, 
2015), 80 FR 53606 (September 4, 2015) (SR-Phlx-2015-74) (notice of 
filing and immediate effectiveness of proposal to extend Pilot 
Program). The Pilot Program was instituted in 2010. See Securities 
Exchange Act Release No. 62900 (September 13, 2010), 75 FR 57098 
(September 17, 2010) (SR-Phlx-2010-123) (notice of filing and 
immediate effectiveness of proposal to institute Pilot Program).
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    The Exchange now proposes to extend the Pilot Program for a pilot 
period ending the earlier of March 15, 2016, or the date on which the 
Pilot is approved on a permanent basis.\8\
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    \8\ The Exchange notes that any positions established under this 
Pilot would not be impacted by the expiration of the Pilot. For 
example, a 10 contract FLEX equity option opening position that 
overlies less than $1 million in the underlying security and expires 
in January 2017 could be established during the Pilot. If the Pilot 
Program were not extended, the position would continue to exist and 
any further trading in the series would be subject to the minimum 
value size requirements for continued trading in that series.
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    The Exchange believes that there is sufficient investor interest 
and demand in the Pilot Program to warrant an extension. The Exchange 
believes that the Pilot Program has provided investors with additional 
means of managing their risk exposures and carrying out their 
investment objectives. Extension of the Pilot Program would continue to 
provide greater opportunities for traders and investors to manage risk 
through the use of FLEX Options, including investors that may otherwise 
trade in the unregulated over

[[Page 9040]]

the counter (``OTC'') market where similar size restrictions do not 
apply.\9\
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    \9\ The Exchange has not experienced any adverse market effects 
with respect to the Pilot Program.
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    In support of the proposed extension of the Pilot Program, the 
Exchange has under separate cover submitted to the Commission a Pilot 
Program Report (``Report'') that provides an analysis of the Pilot 
Program covering the period during which the Pilot has been in effect. 
This Report includes: (i) Data and analysis on the open interest and 
trading volume in (a) FLEX equity options that have an opening 
transaction with a minimum size of 0 to 249 contracts and less than $1 
million in underlying value; (b) FLEX index options that have an 
opening transaction with a minimum opening size of less than $10 
million in underlying equivalent value; and (ii) analysis of the types 
of investors that initiated opening FLEX Options transactions (i.e., 
institutional, high net worth, or retail). The Report has been 
submitted to the Commission as Exhibit 3 to the Exchange's permanent 
approval filing, and a subsequent Report with updated data, which the 
Exchange intends to make public, was also submitted to the Commission 
under separate cover.\10\
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    \10\ In the event the Pilot Program is not permanently approved 
by March 15, 2016, the Exchange will submit an additional Report 
covering the extended Pilot period.
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2. Statutory Basis
    The Exchange's proposal is consistent with Section 6(b) of the Act 
\11\ in general, and furthers the objectives of Section 6(b)(5) of the 
Act \12\ in particular, in that it is designed to 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, and to 
remove impediments to and perfect the mechanisms of a free and open 
market and a national market system. Specifically, the Exchange 
believes that the proposed extension of the Pilot Program, which 
eliminates the minimum value size applicable to opening transactions in 
new series of FLEX Options, would provide greater opportunities for 
investors to manage risk through the use of FLEX Options. The Exchange 
notes that it has not experienced any adverse market effects with 
respect to the Pilot Program.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. To the contrary, the proposal 
would give traders and investors the opportunity to more effectively 
tailor their trading, investing and hedging through FLEX options traded 
on the Exchange. Prior to the Pilot, options that represented opening 
transactions in new series that could not meet a minimum value size 
could not trade via FLEX on the Exchange, but rather had to trade OTC. 
Extension of the Pilot enables such options to continue to trade on the 
Exchange.

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) of the Act and Rule 19b-
4(f)(6) thereunder.\13\
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    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the Exchange 
may seamlessly continue its Pilot Program. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest.\16\ The Commission notes that 
waiving the 30-day operative delay would enable the Pilot Program to 
continue as of the date of the filing of this proposed rule change. 
Therefore, the Commission hereby waives the 30-day operative delay and 
designates the proposal operative upon filing.
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule 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-2016-19 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-2016-19. 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

[[Page 9041]]

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 
such 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-2016-19, and should be submitted on or before March 
15, 2016.

