82_FR_25128 82 FR 25025 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Penny Pilot Program

82 FR 25025 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Penny Pilot Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 103 (May 31, 2017)

Page Range25025-25027
FR Document2017-11144

Federal Register, Volume 82 Issue 103 (Wednesday, May 31, 2017)
[Federal Register Volume 82, Number 103 (Wednesday, May 31, 2017)]
[Notices]
[Pages 25025-25027]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-11144]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80755; File No. SR-Phlx-2017-36]


Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Extend the Penny 
Pilot Program

May 24, 2017.
    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 11, 2017, NASDAQ PHLX LLC (``Phlx'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Phlx Rule 1034 (Minimum 
Increments),\3\ to extend through December 31, 2017 or the date of 
permanent approval, if earlier, the Penny Pilot Program in options 
classes in certain issues (``Penny Pilot'' or ``Pilot''), and to change 
the date when delisted classes may be replaced in the Penny Pilot.\4\
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    \3\ References herein to rules refer to rules of Phlx, unless 
otherwise noted.
    \4\ The Penny Pilot was established in January 2007 and was last 
extended in 2016. See Securities Exchange Act Release Nos. 55153 
(January 23, 2007), 72 FR 4553 (January 31, 2007) (SR-Phlx-2006-74); 
75286 (June 24, 2015), 80 FR 37333 (June 30, 2015) (SR-Phlx-2015-54) 
(notice of filing and approval order establishing Penny Pilot); 
78060 (June 14, 2016), 81 FR 39979 (June 20, 2016) (SR-Phlx-2016-47) 
(notice of filing and immediate effectiveness extending the Penny 
Pilot through December 31, 2016); and 79425 (November 29, 2016), 81 
FR 87633 (December 5, 2016) (SR-Phlx-2016-115) (notice of filing and 
immediate effectiveness of proposed rule change to extend the Penny 
Pilot Program).

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[[Page 25026]]

    Proposed new language is underlined and proposed deleted language 
is [bracketed].

