82_FR_31767 82 FR 31638 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Delivery of Options Disclosure Documents and Special Statement for Uncovered Options Writers

82 FR 31638 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Delivery of Options Disclosure Documents and Special Statement for Uncovered Options Writers

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 129 (July 7, 2017)

Page Range31638-31640
FR Document2017-14247

Federal Register, Volume 82 Issue 129 (Friday, July 7, 2017)
[Federal Register Volume 82, Number 129 (Friday, July 7, 2017)]
[Notices]
[Pages 31638-31640]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-14247]


=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81069; File No. SR-Phlx-2017-49]


Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Regarding Delivery 
of Options Disclosure Documents and Special Statement for Uncovered 
Options Writers

June 30, 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 June 20, 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 Rule 1029, Delivery of Options 
Disclosure Documents.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqphlx.cchwallstreet.com/, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchanges proposes to amend Rule 1029 in two respects, first in 
connection with the required delivery to customers of any amended 
Options Disclosure Document (``ODD''), and second to set forth for the 
use of members and member organizations a Special Statement for 
Uncovered Options Writers for delivery to customers.
Delivery of Amended Options Disclosure Documents
    Rule 1029 currently requires every member and member organization 
to deliver a current ODD to each customer at or prior to the time such 
customer's account is approved for options trading. The rule also 
contains a requirement that each amended ODD shall be distributed to 
every customer having an account approved for trading the options 
class(es) to which such ODD relates, or, the alternative, shall be 
distributed not later than the time a confirmation of a transaction is 
delivered to each customer who enters into an option transaction 
pertaining to such an options class. The language concerning amended 
Options Disclosure Documents is somewhat awkward and cumbersome, with 
the required timing of the provision of the amended ODD presented as 
``an alternative'' to a requirement that the amended ODD be distributed 
in the first place to every customer having an account approved for 
trading the options classes(es) to which such ODD relates. The Exchange 
proposes to delete this language, and to replace it with more 
straightforward language requiring a copy of each amendment to an ODD 
to be furnished to each customer who was previously furnished the ODD 
to which the amendment pertains, not later than the time a confirmation 
of a transaction in the category of options to which the amendment 
pertains is delivered to such customer. This language is based upon 
comparable language in Chapter 11, Section 15(a)(ii), of the Nasdaq 
Options Market rules, Nasdaq ISE Rule 616(a)(2), and Chicago Board 
Options Exchange (``CBOE'') Rule 9.15(a). The Exchange is also making a 
minor edit to the introductory sentence, substituting the word 
``transactions'' for the word ``trading'' in order to conform to the 
terminology used by the foregoing exchanges.
Special Statement for Uncovered Options Writers
    Rule 1024(c)(v) requires every member organization transacting 
business with the public in uncovered option contracts develop, 
implement and maintain specific written procedures governing the 
conduct of such business, including requirements that customers 
approved for writing uncovered short options transactions be provided 
with a special written description of the risks inherent in writing 
uncovered short option transactions, at or prior to the initial 
uncovered short option transaction. This written disclosure document 
must be furnished to customers in addition to the ODD required to be 
provided to customers trading in options pursuant to Rule 1029(a). 
Current Rule 1029(b) states that the written description of risks 
required by Rule 1024(c)(v) shall be in a format prescribed by the

[[Page 31639]]