    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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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-03661 Filed 2-22-16; 8:45 am]
 BILLING CODE 8011-01-P



                                                                                Federal Register / Vol. 81, No. 35 / Tuesday, February 23, 2016 / Notices                                                     9039

                                                  SECURITIES AND EXCHANGE                                   of this Rule are inconsistent with other              there is no open interest in the
                                                  COMMISSION                                                applicable Exchange Rules, this Rule takes            particular series when a Request-for-
                                                                                                            precedence with respect to FLEX options.              Quote (‘‘RFQ’’) is submitted (except as
                                                  [Release No. 34–77153; File No. SR–Phlx–                     (a)–(f) No Change.
                                                  2016–19]                                                     • • • Commentary:
                                                                                                                                                                  provided in Commentary .01 to Rule
                                                                                                               .01 Notwithstanding subparagraphs                  1079): (i) $10 million underlying
                                                  Self-Regulatory Organizations;                            (a)(8)(A)(i) and (a)(8)(A)(ii) above, for a pilot     equivalent value, respecting FLEX
                                                  NASDAQ OMX PHLX LLC; Notice of                            period ending the earlier of [January 31]             market index options, and $5 million
                                                  Filing and Immediate Effectiveness of                     March 15, 2016, or the date on which the              underlying equivalent value respecting
                                                  Proposed Rule Change To Extend the                        pilot is approved on a permanent basis, there         FLEX industry index options; 5 (ii) the
                                                  FLEX No Minimum Value Pilot                               shall be no minimum value size requirements           lesser of 250 contracts or the number of
                                                                                                            for FLEX options.                                     contracts overlying $1 million in the
                                                  February 17, 2016.                                        *     *     *     *     *                             underlying securities, with respect to
                                                     Pursuant to Section 19(b)(1) of the                       The text of the proposed rule change               FLEX equity options (together the
                                                  Securities Exchange Act of 1934                           is available on the Exchange’s Web site               ‘‘minimum value size’’).6
                                                  (‘‘Act’’),1 and Rule 19b–4 thereunder,2                   at http://
                                                  notice is hereby given that on February                   nasdaqomxphlx.cchwallstreet.com, at                      Presently, Commentary .01 to Rule
                                                  2, 2016, NASDAQ OMX PHLX LLC                              the principal office of the Exchange, and             1079 states that by virtue of the Pilot
                                                  (‘‘Phlx’’ or ‘‘Exchange’’) filed with the                 at the Commission’s Public Reference                  Program ending January 31, 2016, or the
                                                  Securities and Exchange Commission                        Room.                                                 date on which the pilot is approved on
                                                  (‘‘SEC’’ or ‘‘Commission’’) the proposed                                                                        a permanent basis, there shall be no
                                                  rule change as described in Items I and                   II. Self-Regulatory Organization’s                    minimum value size requirements for
                                                  II below, which Items have been                           Statement of the Purpose of, and                      FLEX Options as noted in subsections
                                                  prepared by the Exchange. The                             Statutory Basis for, the Proposed Rule                (a)(8)(A)(i) and (a)(8)(A)(ii) of Rule
                                                  Commission is publishing this notice to                   Change                                                1079.7
                                                  solicit comments on the proposed rule                        In its filing with the Commission, the                The Exchange now proposes to extend
                                                  change from interested persons.                           Exchange included statements                          the Pilot Program for a pilot period
                                                                                                            concerning the purpose of and basis for               ending the earlier of March 15, 2016, or
                                                  I. Self-Regulatory Organization’s
                                                                                                            the proposed rule change and discussed                the date on which the Pilot is approved
                                                  Statement of the Terms of the Substance
                                                                                                            any comments it received on the                       on a permanent basis.8
                                                  of the Proposed Rule Change
                                                                                                            proposed rule change. The text of these
                                                     The Exchange is filing with the                                                                                 The Exchange believes that there is
                                                                                                            statements may be examined at the
                                                  Commission a proposal to amend Phlx                                                                             sufficient investor interest and demand
                                                                                                            places specified in Item IV below. The
                                                  Rule 1079 (FLEX Index, Equity and                                                                               in the Pilot Program to warrant an
                                                                                                            Exchange has prepared summaries, set
                                                  Currency Options) to extend a pilot                                                                             extension. The Exchange believes that
                                                                                                            forth in sections A, B, and C below, of
                                                  program that eliminates minimum value                                                                           the Pilot Program has provided
                                                                                                            the most significant aspects of such
                                                  sizes for opening transactions in new                     statements.                                           investors with additional means of
                                                  series of FLEX index options and FLEX                                                                           managing their risk exposures and
                                                  equity options (together known as                         A. Self-Regulatory Organization’s                     carrying out their investment objectives.
                                                  ‘‘FLEX Options’’).3                                       Statement of the Purpose of, and                      Extension of the Pilot Program would
                                                     The text of the amended Exchange                       Statutory Basis for, the Proposed Rule                continue to provide greater
                                                  rule is set forth immediately below.                      Change                                                opportunities for traders and investors
                                                     Additions are in italics and deletions                 1. Purpose                                            to manage risk through the use of FLEX
                                                  are [bracketed].                                                                                                Options, including investors that may
                                                                                                               The purpose of this proposed rule                  otherwise trade in the unregulated over
                                                  Rules of the Exchange                                     change is to amend Phlx Rule 1079
                                                                                                            (FLEX Index, Equity and Currency                         5 Market index options and industry index
                                                  Options Rules
                                                                                                            Options) to extend a pilot program that               options are broad-based index options and narrow-
                                                  *          *   *       *      *                           eliminates minimum value sizes for                    based index options, respectively. See Rule
                                                  Rule 1079. FLEX Index, Equity and Currency                opening transactions in new series of                 1000A(b)(11) and (12).
                                                                                                                                                                     6 Subsection (a)(8)(A) also provides a third
                                                  Options                                                   FLEX Options (the ‘‘Pilot Program’’ or
                                                                                                                                                                  alternative: (iii) 50 contracts in the case of FLEX
                                                     A Requesting Member shall obtain quotes                ‘‘Pilot’’). The Exchange has submitted a              currency options. However, this alternative is not
                                                  and execute trades in certain non-listed FLEX             separate filing for permanent approval                part of the Pilot Program.
                                                  options at the specialist post of the non-FLEX            of the Pilot Program; 4 and is submitting                7 See Securities Exchange Act Release No. 75794