NASDAQ PHLX Rules

Options Rules

* * * * *

Rule 1034. Minimum Increments

    (a) Except as provided in sub-paragraphs (i)(B) and (iii) below, 
all options on stocks, index options, and Exchange Traded Fund Shares 
quoting in decimals at $3.00 or higher shall have a minimum increment 
of $.10, and all options on stocks and index options quoting in 
decimals under $3.00 shall have a minimum increment of $.05.
    (i)(A) No Change.
    (B) For a pilot period scheduled to expire [June 30, 2017] December 
31, 2017 or the date of permanent approval, if earlier (the ``pilot''), 
certain options shall be quoted and traded on the Exchange in minimum 
increments of $0.01 for all series in such options with a price of less 
than $3.00, and in minimum increments of $0.05 for all series in such 
options with a price of $3.00 or higher, except that options overlying 
the PowerShares QQQ Trust (``QQQQ'')[supreg], SPDR S&P 500 Exchange 
Traded Funds (``SPY''), and iShares Russell 2000 Index Funds (``IWM'') 
shall be quoted and traded in minimum increments of $0.01 for all 
series regardless of the price. A list of such options shall be 
communicated to membership via an Options Trader Alert (``OTA'') posted 
on the Exchange's Web site.
    The Exchange may replace any pilot issues that have been delisted 
with the next most actively traded multiply listed options classes that 
are not yet included in the pilot, based on trading activity in the 
previous six months. The replacement issues may be added to the pilot 
on the second trading day following [January 1, 2017] July 1, 2017.
    (C) No Change.
    (ii)-(v) No Change.
* * * * *
    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 filing is to amend Phlx Rule 1034 to extend the 
Penny Pilot through December 31, 2017 or the date of permanent 
approval, if earlier,\5\ and to change the date when delisted classes 
may be replaced in the Penny Pilot. The Exchange believes that 
extending the Penny Pilot will allow for further analysis of the Penny 
Pilot and a determination of how the program should be structured in 
the future.
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    \5\ The options exchanges in the U.S. that have pilot programs 
similar to the Penny Pilot (together ``pilot programs'') are 
currently working on a proposal for permanent approval of the 
respective pilot programs.
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    Under the Penny Pilot, the minimum price variation for all 
participating options classes, except for the Nasdaq-100 Index Tracking 
Stock (``QQQQ''), the SPDR S&P 500 Exchange Traded Fund (``SPY'') and 
the iShares Russell 2000 Index Fund (``IWM''), is $0.01 for all 
quotations in options series that are quoted at less than $3 per 
contract and $0.05 for all quotations in options series that are quoted 
at $3 per contract or greater. QQQQ, SPY and IWM are quoted in $0.01 
increments for all options series. The Penny Pilot is currently 
scheduled to expire on June 30, 2017.
    The Exchange proposes to extend the time period of the Penny Pilot 
through December 31, 2017 or the date of permanent approval, if 
earlier, and to provide a revised date for adding replacement issues to 
the Penny Pilot. The Exchange proposes that any Penny Pilot Program 
issues that have been delisted may be replaced on the second trading 
day following July 1, 2017. The replacement issues will be selected 
based on trading activity in the previous six months.\6\
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    \6\ The replacement issues will be announced to the Exchange's 
membership via an Options Trader Alert (OTA) posted on the 
Exchange's Web site. Penny Pilot replacement issues will be selected 
based on trading activity in the previous six months, as is the case 
today. The replacement issues would be identified based on The 
Options Clearing Corporation's trading volume data. For example, for 
the July replacement, trading volume from December 1, 2016 through 
May 30 [sic], 2017 would be analyzed. The Commission notes that for 
the July replacement, the Exchange will analyze data through May 31, 
2017, not May 30, 2017. The month immediately preceding the 
replacement issues' addition to the Pilot Program (i.e., June) would 
not be used for purposes of the six-month analysis.
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    This filing does not propose any substantive changes to the Penny 
Pilot Program; all classes currently participating in the Penny Pilot 
will remain the same and all minimum increments will remain unchanged. 
The Exchange believes the benefits to public customers and other market 
participants who will be able to express their true prices to buy and 
sell options have been demonstrated to outweigh the potential increase 
in quote traffic.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ 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 mechanism of a free and open 
market and a national market system and, in general, to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the proposed rule change, which extends the Penny 
Pilot for an additional six months through December 31, 2017 or the 
date of permanent approval, if earlier, and changes the date for 
replacing Penny Pilot issues that were delisted to the second trading 
day following July 1, 2017, will enable public customers and other 
market participants to express their true prices to buy and sell 
options for the benefit of all market participants. This is consistent 
with the Act.

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

[[Page 25027]]

of the purposes of the Act. To the contrary, this proposal is pro-
competitive because it allows Penny Pilot issues to continue trading on 
the Exchange.
    Moreover, the Exchange believes that the proposed rule change will 
allow for further analysis of the Pilot and a determination of how the 
Pilot should be structured in the future; and will serve to promote 
regulatory clarity and consistency, thereby reducing burdens on the 
marketplace and facilitating investor protection.
    The Pilot is an industry-wide initiative supported by all other 
option exchanges. The Exchange believes that extending the Pilot will 
allow for continued competition between market participants on the 
Exchange trading similar products as their counterparts on other 
exchanges, while at the same time allowing the Exchange to continue to 
compete for order flow with other exchanges in option issues trading as 
part of the Pilot.