Exchange or in a format developed by the member organization, provided 
it contains substantially similar information as the prescribed 
Exchange format and has received prior written approval of the 
Exchange.
    The Exchange now proposes to add Rule 1029(c), which will set forth 
a sample risk description captioned ``Special Statement for Uncovered 
Options Writers'' (the ``Special Statement'') for use by member 
organizations to satisfy the requirements of Rule 1029(b). The Special 
Statement alerts customers to the special risks associated with 
uncovered options writing which may expose investors to potentially 
significant loss, and states that this type of strategy may therefore 
not be suitable for all customers approved for options transactions. 
The Special Statement describes potential losses of uncovered call and 
put option writing, the possibility of significant margin calls, 
strategies where the potential risk is unlimited, consequences of 
unavailability of a secondary market in options, and the risk born by 
the writer of an American-style option subject to assignment of an 
exercise at any time after he has written the option until the option 
expires. The proposed rules are intended to increase customer awareness 
of the risks entailed in selling uncovered short option contracts.\3\ 
This language is almost identical to language contained in Chapter 11, 
Section 15 (c) of the NOM rules, CBOE Rule 9.15(b), and ISE Rule 
616(d).
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    \3\ The Special Statement was originally based upon a prototype 
developed by the Options Self-Regulatory Council consisting of 
representatives of the American Stock Exchange, Chicago Board 
Options Exchange, Midwest Stock Exchange, National Association of 
Securities Dealers, New York Exchange, Philadelphia Stock Exchange 
and Pacific Stock Exchange. See Securities Exchange Act Release No. 
26952 (June 21, 1989), 54 FR 27256 (June 28, 1989). The language of 
the Special Statement was included as an exhibit to SR-Phlx-89-24 
which was approved in the foregoing approval order, but was not 
submitted as part of the rule text in that filing. The Exchange is 
now adding the Special Statement language into the actual rule text.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\4\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\5\ in particular, in that it is designed to promote 
just and equitable principles of trade, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general to protect investors and the public interest. 
The amendment of the portion of the rule requiring the delivery to 
customers of any amended ODD should protect investors by making this 
regulatory obligation more clear to members and member organizations, 
thus ensuring that amendments will be delivered to each customer who 
was previously furnished the ODD to which the amendment pertains. The 
proposed rule setting forth the Special Statement is intended to 
protect investors by facilitating increased customer awareness of the 
particular risks associated with selling uncovered short option 
contracts. The distribution to customers of this short succinct written 
statement that describes the risks associated with uncovered options 
writing will help ensure investor protection because it will increase 
customer awareness of the potential for significant losses in writing 
uncovered short options contracts. Since disclosure is an important 
component of investor protection under the federal securities laws, 
providing investors with this special uncovered short options risk 
statement may help ameliorate problems associated with uncovered short 
options transactions (e.g., significant margin calls), especially 
during volatile markets.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 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. The language which is proposed 
to be added to Rule 1029 has previously been considered and approved by 
the Commission for use in other exchanges' rulebooks as discussed 
above.\6\
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    \6\ See footnote 3 above.
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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 \7\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 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-2017-49 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-2017-49. 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

[[Page 31640]]

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-2017-49 and should be submitted on or before July 
28, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2017-14247 Filed 7-6-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                    31638                             Federal Register / Vol. 82, No. 129 / Friday, July 7, 2017 / Notices

