82 FR 39925 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing of Proposed Rule Change Related to the Floor Requirements
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 161 (August 22, 2017)
Federal Register Volume 82, Issue 161 (August 22, 2017)
| Page Range | 39925-39929 | |
| FR Document | 2017-17685 |
[Federal Register Volume 82, Number 161 (Tuesday, August 22, 2017)] [Notices] [Pages 39925-39929] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-17685] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81409; File No. SR-Phlx-2017-67)] Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing of Proposed Rule Change Related to the Floor Requirements August 16, 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 August 3, 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Commentary .01 of Rule 1014, Obligations and Restrictions Applicable to Specialists and Registered Options Traders, to change quarterly trading requirements applicable to Registered Options Traders (``ROTs''), as described below.\3\ --------------------------------------------------------------------------- \3\ A Registered Options Trader or ROT is a regular member of the Exchange located on the trading floor who has received permission from the Exchange to trade in options for his own account. See Exchange Rule 1014(b)(i). --------------------------------------------------------------------------- The text of the proposed rule change is set forth below. Proposed new language is italicized; deletions are bracketed. * * * * * [[Page 39926]] Rule 1014 Obligations and Restrictions Applicable to Specialists and Registered Options Traders (a)-(g) No change. Commentary .01 An ROT electing to engage in Exchange options transactions is designated as a specialist on the Exchange for all purposes under the Securities Exchange Act of 1934 and the rules and regulations thereunder with respect to options transactions initiated and effected by him on the floor in his capacity as an ROT. For purposes of this commentary, the term ``transactions initiated and effected on the floor'' shall not include transactions initiated by an ROT off the floor, but which are considered ``on-floor'' pursuant to Commentaries .07 and .08 of Rule 1014. Similarly, an RSQT electing to engage in Exchange options transactions is designated as a specialist on the Exchange for all purposes under the Securities Exchange Act of 1934 and the rules and regulations thereunder with respect to options transactions initiated and effected by him in his capacity as an ROT. [An ROT (other than an RSQT or a Remote Specialist)] A non-SQT ROT is required to trade either (a) 1,000 contracts and 300 transactions, or (b) 10,000 contracts and 100 transactions, on the Exchange each quarter. Transactions executed in the trading crowd where the contra- side is an ROT are not included. In addition, in order for an ROT (other than an RSQT or a Remote Specialist) to receive specialist margin treatment for off-floor orders in any calendar quarter, the ROT must execute the greater of 1,000 contracts or 80% of his total contracts that quarter in person (not through the use of orders, except that non-streaming ROTs can use orders entered in person) and 75% of his total contracts that quarter in assigned options. Transactions executed in the trading crowd where the contra-side is an ROT are not included. The off-floor orders for which an ROT receives specialist margin treatment shall be subject to the obligations of Rule 1014(a) and, in general, be effected for the purpose of hedging, reducing risk of, or rebalancing positions of the ROT. An ROT is responsible for evidencing compliance with these provisions. The Exchange may exempt one or more classes of options from this calculation. .02-.19 No change. * * * * * 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to add flexibility to one of the Exchange's quarterly trading requirements to encourage liquidity-providing activity by market makers on the Exchange's trading floor. Phlx imposed this trading requirement initially to require market makers to ensure available liquidity on the trading floor. Liquidity provided by market makers is a key ingredient to ensuring a competitive trading floor. Market maker liquidity benefits all market participants by providing more trading opportunities. The Exchange's proposal is intended to ensure that market makers on the trading floor are ready and able to participate to provide a reasonable pool of liquidity on the floor trading. The Exchange also notes that other options exchanges with physical trading floors do not have a minimum trading requirement similar to Phlx. The general term ``market makers'' on the Exchange includes Specialists \4\ and ROTs. ROTs can be either Streaming Quote Traders \5\ (``SQTs''), Remote SQTs \6\ (``RSQTs'') or non-SQT ROTs.\7\ Today, quarterly trading requirements apply to two types of ROTs: SQTs and non-SQT ROTs. Specialists and RSQTs are subject to different requirements. By definition, non-SQT ROTs do not ``stream'' quotes, meaning send quotes electronically to the Exchange; instead, pursuant to Commentary .18 of Rule 1014, they submit limit orders electronically and respond to Floor Brokers verbally. --------------------------------------------------------------------------- \4\ A Specialist is an Exchange member who is registered as an options specialist pursuant to Rule 501(a). An options specialist includes a Remote Specialist which is defined as an options specialist in one or more classes that does not have a physical presence on an Exchange floor and is approved by the Exchange pursuant to Rule 501. \5\ An SQT is an ROT who has received permission from the Exchange to generate and submit option quotations electronically in options to which such SQT is assigned. An SQT may only submit such quotations while such SQT is physically present on the floor of the Exchange. An SQT may only trade in a market making capacity in classes of options in which the SQT is assigned. See Rule 1014(b)(ii)(A). \6\ An RSQT is an ROT that is a member affiliated with and RSQTO with no physical trading floor presence who has received permission from the Exchange to generate and submit option quotations electronically in options to which such RSQT has been assigned. A qualified RSQT may function as a Remote Specialist upon Exchange approval. See Rule 1014(b)(ii)(B). \7\ A non-SQT ROT is an ROT who is neither an SQT nor an RSQT. See Rule 1014(b)(ii)(C). --------------------------------------------------------------------------- Specifically, the Exchange is proposing to amend a quarterly trading requirement set forth in Commentary .01.