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 \9\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection 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-2017-36 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-2017-36. 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-2017-36 and should 
be submitted on or before June 21, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11144 Filed 5-30-17; 8:45 am]
BILLING CODE 8011-01-P



                                                                             Federal Register / Vol. 82, No. 103 / Wednesday, May 31, 2017 / Notices                                                       25025

                                               other market participants to express                         At any time within 60 days of the                 submissions. You should submit only
                                               their true prices to buy and sell options                 filing of the proposed rule change, the              information that you wish to make
                                               for the benefit of all market participants.               Commission summarily may                             available publicly.
                                               This is consistent with the Act.                          temporarily suspend such rule change if                All submissions should refer to File
                                                                                                         it appears to the Commission that such               Number SR–Nasdaq–2017–049 and
                                               B. Self-Regulatory Organization’s                                                                              should be submitted on or before June
                                                                                                         action is: (i) Necessary or appropriate in
                                               Statement on Burden on Competition                        the public interest; (ii) for the protection         21, 2017.
                                                 The Exchange does not believe that                      of investors; or (iii) otherwise in                    For the Commission, by the Division of
                                               the proposed rule change will impose                      furtherance of the purposes of the Act.              Trading and Markets, pursuant to delegated
                                               any burden on competition not                             If the Commission takes such action, the             authority.11
                                               necessary or appropriate in furtherance                   Commission shall institute proceedings               Eduardo A. Aleman,
                                               of the purposes of the Act. To the                        to determine whether the proposed rule               Assistant Secretary.
                                               contrary, this proposal is pro-                           should be approved or disapproved.                   [FR Doc. 2017–11145 Filed 5–30–17; 8:45 am]
                                               competitive because it allows Penny
                                                                                                         IV. Solicitation of Comments                         BILLING CODE 8011–01–P
                                               Pilot issues to continue trading on the
                                               Exchange.                                                   Interested persons are invited to
                                                 Moreover, the Exchange believes that                    submit written data, views, and                      SECURITIES AND EXCHANGE
                                               the proposed rule change will allow for                   arguments concerning the foregoing,                  COMMISSION
                                               further analysis of the Pilot and a                       including whether the proposed rule
                                               determination of how the Pilot should                     change is consistent with the Act.                   [Release No. 34–80755; File No. SR–Phlx–
                                                                                                         Comments may be submitted by any of                  2017–36]
                                               be structured in the future; and will
                                               serve to promote regulatory clarity and                   the following methods:
                                                                                                                                                              Self-Regulatory Organizations;
                                               consistency, thereby reducing burdens                     Electronic Comments                                  NASDAQ PHLX LLC; Notice of Filing
                                               on the marketplace and facilitating
                                               investor protection.                                        • Use the Commission’s Internet                    and Immediate Effectiveness of
                                                                                                         comment form (http://www.sec.gov/                    Proposed Rule Change To Extend the
                                                 The Pilot is an industry-wide                                                                                Penny Pilot Program
                                               initiative supported by all other option                  rules/sro.shtml); or
                                                                                                           • Send an email to rule-comments@
                                               exchanges. The Exchange believes that                                                                          May 24, 2017.
                                                                                                         sec.gov. Please include File Number SR–
                                               extending the Pilot will allow for                                                                                Pursuant to Section 19(b)(1) of the
                                                                                                         Nasdaq–2017–049 on the subject line.
                                               continued competition between market                                                                           Securities Exchange Act of 1934
                                               participants on the Exchange trading                      Paper Comments                                       (‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                               similar products as their counterparts                       • Send paper comments in triplicate               notice is hereby given that on May 11,
                                               on other exchanges, while at the same                     to Secretary, Securities and Exchange                2017, NASDAQ PHLX LLC (‘‘Phlx’’ or
                                               time allowing the Exchange to continue                    Commission, 100 F Street NE.,                        ‘‘Exchange’’) filed with the Securities
                                               to compete for order flow with other                      Washington, DC 20549–1090.                           and Exchange Commission (‘‘SEC’’ or
                                               exchanges in option issues trading as                                                                          ‘‘Commission’’) the proposed rule
                                                                                                         All submissions should refer to File
                                               part of the Pilot.                                                                                             change as described in Items I, II, and
                                                                                                         Number SR–Nasdaq–2017–049. This file
                                                                                                                                                              III below, which Items have been