                                                    report of the findings, as well as                       (‘‘Act’’),1 and Rule 19b–4 thereunder,2                    account is approved for options trading.
                                                    recommended actions, will be                             notice is hereby given that on June 20,                    The rule also contains a requirement
                                                    published by ATALM.                                      2017 NASDAQ PHLX LLC (‘‘Phlx’’ or                          that each amended ODD shall be
                                                       Agency: Institute of Museum and                       ‘‘Exchange’’) filed with the Securities                    distributed to every customer having an
                                                    Library Services.                                        and Exchange Commission (‘‘SEC’’ or                        account approved for trading the
                                                       Title: 2017 Sustaining Indigenous                     ‘‘Commission’’) the proposed rule                          options class(es) to which such ODD
                                                    Culture Survey: The Structure,                           change as described in Items I, II, and                    relates, or, the alternative, shall be
                                                    Activities, and Needs of Tribal                          III, below, which Items have been                          distributed not later than the time a
                                                    Archives, Libraries, and Museums.                        prepared by the Exchange. The                              confirmation of a transaction is
                                                       OMB Number: To be determined.                         Commission is publishing this notice to                    delivered to each customer who enters
                                                       Frequency: One-time collection                        solicit comments on the proposed rule                      into an option transaction pertaining to
                                                    anticipated.                                             change from interested persons.                            such an options class. The language
                                                       Affected Public: The target population                                                                           concerning amended Options Disclosure
                                                                                                             I. Self-Regulatory Organization’s
                                                    is tribal archive, library, and museum                                                                              Documents is somewhat awkward and
                                                                                                             Statement of the Terms of Substance of
                                                    centers, as well as leaders of tribal                                                                               cumbersome, with the required timing
                                                                                                             the Proposed Rule Change
                                                    communities without cultural programs.                                                                              of the provision of the amended ODD
                                                       Number of Respondents: To be                             The Exchange proposes to amend                          presented as ‘‘an alternative’’ to a
                                                    determined.                                              Rule 1029, Delivery of Options                             requirement that the amended ODD be
                                                       Estimated Average Burden per                          Disclosure Documents.                                      distributed in the first place to every
                                                    Response: To be determined.                                 The text of the proposed rule change                    customer having an account approved
                                                       Estimated Total Annual Burden: To                     is available on the Exchange’s Web site                    for trading the options classes(es) to
                                                    be determined.                                           at                                                         which such ODD relates. The Exchange
                                                                                                             http://nasdaqphlx.cchwallstreet.com/,                      proposes to delete this language, and to
                                                       Total Annualized Capital/Startup
                                                                                                             at the principal office of the Exchange,                   replace it with more straightforward
                                                    Costs: n/a.
                                                                                                             and at the Commission’s Public                             language requiring a copy of each
                                                       Total Annual Costs: To be
                                                                                                             Reference Room.                                            amendment to an ODD to be furnished
                                                    determined.
                                                       Public Comments Invited: Comments                     II. Self-Regulatory Organization’s                         to each customer who was previously
                                                    submitted in response to this notice will                Statement of the Purpose of, and                           furnished the ODD to which the
                                                    be summarized and/or included in the                     Statutory Basis for, the Proposed Rule                     amendment pertains, not later than the
                                                    request for OMB’s clearance of this                      Change                                                     time a confirmation of a transaction in
                                                    information collection.                                                                                             the category of options to which the
                                                                                                                In its filing with the Commission, the                  amendment pertains is delivered to
                                                    FOR FURTHER INFORMATION CONTACT: Dr.                     Exchange included statements                               such customer. This language is based
                                                    Sandra Toro, Senior Program Officer,                     concerning the purpose of and basis for                    upon comparable language in Chapter
                                                    Institute of Museum and Library                          the proposed rule change and discussed                     11, Section 15(a)(ii), of the Nasdaq
                                                    Services, 955 L’Enfant Plaza SW., Suite                  any comments it received on the                            Options Market rules, Nasdaq ISE Rule
                                                    4000, Washington, DC 20024. Dr. Toro                     proposed rule change. The text of these                    616(a)(2), and Chicago Board Options
                                                    can be reached by Telephone: 202–653–                    statements may be examined at the                          Exchange (‘‘CBOE’’) Rule 9.15(a). The
                                                    4662, Fax: 202–653–4608, or by email at                  places specified in Item IV below. The                     Exchange is also making a minor edit to
                                                    storo@imls.gov, or by teletype (TTY/                     Exchange has prepared summaries, set                       the introductory sentence, substituting
                                                    TDD) for persons with hearing difficulty                 forth in sections A, B, and C below, of                    the word ‘‘transactions’’ for the word
                                                    at 202/653–4614. Office hours are from                   the most significant aspects of such                       ‘‘trading’’ in order to conform to the
                                                    8:00 a.m. to 4:30 p.m., E.T., Monday                     statements.                                                terminology used by the foregoing
                                                    through Friday, except Federal holidays.                                                                            exchanges.
                                                                                                             A. Self-Regulatory Organization’s
                                                      Dated: July 3, 2017.                                   Statement of the Purpose of, and                           Special Statement for Uncovered
                                                    Kim Miller,                                              Statutory Basis for, the Proposed Rule                     Options Writers
                                                    Grants Management Specialist, Office of Chief            Change
                                                    Information Officer.                                                                                                   Rule 1024(c)(v) requires every
                                                                                                             1. Purpose                                                 member organization transacting
                                                    [FR Doc. 2017–14302 Filed 7–6–17; 8:45 am]
                                                                                                                The Exchanges proposes to amend                         business with the public in uncovered
                                                    BILLING CODE 7036–01–P
                                                                                                             Rule 1029 in two respects, first in                        option contracts develop, implement
                                                                                                             connection with the required delivery to                   and maintain specific written
                                                                                                             customers of any amended Options                           procedures governing the conduct of
                                                    SECURITIES AND EXCHANGE                                                                                             such business, including requirements
                                                                                                             Disclosure Document (‘‘ODD’’), and
                                                    COMMISSION                                                                                                          that customers approved for writing
                                                                                                             second to set forth for the use of
                                                    [Release No. 34–81069; File No. SR–Phlx–                 members and member organizations a                         uncovered short options transactions be
                                                    2017–49]                                                 Special Statement for Uncovered                            provided with a special written
                                                                                                             Options Writers for delivery to                            description of the risks inherent in
                                                    Self-Regulatory Organizations;                           customers.                                                 writing uncovered short option
                                                    NASDAQ PHLX LLC; Notice of Filing                                                                                   transactions, at or prior to the initial
                                                                                                             Delivery of Amended Options
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                    and Immediate Effectiveness of                                                                                      uncovered short option transaction.
                                                    Proposed Rule Change Regarding                           Disclosure Documents                                       This written disclosure document must
                                                    Delivery of Options Disclosure                              Rule 1029 currently requires every                      be furnished to customers in addition to
                                                    Documents and Special Statement for                      member and member organization to                          the ODD required to be provided to
                                                    Uncovered Options Writers                                deliver a current ODD to each customer                     customers trading in options pursuant
                                                                                                             at or prior to the time such customer’s                    to Rule 1029(a). Current Rule 1029(b)
                                                    June 30, 2017.                                                                                                      states that the written description of
                                                      Pursuant to Section 19(b)(1) of the                         1 15   U.S.C. 78s(b)(1).                              risks required by Rule 1024(c)(v) shall
                                                    Securities Exchange Act of 1934                               2 17   CFR 240.19b–4.                                 be in a format prescribed by the