                                                  option on the Exchange. The term ‘‘FLEX                   this extension proposal so the Pilot                  (August 31, 2015), 80 FR 53606 (September 4, 2015)
                                                  option’’ means a FLEX option contract that                                                                      (SR–Phlx–2015–74) (notice of filing and immediate
                                                                                                            Program continues while the                           effectiveness of proposal to extend Pilot Program).
                                                  is traded subject to this Rule. Although FLEX
                                                  options are generally subject to the Rules in
                                                                                                            Commission considers such permanent                   The Pilot Program was instituted in 2010. See
                                                  this section, to the extent that the provisions           approval.                                             Securities Exchange Act Release No. 62900
                                                                                                               Rule 1079 deals with the process of                (September 13, 2010), 75 FR 57098 (September 17,
                                                                                                                                                                  2010) (SR–Phlx–2010–123) (notice of filing and
                                                      1 15U.S.C. 78s(b)(1).                                 listing and trading FLEX equity, index,               immediate effectiveness of proposal to institute
                                                      2 17CFR 240.19b–4.                                    and currency options on the Exchange.                 Pilot Program).
                                                     3 In addition to FLEX Options, FLEX currency           Rule 1079(a)(8)(A) currently sets the                    8 The Exchange notes that any positions

                                                  options are also traded on the Exchange. These            minimum opening transaction value                     established under this Pilot would not be impacted
mstockstill on DSK4VPTVN1PROD with NOTICES




                                                  flexible index, equity, and currency options provide      size in the case of a FLEX Option in a                by the expiration of the Pilot. For example, a 10
                                                  investors the ability to customize basic option                                                                 contract FLEX equity option opening position that
                                                  features including size, expiration date, exercise        newly established (opening) series if                 overlies less than $1 million in the underlying
                                                  style, and certain exercise prices, and may have                                                                security and expires in January 2017 could be
                                                  expiration dates within five years. See Rule 1079.           4 See Securities Exchange Act Release No. 76593    established during the Pilot. If the Pilot Program
                                                  FLEX currency options traded on the Exchange are          (December 8, 2015), 80 FR 77399 (December 14,         were not extended, the position would continue to
                                                  also known as FLEX FX Options. The pilot program          2015) (SR–Phlx–2015–94) (notice of amended            exist and any further trading in the series would be
                                                  discussed herein does not encompass FLEX                  proposal to make the Pilot Program permanent) (the    subject to the minimum value size requirements for
                                                  currency options.                                         ‘‘permanent approval filing’’).                       continued trading in that series.