                                               C. Self-Regulatory Organization’s                         number should be included on the
                                                                                                                                                              prepared by the Exchange. The
                                               Statement on Comments on the                              subject line if email is used.
                                                                                                            To help the Commission process and                Commission is publishing this notice to
                                               Proposed Rule Change Received From
                                                                                                         review your comments more efficiently,               solicit comments on the proposed rule
                                               Members, Participants, or Others
                                                                                                         please use only one method. The                      change from interested persons.
                                                 No written comments were either
                                                                                                         Commission will post all comments on                 I. Self-Regulatory Organization’s
                                               solicited or received.
                                                                                                         the Commission’s Internet Web site                   Statement of the Terms of Substance of
                                               III. Date of Effectiveness of the                         (http://www.sec.gov/rules/sro.shtml).                the Proposed Rule Change
                                               Proposed Rule Change and Timing for                          Copies of the submission, all
                                                                                                                                                                 The Exchange proposes to amend
                                               Commission Action                                         subsequent amendments, all written
                                                                                                                                                              Phlx Rule 1034 (Minimum Increments),3
                                                                                                         statements with respect to the proposed
                                                 Because the foregoing proposed rule                                                                          to extend through December 31, 2017 or
                                                                                                         rule change that are filed with the
                                               change does not: (i) Significantly affect                                                                      the date of permanent approval, if
                                                                                                         Commission, and all written
                                               the protection of investors or the public                                                                      earlier, the Penny Pilot Program in
                                                                                                         communications relating to the
                                               interest; (ii) impose any significant                                                                          options classes in certain issues (‘‘Penny
                                                                                                         proposed rule change between the
                                               burden on competition; and (iii) become                                                                        Pilot’’ or ‘‘Pilot’’), and to change the
                                                                                                         Commission and any person, other than
                                               operative for 30 days from the date on                                                                         date when delisted classes may be
                                                                                                         those that may be withheld from the
                                               which it was filed, or such shorter time                                                                       replaced in the Penny Pilot.4
                                                                                                         public in accordance with the
                                               as the Commission may designate, it has
                                                                                                         provisions of 5 U.S.C. 552, will be
                                               become effective pursuant to Section                                                                             11 17  CFR 200.30–3(a)(12).
                                                                                                         available for Web site viewing and                     1 15  U.S.C. 78s(b)(1).
                                               19(b)(3)(A)(iii) of the Act 9 and
                                                                                                         printing in the Commission’s Public                     2 17 CFR 240.19b–4.
                                               subparagraph (f)(6) of Rule 19b–4
                                                                                                         Reference Room, 100 F Street NE.,                       3 References herein to rules refer to rules of Phlx,
                                               thereunder.10
                                                                                                         Washington, DC 20549, on official                    unless otherwise noted.
                                                                                                                                                                 4 The Penny Pilot was established in January 2007
                                                                                                         business days between the hours of
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                                                 9 15  U.S.C. 78s(b)(3)(A)(iii).                                                                              and was last extended in 2016. See Securities
                                                 10 17  CFR 240.19b–4(f)(6). In addition, Rule 19b–
                                                                                                         10:00 a.m. and 3:00 p.m. Copies of the               Exchange Act Release Nos. 55153 (January 23,
                                               4(f)(6) requires a self-regulatory organization to give   filing also will be available for                    2007), 72 FR 4553 (January 31, 2007) (SR–Phlx–
                                               the Commission written notice of its intent to file       inspection and copying at the principal              2006–74); 75286 (June 24, 2015), 80 FR 37333 (June
                                               the proposed rule change at least five business days      office of the Exchange. All comments                 30, 2015) (SR–Phlx–2015–54) (notice of filing and
                                               prior to the date of filing of the proposed rule                                                               approval order establishing Penny Pilot); 78060
                                               change, or such shorter time as designated by the
                                                                                                         received will be posted without change;              (June 14, 2016), 81 FR 39979 (June 20, 2016) (SR–
                                               Commission. The Exchange has satisfied this               the Commission does not edit personal                Phlx–2016–47) (notice of filing and immediate
                                               requirement.                                              identifying information from                                                                      Continued