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                                                                                      Federal Register / Vol. 82, No. 129 / Friday, July 7, 2017 / Notices                                                           31639

                                                    Exchange or in a format developed by                     amendment of the portion of the rule                       19(b)(3)(A)(iii) of the Act 7 and
                                                    the member organization, provided it                     requiring the delivery to customers of                     subparagraph (f)(6) of Rule 19b–4
                                                    contains substantially similar                           any amended ODD should protect                             thereunder.8
                                                    information as the prescribed Exchange                   investors by making this regulatory                           At any time within 60 days of the
                                                    format and has received prior written                    obligation more clear to members and                       filing of the proposed rule change, the
                                                    approval of the Exchange.                                member organizations, thus ensuring                        Commission summarily may
                                                       The Exchange now proposes to add                      that amendments will be delivered to                       temporarily suspend such rule change if
                                                    Rule 1029(c), which will set forth a                     each customer who was previously                           it appears to the Commission that such
                                                    sample risk description captioned                        furnished the ODD to which the                             action is: (i) Necessary or appropriate in
                                                    ‘‘Special Statement for Uncovered                        amendment pertains. The proposed rule                      the public interest; (ii) for the protection
                                                    Options Writers’’ (the ‘‘Special                         setting forth the Special Statement is                     of investors; or (iii) otherwise in
                                                    Statement’’) for use by member                           intended to protect investors by                           furtherance of the purposes of the Act.
                                                    organizations to satisfy the requirements                facilitating increased customer                            If the Commission takes such action, the
                                                    of Rule 1029(b). The Special Statement                   awareness of the particular risks                          Commission shall institute proceedings
                                                    alerts customers to the special risks                    associated with selling uncovered short                    to determine whether the proposed rule
                                                    associated with uncovered options                        option contracts. The distribution to                      should be approved or disapproved.
                                                    writing which may expose investors to                    customers of this short succinct written
                                                    potentially significant loss, and states                                                                            IV. Solicitation of Comments
                                                                                                             statement that describes the risks
                                                    that this type of strategy may therefore                 associated with uncovered options                            Interested persons are invited to
                                                    not be suitable for all customers                        writing will help ensure investor                          submit written data, views, and
                                                    approved for options transactions. The                   protection because it will increase                        arguments concerning the foregoing,
                                                    Special Statement describes potential                    customer awareness of the potential for                    including whether the proposed rule
                                                    losses of uncovered call and put option                  significant losses in writing uncovered                    change is consistent with the Act.
                                                    writing, the possibility of significant                  short options contracts. Since disclosure                  Comments may be submitted by any of
                                                    margin calls, strategies where the                       is an important component of investor                      the following methods:
                                                    potential risk is unlimited,                             protection under the federal securities
                                                    consequences of unavailability of a                                                                                 Electronic Comments
                                                                                                             laws, providing investors with this
                                                    secondary market in options, and the                     special uncovered short options risk                         • Use the Commission’s Internet
                                                    risk born by the writer of an American-                  statement may help ameliorate problems                     comment form (http://www.sec.gov/
                                                    style option subject to assignment of an                 associated with uncovered short options                    rules/sro.shtml); or
                                                    exercise at any time after he has written                transactions (e.g., significant margin                       • Send an email to rule-comments@
                                                    the option until the option expires. The                 calls), especially during volatile                         sec.gov. Please include File Number SR–
                                                    proposed rules are intended to increase                  markets.                                                   Phlx–2017–49 on the subject line.
                                                    customer awareness of the risks entailed
                                                                                                             B. Self-Regulatory Organization’s                          Paper Comments
                                                    in selling uncovered short option
                                                    contracts.3 This language is almost                      Statement on Burden on Competition                           • Send paper comments in triplicate
                                                    identical to language contained in                                                                                  to Secretary, Securities and Exchange
                                                                                                               The Exchange does not believe that