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                                                  9040                        Federal Register / Vol. 81, No. 35 / Tuesday, February 23, 2016 / Notices

                                                  the counter (‘‘OTC’’) market where                      B. Self-Regulatory Organization’s                         investors and the public interest.16 The
                                                  similar size restrictions do not apply.9                Statement on Burden on Competition                        Commission notes that waiving the 30-
                                                     In support of the proposed extension                                                                           day operative delay would enable the
                                                                                                             The Exchange does not believe that                     Pilot Program to continue as of the date
                                                  of the Pilot Program, the Exchange has                  the proposed rule change will impose
                                                  under separate cover submitted to the                                                                             of the filing of this proposed rule
                                                                                                          any burden on competition not                             change. Therefore, the Commission
                                                  Commission a Pilot Program Report                       necessary or appropriate in furtherance                   hereby waives the 30-day operative
                                                  (‘‘Report’’) that provides an analysis of               of the purposes of the Act. To the                        delay and designates the proposal
                                                  the Pilot Program covering the period                   contrary, the proposal would give                         operative upon filing.
                                                  during which the Pilot has been in                      traders and investors the opportunity to                     At any time within 60 days of the
                                                  effect. This Report includes: (i) Data and              more effectively tailor their trading,                    filing of the proposed rule change, the
                                                  analysis on the open interest and                       investing and hedging through FLEX                        Commission summarily may
                                                  trading volume in (a) FLEX equity                       options traded on the Exchange. Prior to                  temporarily suspend such rule change if
                                                  options that have an opening                            the Pilot, options that represented                       it appears to the Commission that such
                                                  transaction with a minimum size of 0 to                 opening transactions in new series that                   action is necessary or appropriate in the
                                                  249 contracts and less than $1 million                  could not meet a minimum value size                       public interest, for the protection of
                                                  in underlying value; (b) FLEX index                     could not trade via FLEX on the                           investors, or otherwise in furtherance of
                                                  options that have an opening                            Exchange, but rather had to trade OTC.                    the purposes of the Act. If the
                                                  transaction with a minimum opening                      Extension of the Pilot enables such                       Commission takes such action, the
                                                  size of less than $10 million in                        options to continue to trade on the                       Commission shall institute proceedings
                                                  underlying equivalent value; and (ii)                   Exchange.                                                 to determine whether the proposed rule
                                                  analysis of the types of investors that                 C. Self-Regulatory Organization’s                         should be approved or disapproved.
                                                  initiated opening FLEX Options                          Statement on Comments on the
                                                  transactions (i.e., institutional, high net                                                                       IV. Solicitation of Comments
                                                                                                          Proposed Rule Change Received From
                                                  worth, or retail). The Report has been                  Members, Participants, or Others                            Interested persons are invited to
                                                  submitted to the Commission as Exhibit                                                                            submit written data, views, and
                                                  3 to the Exchange’s permanent approval                    No written comments were either                         arguments concerning the foregoing,
                                                  filing, and a subsequent Report with                    solicited or received.                                    including whether the proposed rule
                                                  updated data, which the Exchange                        III. Date of Effectiveness of the                         change is consistent with the Act.
                                                  intends to make public, was also                        Proposed Rule Change and Timing for                       Comments may be submitted by any of
                                                  submitted to the Commission under                       Commission Action                                         the following methods:
                                                  separate cover.10                                                                                                 Electronic Comments
                                                                                                            Because the foregoing proposed rule
                                                  2. Statutory Basis                                      change does not: (i) Significantly affect                   • Use the Commission’s Internet