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                                               25026                        Federal Register / Vol. 82, No. 103 / Wednesday, May 31, 2017 / Notices

                                                 Proposed new language is underlined                    II. Self-Regulatory Organization’s                    based on trading activity in the previous
                                               and proposed deleted language is                         Statement of the Purpose of, and                      six months.6
                                               [bracketed].                                             Statutory Basis for, the Proposed Rule                  This filing does not propose any
                                                                                                        Change                                                substantive changes to the Penny Pilot
                                               NASDAQ PHLX Rules                                                                                              Program; all classes currently
                                               Options Rules                                              In its filing with the Commission, the              participating in the Penny Pilot will
                                                                                                        Exchange included statements                          remain the same and all minimum
                                               *      *      *       *      *                           concerning the purpose of and basis for               increments will remain unchanged. The
                                               Rule 1034. Minimum Increments                            the proposed rule change and discussed                Exchange believes the benefits to public
                                                                                                        any comments it received on the                       customers and other market participants
                                                  (a) Except as provided in sub-                        proposed rule change. The text of these               who will be able to express their true
                                               paragraphs (i)(B) and (iii) below, all                   statements may be examined at the                     prices to buy and sell options have been
                                               options on stocks, index options, and                    places specified in Item IV below. The                demonstrated to outweigh the potential
                                               Exchange Traded Fund Shares quoting                      Exchange has prepared summaries, set                  increase in quote traffic.
                                               in decimals at $3.00 or higher shall have                forth in sections A, B, and C below, of
                                               a minimum increment of $.10, and all                                                                           2. Statutory Basis
                                                                                                        the most significant aspects of such
                                               options on stocks and index options                      statements.                                              The Exchange believes that its
                                               quoting in decimals under $3.00 shall                                                                          proposal is consistent with Section 6(b)
                                               have a minimum increment of $.05.                        A. Self-Regulatory Organization’s                     of the Act,7 in general, and furthers the
                                                                                                        Statement of the Purpose of, and                      objectives of Section 6(b)(5) of the Act,8
                                                  (i)(A) No Change.                                     Statutory Basis for, the Proposed Rule                in particular, in that it is designed to
                                                  (B) For a pilot period scheduled to                   Change                                                prevent fraudulent and manipulative
                                               expire [June 30, 2017] December 31,                                                                            acts and practices, to promote just and
                                               2017 or the date of permanent approval,                  1. Purpose
                                                                                                                                                              equitable principles of trade, to foster
                                               if earlier (the ‘‘pilot’’), certain options                 The purpose of this filing is to amend             cooperation and coordination with
                                               shall be quoted and traded on the                        Phlx Rule 1034 to extend the Penny                    persons engaged in facilitating
                                               Exchange in minimum increments of                        Pilot through December 31, 2017 or the                transactions in securities, and to remove
                                               $0.01 for all series in such options with                date of permanent approval, if earlier,5              impediments to and perfect the
                                               a price of less than $3.00, and in                       and to change the date when delisted                  mechanism of a free and open market
                                               minimum increments of $0.05 for all                      classes may be replaced in the Penny                  and a national market system and, in
                                               series in such options with a price of                   Pilot. The Exchange believes that                     general, to protect investors and the
                                               $3.00 or higher, except that options                     extending the Penny Pilot will allow for              public interest.
                                               overlying the PowerShares QQQ Trust                                                                               In particular, the proposed rule