                                                    Chapter 11, Section 15 (c) of the NOM                                                                               Commission, 100 F Street NE.,
                                                                                                             the proposed rule change will impose
                                                    rules, CBOE Rule 9.15(b), and ISE Rule                                                                              Washington, DC 20549–1090.
                                                                                                             any burden on competition not
                                                    616(d).                                                  necessary or appropriate in furtherance                    All submissions should refer to File
                                                    2. Statutory Basis                                       of the purposes of the Act. The language                   Number SR–Phlx–2017–49. This file
                                                                                                             which is proposed to be added to Rule                      number should be included on the
                                                       The Exchange believes that its                                                                                   subject line if email is used. To help the
                                                    proposal is consistent with Section 6(b)                 1029 has previously been considered
                                                                                                             and approved by the Commission for                         Commission process and review your
                                                    of the Act,4 in general, and furthers the                                                                           comments more efficiently, please use
                                                    objectives of Section 6(b)(5) of the Act,5               use in other exchanges’ rulebooks as
                                                                                                             discussed above.6                                          only one method. The Commission will
                                                    in particular, in that it is designed to                                                                            post all comments on the Commission’s
                                                    promote just and equitable principles of                 C. Self-Regulatory Organization’s                          Internet Web site (http://www.sec.gov/
                                                    trade, to remove impediments to and                      Statement on Comments on the                               rules/sro.shtml). Copies of the
                                                    perfect the mechanism of a free and                      Proposed Rule Change Received From                         submission, all subsequent
                                                    open market and a national market                        Members, Participants, or Others                           amendments, all written statements
                                                    system, and, in general to protect                                                                                  with respect to the proposed rule
                                                    investors and the public interest. The                     No written comments were either
                                                                                                             solicited or received.                                     change that are filed with the
                                                                                                                                                                        Commission, and all written
                                                       3 The Special Statement was originally based
                                                                                                             III. Date of Effectiveness of the                          communications relating to the
                                                    upon a prototype developed by the Options Self-
                                                    Regulatory Council consisting of representatives of
                                                                                                             Proposed Rule Change and Timing for                        proposed rule change between the
                                                    the American Stock Exchange, Chicago Board               Commission Action                                          Commission and any person, other than
                                                    Options Exchange, Midwest Stock Exchange,                                                                           those that may be withheld from the
                                                    National Association of Securities Dealers, New            Because the foregoing proposed rule
                                                    York Exchange, Philadelphia Stock Exchange and           change does not: (i) Significantly affect                  public in accordance with the
                                                    Pacific Stock Exchange. See Securities Exchange          the protection of investors or the public                  provisions of 5 U.S.C. 552, will be
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                    Act Release No. 26952 (June 21, 1989), 54 FR 27256       interest; (ii) impose any significant
                                                    (June 28, 1989). The language of the Special                                                                          7 15  U.S.C. 78s(b)(3)(A)(iii).
                                                    Statement was included as an exhibit to SR–Phlx–         burden on competition; and (iii) become                      8 17  CFR 240.19b–4(f)(6). In addition, Rule 19b–
                                                    89–24 which was approved in the foregoing                operative for 30 days from the date on                     4(f)(6) requires a self-regulatory organization to give
                                                    approval order, but was not submitted as part of the     which it was filed, or such shorter time                   the Commission written notice of its intent to file
                                                    rule text in that filing. The Exchange is now adding     as the Commission may designate, it has                    the proposed rule change at least five business days
                                                    the Special Statement language into the actual rule                                                                 prior to the date of filing of the proposed rule
                                                    text.                                                    become effective pursuant to Section
                                                                                                                                                                        change, or such shorter time as designated by the
                                                       4 15 U.S.C. 78f(b).
                                                                                                                                                                        Commission. The Exchange has satisfied this
                                                       5 15 U.S.C. 78f(b)(5).                                     6 See   footnote 3 above.                             requirement.