                                                                                                          the protection of investors or the public                 comment form (http://www.sec.gov/
                                                     The Exchange’s proposal is consistent                interest; (ii) impose any significant                     rules/sro.shtml); or
                                                  with Section 6(b) of the Act 11 in                      burden on competition; and (iii) become                     • Send an email to rule-comments@
                                                  general, and furthers the objectives of                 operative for 30 days from the date on                    sec.gov. Please include File Number SR–
                                                  Section 6(b)(5) of the Act 12 in                        which it was filed, or such shorter time                  Phlx–2016–19 on the subject line.
                                                  particular, in that it is designed to                   as the Commission may designate, it has
                                                  prevent fraudulent and manipulative                     become effective pursuant to Section                      Paper Comments
                                                  acts and practices, to promote just and                 19(b)(3)(A) of the Act and Rule 19b–                        • Send paper comments in triplicate
                                                  equitable principles of trade, to foster                4(f)(6) thereunder.13                                     to Secretary, Securities and Exchange
                                                  cooperation and coordination with                         A proposed rule change filed under                      Commission, 100 F Street NE.,
                                                  persons engaged in facilitating                         Rule 19b–4(f)(6) 14 normally does not                     Washington, DC 20549–1090.
                                                  transactions in securities, and to remove               become operative prior to 30 days after                   All submissions should refer to File
                                                  impediments to and perfect the                          the date of the filing. However, pursuant                 Number SR–Phlx–2016–19. This file
                                                  mechanisms of a free and open market                    to Rule 19b–4(f)(6)(iii),15 the                           number should be included on the
                                                  and a national market system.                           Commission may designate a shorter                        subject line if email is used. To help the
                                                  Specifically, the Exchange believes that                time if such action is consistent with the                Commission process and review your
                                                  the proposed extension of the Pilot                     protection of investors and the public                    comments more efficiently, please use
                                                  Program, which eliminates the                           interest. The Exchange has asked the                      only one method. The Commission will
                                                  minimum value size applicable to                        Commission to waive the 30-day                            post all comments on the Commission’s
                                                  opening transactions in new series of                   operative delay so that the Exchange                      Internet Web site (http://www.sec.gov/
                                                  FLEX Options, would provide greater                     may seamlessly continue its Pilot                         rules/sro.shtml). Copies of the
                                                  opportunities for investors to manage                   Program. The Commission believes that                     submission, all subsequent
                                                  risk through the use of FLEX Options.                   waiving the 30-day operative delay is                     amendments, all written statements
                                                  The Exchange notes that it has not                      consistent with the protection of                         with respect to the proposed rule
                                                  experienced any adverse market effects                                                                            change that are filed with the
                                                  with respect to the Pilot Program.                         13 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–      Commission, and all written
                                                                                                          4(f)(6)(iii) requires a self-regulatory organization to   communications relating to the
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                                                                                                          give the Commission written notice of its intent to       proposed rule change between the
                                                    9 The Exchange has not experienced any adverse
                                                                                                          file the proposed rule change, along with a brief
                                                  market effects with respect to the Pilot Program.       description and text of the proposed rule change,         Commission and any person, other than
                                                    10 In the event the Pilot Program is not              at least five business days prior to the date of filing   those that may be withheld from the
                                                  permanently approved by March 15, 2016, the             of the proposed rule change, or such shorter time
                                                  Exchange will submit an additional Report covering      as designated by the Commission. The Exchange               16 For purposes only of waiving the 30-day
                                                  the extended Pilot period.                              has satisfied this requirement.                           operative delay, the Commission has considered the
                                                    11 15 U.S.C. 78f(b).                                     14 17 CFR 240.19b–4(f)(6).
                                                                                                                                                                    proposed rule’s impact on efficiency, competition,
                                                    12 15 U.S.C. 78f(b)(5).                                  15 17 CFR 240.19b–4(f)(6)(iii).                        and capital formation. See 15 U.S.C. 78c(f).