                                                                                                        further analysis of the Penny Pilot and
                                               (‘‘QQQQ’’)®, SPDR S&P 500 Exchange                                                                             change, which extends the Penny Pilot
                                                                                                        a determination of how the program
                                               Traded Funds (‘‘SPY’’), and iShares                                                                            for an additional six months through
                                                                                                        should be structured in the future.
                                               Russell 2000 Index Funds (‘‘IWM’’)                                                                             December 31, 2017 or the date of
                                               shall be quoted and traded in minimum                       Under the Penny Pilot, the minimum                 permanent approval, if earlier, and
                                               increments of $0.01 for all series                       price variation for all participating                 changes the date for replacing Penny
                                               regardless of the price. A list of such                  options classes, except for the Nasdaq-               Pilot issues that were delisted to the
                                               options shall be communicated to                         100 Index Tracking Stock (‘‘QQQQ’’),                  second trading day following July 1,
                                               membership via an Options Trader Alert                   the SPDR S&P 500 Exchange Traded                      2017, will enable public customers and
                                               (‘‘OTA’’) posted on the Exchange’s Web                   Fund (‘‘SPY’’) and the iShares Russell                other market participants to express
                                               site.                                                    2000 Index Fund (‘‘IWM’’), is $0.01 for               their true prices to buy and sell options
                                                                                                        all quotations in options series that are             for the benefit of all market participants.
                                                  The Exchange may replace any pilot
                                                                                                        quoted at less than $3 per contract and               This is consistent with the Act.
                                               issues that have been delisted with the
                                               next most actively traded multiply                       $0.05 for all quotations in options series
                                                                                                        that are quoted at $3 per contract or                 B. Self-Regulatory Organization’s
                                               listed options classes that are not yet                                                                        Statement on Burden on Competition
                                               included in the pilot, based on trading                  greater. QQQQ, SPY and IWM are
                                               activity in the previous six months. The                 quoted in $0.01 increments for all                      The Exchange does not believe that
                                               replacement issues may be added to the                   options series. The Penny Pilot is                    the proposed rule change will impose
                                               pilot on the second trading day                          currently scheduled to expire on June                 any burden on competition not
                                               following [January 1, 2017] July 1, 2017.                30, 2017.                                             necessary or appropriate in furtherance
                                                  (C) No Change.                                           The Exchange proposes to extend the
                                                                                                                                                                 6 The replacement issues will be announced to
                                                                                                        time period of the Penny Pilot through
                                                  (ii)–(v) No Change.                                   December 31, 2017 or the date of                      the Exchange’s membership via an Options Trader
                                                                                                                                                              Alert (OTA) posted on the Exchange’s Web site.
                                               *      *     *      *      *                             permanent approval, if earlier, and to                Penny Pilot replacement issues will be selected
                                                  The text of the proposed rule change                  provide a revised date for adding                     based on trading activity in the previous six
                                                                                                        replacement issues to the Penny Pilot.                months, as is the case today. The replacement
                                               is available on the Exchange’s Web site                                                                        issues would be identified based on The Options
                                               at http://nasdaqomxphlx.cchwall                          The Exchange proposes that any Penny                  Clearing Corporation’s trading volume data. For
                                               street.com/, at the principal office of the              Pilot Program issues that have been                   example, for the July replacement, trading volume
                                               Exchange, and at the Commission’s                        delisted may be replaced on the second                from December 1, 2016 through May 30 [sic], 2017
nlaroche on DSK30NT082PROD with NOTICES