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                                                    31640                               Federal Register / Vol. 82, No. 129 / Friday, July 7, 2017 / Notices

                                                    available for Web site viewing and                         a hearing. Interested persons may                     organized in the future for which the
                                                    printing in the Commission’s Public                        request a hearing by writing to the                   Adviser or any entity controlling,
                                                    Reference Room, 100 F Street NE.,                          Commission’s Secretary and serving                    controlled by, or under common control
                                                    Washington, DC 20549, on official                          applicants with a copy of the request,                with the Adviser, or any successor in
                                                    business days between the hours of                         personally or by mail. Hearing requests               interest to any such entity,1 acts as
                                                    10:00 a.m. and 3:00 p.m. Copies of the                     should be received by the Commission                  investment adviser and which operates
                                                    filing also will be available for                          by 5:30 p.m. on July 28, 2017, and                    as an interval fund pursuant to rule
                                                    inspection and copying at the principal                    should be accompanied by proof of                     23c–3 under the Act or provides
                                                    office of the Exchange. All comments                       service on the applicants, in the form of             periodic liquidity with respect to its
                                                    received will be posted without change;                    an affidavit, or, for lawyers, a certificate          shares pursuant to rule 13e–4 under the
                                                    the Commission does not edit personal                      of service. Pursuant to rule 0–5 under                Securities Exchange Act of 1934
                                                    identifying information from                               the Act, hearing requests should state                (‘‘Exchange Act’’) (each, a ‘‘Future
                                                    submissions. You should submit only                        the nature of the writer’s interest, any              Fund’’ and together with the Initial
                                                    information that you wish to make                          facts bearing upon the desirability of a              Fund, the ‘‘Funds’’).2
                                                    available publicly. All submissions                        hearing on the matter, the reason for the                5. Each Fund intends to engage in a
                                                    should refer to File Number SR–Phlx–                       request, and the issues contested.                    continuous offering of its shares of
                                                    2017–49 and should be submitted on or                      Persons who wish to be notified of a                  beneficial interest. Applicants state that
                                                    before July 28, 2017.                                      hearing may request notification by                   additional offerings by any Fund relying
                                                      For the Commission, by the Division of                   writing to the Commission’s Secretary.                on the order may be on a private
                                                    Trading and Markets, pursuant to delegated                 ADDRESSES: Secretary, U.S. Securities                 placement or public offering basis.
                                                    authority.9                                                and Exchange Commission, 100 F Street                 Shares of the Funds will not be listed on
                                                    Brent J. Fields,                                           NE., Washington, DC 20549–1090;                       any securities exchange nor publicly
                                                    Secretary.                                                 Applicants: c/o JoAnn Strasser, Esq.,                 traded. There is currently no secondary
                                                    [FR Doc. 2017–14247 Filed 7–6–17; 8:45 am]                 Thompson Hine LLP, 41 South High                      market for the Funds’ shares and the
                                                                                                               Street, Suite 1700, Columbus, OH                      Funds expect that no secondary market
                                                    BILLING CODE 8011–01–P
                                                                                                               43215–6101.                                           will develop.
                                                                                                                                                                        6. If the requested relief is granted, the
                                                                                                               FOR FURTHER INFORMATION CONTACT:
                                                    SECURITIES AND EXCHANGE                                                                                          Initial Fund intends to redesignate its
                                                                                                               Laura L. Solomon, Senior Counsel, at
                                                    COMMISSION                                                                                                       common shares as Class A shares and to
                                                                                                               (202) 551–6915, or David J. Marcinkus,
                                                                                                                                                                     commence a continuous offering of
                                                    [Investment Company Act Release No.
                                                                                                               Branch Chief, at (202) 551–6821
                                                                                                                                                                     Class I and Class C shares, with each
                                                    32723; 812–14716]                                          (Division of Investment Management,
                                                                                                                                                                     class having its own fee and expense
                                                                                                               Chief Counsel’s Office).
                                                                                                                                                                     structure, and may also offer additional
                                                    Vertical Capital Income Fund and                           SUPPLEMENTARY INFORMATION: The                        classes of shares in the future. Because
                                                    Oakline Advisors, LLC                                      following is a summary of the                         of the different distribution fees,
                                                                                                               application. The complete application                 services and any other class expenses
                                                    July 3, 2017.
                                                                                                               may be obtained via the Commission’s                  that may be attributable to the Class A,
                                                    AGENCY: Securities and Exchange
                                                                                                               Web site by searching for the file                    Class I, and Class C shares, the net