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                                                                              Federal Register / Vol. 81, No. 35 / Tuesday, February 23, 2016 / Notices                                                         9041

                                                  public in accordance with the                           change, or within such longer period up                   BSECC, SCCP, BX, and NASDAQ, the
                                                  provisions of 5 U.S.C. 552, will be                     to 90 days as the Commission may                          ‘‘SROs’’), filed with the Securities and
                                                  available for Web site viewing and                      designate if it finds such longer period                  Exchange Commission (‘‘Commission’’),
                                                  printing in the Commission’s Public                     to be appropriate and publishes its                       pursuant to Section 19(b)(1) of the
                                                  Reference Room, 100 F Street NE.,                       reasons for so finding, or as to which the                Securities Exchange Act of 1934
                                                  Washington, DC 20549 on official                        self-regulatory organization consents,                    (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
                                                  business days between the hours of                      the Commission shall either approve the                   proposed rule changes with respect to
                                                  10:00 a.m. and 3:00 p.m. Copies of such                 proposed rule change, disapprove the                      the By-Laws (‘‘By-Laws’’) of NASDAQ,
                                                  filing also will be available for                       proposed rule change, or institute                        Inc. (‘‘Company’’), the parent company
                                                  inspection and copying at the principal                 proceedings to determine whether the                      of the SROs. The proposed rule changes
                                                  office of the Exchange. All comments                    proposed rule change should be                            would revise certain requirements
                                                  received will be posted without change;                 disapproved. The 45th day after                           regarding Director 3 qualifications and
                                                  the Commission does not edit personal                   publication of the notice for this                        Director disqualification procedures for
                                                  identifying information from                            proposed rule change is February 18,                      the Company’s Board of Directors
                                                  submissions. You should submit only                     2016. The Commission is extending this                    (‘‘Board’’). On December 29, 2015, each
                                                  information that you wish to make                       45-day time period.                                       SRO filed Amendment No. 1 to its
                                                  available publicly. All submissions                       The Commission finds it appropriate                     respective proposal.4 On December 30,
                                                  should refer to File Number SR–Phlx–                    to designate a longer period within                       2015, Phlx filed Amendment No. 2 to its
                                                  2016–19, and should be submitted on or                  which to take action on the proposed                      proposal.5 The proposed rule changes,
                                                  before March 15, 2016.                                  rule change so that it has sufficient time                as modified by the amendments thereto,
                                                    For the Commission, by the Division of                to consider this proposed rule change.                    were published for comment in the
                                                  Trading and Markets, pursuant to delegated              Accordingly, the Commission, pursuant                     Federal Register on January 7, 2016.6
                                                  authority.17                                            to Section 19(b)(2) of the Act,5                          The Commission did not receive any
                                                  Robert W. Errett,                                       designates April 1, 2016, as the date by                  comment letters on the proposals. This
                                                  Deputy Secretary.                                       which the Commission shall either                         order approves the proposed rule
                                                  [FR Doc. 2016–03661 Filed 2–22–16; 8:45 am]
                                                                                                          approve or disapprove, or institute                       changes, as modified by the respective
                                                                                                          proceedings to determine whether to                       amendments thereto.
                                                  BILLING CODE 8011–01–P
                                                                                                          disapprove, the proposed rule change
                                                                                                          (File No. SR–BATS–2015–105).                              II. Description of the Proposal
                                                  SECURITIES AND EXCHANGE                                   For the Commission, by the Division of                    The Company proposes to amend
                                                  COMMISSION                                              Trading and Markets, pursuant to delegated
                                                                                                          authority.6                                               certain provisions of the By-Laws that
                                                  [Release No. 34–77159; File No. SR–BATS–                                                                          relate to the qualification of Directors.
                                                                                                          Robert W. Errett,
                                                  2015–105]                                                                                                           First, the Company proposes to
                                                                                                          Deputy Secretary.
                                                  Self-Regulatory Organizations; BATS                     [FR Doc. 2016–03666 Filed 2–22–16; 8:45 am]               amend Section 4.3 of the By-Laws
                                                  Exchange, Inc.; Notice of Designation                   BILLING CODE 8011–01–P
                                                                                                                                                                    (Qualifications), which sets forth the
                                                  of a Longer Period for Commission                                                                                 compositional requirements of the
                                                  Action on Proposed Rule Change to                                                                                 Board. Currently, Section 4.3 requires
                                                  Rule 14.11(i), Managed Fund Shares,                     SECURITIES AND EXCHANGE                                   that the number of Non-Industry
                                                  To List and Trade the Shares of the                     COMMISSION                                                Directors 7 on the Board equal or exceed
                                                  Elkhorn S&P GSCI Dynamic Roll                           [Release No. 34–77165; File Nos. SR–                        1 15  U.S.C. 78s(b)(1).
                                                  Commodity ETF of Elkhorn ETF Trust                      BSECC–2015–002; SR–SCCP–2015–02; SR–                        2 17  CFR 240.19b–4.
                                                                                                          BX–2015–085; SR–NASDAQ–2015–160; SR–                         3 ‘‘Director’’ means a member of the Company’s
                                                  February 17, 2016.                                      Phlx–2015–113]
                                                     On December 18, 2015, BATS                                                                                     Board of Directors. See Article I(j) of the By-Laws.
                                                                                                                                                                       4 Amendment No. 1 for each of the proposals
                                                  Exchange, Inc. (‘‘BATS’’) filed with the                Self-Regulatory Organizations; Boston                     amended and replaced the original filing in its
                                                  Securities and Exchange Commission                      Stock Exchange Clearing Corporation;                      entirety. In Amendment No. 1, each SRO, among
                                                  (‘‘Commission’’), pursuant to Section                   Stock Clearing Corporation of                             other things, clarified the operation of the current
                                                  19(b)(1) of the Securities Exchange Act                 Philadelphia; NASDAQ OMX BX, Inc.;                        and proposed provisions of the By-Laws and how
                                                                                                                                                                    the proposed rule change would operate in
                                                  of 1934 (‘‘Act’’) 1 and Rule 19b–4                      The NASDAQ Stock Market LLC;                              conjunction with the Listing Rules (as herein
                                                  thereunder,2 a proposed rule change to                  NASDAQ OMX PHLX LLC; Order                                defined) of NASDAQ.
                                                  list and trade the shares of the Elkhorn                Approving Proposed Rule Changes, as                          5 On December 30, 2015, Phlx withdrew