                                                                                                        trading day following July 1, 2017. The               would be analyzed. The Commission notes that for
                                               Public Reference Room.                                                                                         the July replacement, the Exchange will analyze
                                                                                                        replacement issues will be selected                   data through May 31, 2017, not May 30, 2017. The
                                               effectiveness extending the Penny Pilot through                                                                month immediately preceding the replacement
                                               December 31, 2016); and 79425 (November 29,                 5 The options exchanges in the U.S. that have      issues’ addition to the Pilot Program (i.e., June)
                                               2016), 81 FR 87633 (December 5, 2016) (SR–Phlx–          pilot programs similar to the Penny Pilot (together   would not be used for purposes of the six-month
                                               2016–115) (notice of filing and immediate                ‘‘pilot programs’’) are currently working on a        analysis.
                                                                                                                                                                 7 15 U.S.C. 78f(b).
                                               effectiveness of proposed rule change to extend the      proposal for permanent approval of the respective
                                               Penny Pilot Program).                                    pilot programs.                                          8 15 U.S.C. 78f(b)(5).




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                                                                             Federal Register / Vol. 82, No. 103 / Wednesday, May 31, 2017 / Notices                                                  25027

                                               of the purposes of the Act. To the                        to determine whether the proposed rule                 For the Commission, by the Division of
                                               contrary, this proposal is pro-                           should be approved or disapproved.                   Trading and Markets, pursuant to delegated
                                               competitive because it allows Penny                                                                            authority.11
                                               Pilot issues to continue trading on the                   IV. Solicitation of Comments                         Eduardo A. Aleman,
                                               Exchange.                                                                                                      Assistant Secretary.
                                                                                                           Interested persons are invited to
                                                 Moreover, the Exchange believes that                    submit written data, views, and                      [FR Doc. 2017–11144 Filed 5–30–17; 8:45 am]
                                               the proposed rule change will allow for                   arguments concerning the foregoing,                  BILLING CODE 8011–01–P
                                               further analysis of the Pilot and a                       including whether the proposed rule
                                               determination of how the Pilot should                     change is consistent with the Act.
                                               be structured in the future; and will                                                                          SECURITIES AND EXCHANGE
                                                                                                         Comments may be submitted by any of
                                               serve to promote regulatory clarity and                                                                        COMMISSION
                                                                                                         the following methods:
                                               consistency, thereby reducing burdens                                                                          [Release No. 34–80754; File No. SR–CHX–
                                               on the marketplace and facilitating                       Electronic Comments                                  2017–10]
                                               investor protection.
                                                 The Pilot is an industry-wide                             • Use the Commission’s Internet                    Self-Regulatory Organizations;
                                               initiative supported by all other option                  comment form (http://www.sec.gov/                    Chicago Stock Exchange, Inc.; Notice
                                               exchanges. The Exchange believes that                     rules/sro.shtml); or                                 of Filing and Immediate Effectiveness
                                               extending the Pilot will allow for                          • Send an email to rule-comments@                  of a Proposed Rule Change To Modify
                                               continued competition between market                      sec.gov. Please include File Number SR–              Certain Appendix B Web Site
                                               participants on the Exchange trading                      Phlx–2017–36 on the subject line.                    Publication Requirements Pursuant to
                                               similar products as their counterparts                                                                         the Regulation NMS Plan To Implement
                                               on other exchanges, while at the same                     Paper Comments                                       a Tick Size Pilot Program
                                               time allowing the Exchange to continue
                                                                                                           • Send paper comments in triplicate                May 24, 2017.
                                               to compete for order flow with other
                                               exchanges in option issues trading as                     to Secretary, Securities and Exchange                   Pursuant to Section 19(b)(1) of the
                                               part of the Pilot.                                        Commission, 100 F Street NE.,                        Securities Exchange Act of 1934
                                                                                                         Washington, DC 20549–1090.                           (‘‘Act’’),1 and Rule 19b–4 2 thereunder,
                                               C. Self-Regulatory Organization’s                                                                              notice is hereby given that on May 15,
                                               Statement on Comments on the                              All submissions should refer to File
                                                                                                         Number SR–Phlx–2017–36. This file                    2017, the Chicago Stock Exchange, Inc.
                                               Proposed Rule Change Received From                                                                             (‘‘CHX’’ or the ‘‘Exchange’’) filed with
                                               Members, Participants, or Others                          number should be included on the
                                                                                                                                                              the Securities and Exchange
                                                                                                         subject line if email is used.
                                                 No written comments were either                                                                              Commission (‘‘Commission’’) the