                                                    Commission (‘‘Commission’’).
                                                                                                               number, or for an applicant using the                 income attributable to, and the
                                                    ACTION: Notice.                                            Company name box, at http://                          dividends payable on, each class of
                                                       Notice of an application under section                  www.sec.gov/search/search.htm or by                   shares may differ from each other.
                                                    6(c) of the Investment Company Act of                      calling (202) 551–8090.                                  7. Applicants state that, from time to
                                                    1940 (the ‘‘Act’’) for an exemption from                   Applicants’ Representations                           time, the Initial Fund may create
                                                    sections 18(a)(2), 18(c) and 18(i) of the                                                                        additional classes of shares, the terms of
                                                                                                                  1. The Initial Fund is a Delaware                  which may differ from Class A, Class I
                                                    Act, under sections 6(c) and 23(c)(3) of
                                                                                                               statutory trust that is registered under              and Class C shares in the following
                                                    the Act for an exemption from rule 23c–
                                                                                                               the Act as a diversified, closed-end                  respects: (i) The amount of fees
                                                    3 under the Act, and for an order
                                                                                                               management investment company. The                    permitted by different distribution plans
                                                    pursuant to section 17(d) of the Act and
                                                                                                               Initial Fund’s primary investment                     or different shareholder services fee
                                                    rule 17d–1 under the Act.
                                                                                                               objective is to seek income.                          arrangements; (ii) voting rights with
                                                    SUMMARY OF APPLICATION: Applicants
                                                                                                                  2. The Adviser is a Delaware limited
                                                    request an order to permit certain                                                                               respect to a distribution plan of a class;
                                                                                                               liability company and is registered as an
                                                    registered closed-end management                                                                                 (iii) different class designations; (iv) the
                                                                                                               investment adviser under the
                                                    investment companies to issue multiple                                                                           impact of any class expenses directly
                                                                                                               Investment Advisers Act of 1940
                                                    classes of shares and to impose asset-                                                                           attributable to a particular class of
                                                                                                               (‘‘Advisers Act’’). The Adviser serves as
                                                    based distribution and shareholder                                                                               shares allocated on a class basis as
                                                                                                               investment adviser to the Initial Fund.
                                                    service fees and early withdrawal                                                                                described in the application; (v) any
                                                                                                                  3. The applicants seek an order to
                                                    charges.                                                                                                         differences in dividends and net asset
                                                                                                               permit the Funds (as defined below) to
                                                    APPLICANTS: Vertical Capital Income                                                                              value resulting from differences in fees
                                                                                                               issue multiple classes of shares, each
                                                    Fund (the ‘‘Initial Fund’’), and Oakline                                                                         under a distribution plan or in class
                                                                                                               having its own fee and expense
                                                    Advisors, LLC (the ‘‘Adviser’’).                                                                                 expenses; (vi) any early withdrawal
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                                                                               structure and to impose early
                                                    FILING DATES: The application was filed                    withdrawal charges and asset-based                      1 A successor in interest is limited to an entity
                                                    on November 21, 2016, and amended on                       distribution and shareholder service                  that results from a reorganization into another
                                                    April 20, 2017.                                            fees with respect to certain classes.                 jurisdiction or a change in the type of business
                                                    HEARING OR NOTIFICATION OF HEARING: An                        4. Applicants request that the order               organization.
                                                                                                                                                                       2 Any Fund relying on this relief in the future will
                                                    order granting the requested relief will                   also apply to any continuously-offered
                                                                                                                                                                     do so in a manner consistent with the terms and
                                                    be issued unless the Commission orders                     registered closed-end management                      conditions of the application. Applicants represent
                                                                                                               investment company that has been                      that each entity presently intending to rely on the
                                                      9 17   CFR 200.30–3(a)(12).                              previously organized or that may be                   requested relief is listed as an applicant.



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Document Created: 2017-07-07 02:19:28
Document Modified: 2017-07-07 02:19:28
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 31638 

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