                                                  S&P GSCI Dynamic Roll Commodity                         Modified by Amendments Thereto, To                        Amendment No. 1 for technical reasons and,
                                                  ETF of Elkhorn ETF Trust under BATS                                                                               subsequently, filed Amendment No. 2. Amendment
                                                                                                          Amend the By-Laws of NASDAQ, Inc.                         No. 2 amended and replaced the original filing in
                                                  Rule 14.11(i). The proposed rule change                                                                           its entirety.
                                                  was published for comment in the                        February 17, 2016.                                           6 Securities Exchange Act Release Nos. 76806

                                                  Federal Register on January 4, 2016.3                   I. Introduction                                           (December 31, 2015), 81 FR 838 (SR–BSCC–2015–
                                                  The Commission has not received any                                                                               002); 76807 (December 31, 2015), 81 FR 828 (SR–
                                                                                                             On December 21, 2015, each of the                      SCCP–2015–02); 76808 (December 31, 2015), 81 FR
                                                  comments on the proposal.                               Boston Stock Exchange Clearing                            831 (SR–BX–2015–085); 76809 (December 31,
                                                     Section 19(b)(2) of the Act 4 provides                                                                         2015), 81 FR 817 (SR–NASDAQ–2015–160); 76810
                                                                                                          Corporation (‘‘BSECC’’), Stock Clearing
                                                  that within 45 days of the publication of                                                                         (December 31, 2015), 81 FR 841 (SR–Phlx–2015–
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                                                                                                          Corporation of Philadelphia (‘‘SCCP’’),                   113) (collectively, ‘‘Notices’’).
                                                  notice of the filing of a proposed rule
                                                                                                          NASDAQ OMX BX, Inc. (‘‘BX’’), The                            7 Under the By-Laws, ‘‘Non-Industry Director’’ or

                                                    17 17 CFR 200.30–3(a)(12).
                                                                                                          NASDAQ Stock Market LLC                                   ‘‘Non-Industry committee member’’ means a
                                                    1 15                                                  (‘‘NASDAQ’’), and NASDAQ OMX                              Director (excluding any Staff Director) or committee
                                                         U.S.C. 78s(b)(1).                                                                                          member who is (1) a Public Director or Public
                                                    2 17 CFR 240.19b–4.                                   PHLX LLC (‘‘Phlx’’ and, together with                     committee member; (2) an Issuer Director or Issuer
                                                    3 See Securities Exchange Act Release No. 76776
                                                                                                                                                                    committee member; or (3) any other individual who
                                                  (Dec. 28, 2015), 80 FR 120.                               5 Id.
                                                                                                                                                                    would not be an Industry Director or Industry
                                                    4 15 U.S.C. 78s(b)(2).                                  6 17    CFR 200.30–3(a)(31).                            committee member. See Article I(q) of the By-Laws.



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Document Created: 2018-02-02 14:33:10
Document Modified: 2018-02-02 14:33:10
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 9039 

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