                                               solicited or received.                                       To help the Commission process and                proposed rule change as described in
                                                                                                         review your comments more efficiently,               Items I, II and III below, which Items
                                               III. Date of Effectiveness of the                         please use only one method. The                      have been prepared by the Exchange.
                                               Proposed Rule Change and Timing for                       Commission will post all comments on                 The Commission is publishing this
                                               Commission Action                                         the Commission’s Internet Web site                   notice to solicit comments on the
                                                  Because the foregoing proposed rule                    (http://www.sec.gov/rules/sro.shtml).                proposed rule change from interested
                                               change does not: (i) Significantly affect                    Copies of the submission, all                     persons.
                                               the protection of investors or the public                 subsequent amendments, all written                   I. Self-Regulatory Organization’s
                                               interest; (ii) impose any significant                     statements with respect to the proposed              Statement of the Terms of Substance of
                                               burden on competition; and (iii) become                   rule change that are filed with the                  the Proposed Rule Change
                                               operative for 30 days from the date on                    Commission, and all written
                                               which it was filed, or such shorter time                  communications relating to the                          CHX proposes to amend Article 20,
                                               as the Commission may designate, it has                   proposed rule change between the                     Rule 13(b) of the Rules of the Exchange
                                               become effective pursuant to Section                                                                           (‘‘CHX Rules’’) to modify certain
                                                                                                         Commission and any person, other than
                                               19(b)(3)(A)(iii) of the Act 9 and                                                                              Appendix B Web site data publication
                                                                                                         those that may be withheld from the
                                               subparagraph (f)(6) of Rule 19b–4                                                                              requirements pursuant to the Regulation
                                                                                                         public in accordance with the
                                               thereunder.10                                                                                                  NMS Plan to Implement a Tick Size
                                                                                                         provisions of 5 U.S.C. 552, will be
                                                  At any time within 60 days of the                                                                           Pilot Program (‘‘Plan’’).
                                                                                                         available for Web site viewing and                      The text of this proposed rule change
                                               filing of the proposed rule change, the                   printing in the Commission’s Public
                                               Commission summarily may                                                                                       is available on the Exchange’s Web site
                                                                                                         Reference Room, 100 F Street NE.,                    at (www.chx.com) and in the
                                               temporarily suspend such rule change if                   Washington, DC 20549, on official
                                               it appears to the Commission that such                                                                         Commission’s Public Reference Room.
                                                                                                         business days between the hours of
                                               action is: (i) Necessary or appropriate in                10:00 a.m. and 3:00 p.m. Copies of the               II. Self-Regulatory Organization’s
                                               the public interest; (ii) for the protection                                                                   Statement of the Purpose of, and
                                                                                                         filing also will be available for
                                               of investors; or (iii) otherwise in                                                                            Statutory Basis for, the Proposed Rule
                                                                                                         inspection and copying at the principal
                                               furtherance of the purposes of the Act.                                                                        Change
                                                                                                         office of the Exchange. All comments
                                               If the Commission takes such action, the
                                                                                                         received will be posted without change;                In its filing with the Commission, the
                                               Commission shall institute proceedings
                                                                                                         the Commission does not edit personal                CHX included statements concerning
                                                                                                         identifying information from                         the purpose of and basis for the
nlaroche on DSK30NT082PROD with NOTICES




                                                 9 15  U.S.C. 78s(b)(3)(A)(iii).
                                                 10 17  CFR 240.19b–4(f)(6). In addition, Rule 19b–      submissions. You should submit only                  proposed rule changes and discussed
                                               4(f)(6) requires a self-regulatory organization to give   information that you wish to make                    any comments it received on the
                                               the Commission written notice of its intent to file       available publicly.                                  proposed rule change. The text of these
                                               the proposed rule change at least five business days
                                               prior to the date of filing of the proposed rule          All submissions should refer to File                   11 17 CFR 200.30–3(a)(12).
                                               change, or such shorter time as designated by the
                                               Commission. The Exchange has satisfied this
                                                                                                         Number SR–Phlx–2017–36 and should                      1 15 U.S.C. 78s(b)(1).
                                               requirement.                                              be submitted on or before June 21, 2017.               2 17 CFR 240.19b–4.




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Document Created: 2017-05-31 05:59:19
Document Modified: 2017-05-31 05:59:19
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 Citation82 FR 25025 

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