\8\ Phlx Rule 1014 at Commentary .01 currently requires a ROT (other than an RSQT or Remote Specialist) to trade 1,000 contracts and 300 transactions on the Exchange each quarter (excluding transactions executed in the trading crowd where the contra-side is an ROT). --------------------------------------------------------------------------- \8\ In addition to the trading requirement being amended herein, the ``in assigned'' quarterly trading requirement in Commentary .03 requires that, except for unusual circumstances, at least 50% of the trading activity in any quarter (measured in terms of contract volume) of an ROT (other than an RSQT) shall ordinarily be in classes of options to which he is assigned. Temporarily undertaking the obligations of paragraph (c) at the request of a member of the Exchange in non-assigned classes of options is not deemed trading in non-assigned option contracts. Furthermore, Commentary .13 further provides that, within each quarter, an ROT must execute in person, and not through the use of orders, a specified number of contracts, such number to be determined from time to time by the Exchange. Options Floor Procedure Advice (``Advice'') B-3, Trading Requirements, establishes a quarterly requirement to trade the greater of 1,000 contracts or 50% of contract volume in person; pursuant to the Exchange's minor rule violation and enforcement plan, it establishes a fine schedule for violations thereof, as well as for violations of the quarterly trading requirement in assigned options contained in Commentary .03. Commentary .01 also requires that in order for an ROT (other than an RSQT or a Remote Specialist) to receive specialist margin treatment for off-floor orders in any calendar quarter, the ROT must execute the greater of 1,000 contracts or 80% of his total contracts that quarter in person (not through the use of orders, except that non-streaming ROTs can use orders entered in person) and 75% of his total contracts that quarter in assigned options (excluding transactions executed in the trading crowd where the contra-side is an ROT). None of these trading requirements are changing. --------------------------------------------------------------------------- This proposal seeks to amend this quarterly requirement of Commentary .01 in two ways: (1) By limiting the trading requirement to non-SQT ROTs; and (2) by adding a new test as an alternative. The Exchange proposes to amend Commentary .01 to require a non-SQT ROT (other than an RSQT or [[Page 39927]] a Remote Specialist) to trade either (a) 1,000 contracts and 300 transactions (the ``1000/300 Alternative,'' which is the current requirement) or (b) 10,000 contracts and 100 transactions (the ``New Alternative''), on the Exchange each quarter. With respect to limiting the requirement to non-SQT ROTs, the Exchange notes that today, SQTs and RSQTs are obligated to continuous quoting requirements when trading electronically in their assigned options series.\9\ Non-SQT ROTs are not subject to similar continuous quoting requirements today on the trading floor. If a non-SQT ROT trades electronically, that market maker would be required to continuously quote in his or her assigned option pursuant to the requirement in Rule 1014(b)(ii)(D), whereas if that market maker was on the trading floor in the capacity of a non-SQT ROT, the market maker would be required to separately meet the requirements of Phlx Rule 1014 at Commentary .01. With this proposal, the Exchange is proposing a separate requirement for market makers that conduct business on the trading floor as compared to market makers who transact business electronically on the Exchange. --------------------------------------------------------------------------- \9\ See Rule 1014(b)(ii)(D). --------------------------------------------------------------------------- With respect to adding the alternative, similar to the requirement today, transactions executed in the trading crowd where the contra-side is an ROT would not be included.\10\ Similar to the current 1000/300 Alternative, the New Alternative is a pure trading requirement, not limited, like the other trading requirements, to assigned options \11\ and in person trading.\12\ Accordingly, the New Alternative requirement can be fulfilled with trades and contracts that are not in assigned options and not executed in person, although, of course, the existing trading requirements respecting ``in assigned'' options and ``in person'' trading must still be met. Also, limit orders can continue to be counted toward either minimum trading requirement. The Exchange recognizes that floor trading is a competitive space and that Phlx is the only floor trading venue requiring its market makers on the trading floor to transact a minimum amount of contracts. The Exchange is not seeking to burden these market participants by limiting the type of qualifying transactions to meet the requirement. --------------------------------------------------------------------------- \10\ The Exchange already excludes from the contracts and transactions required by the current 1000/300 Alternative, in each quarter, any transactions executed in the trading crowd where the contra-side is an ROT in order to focus market making efforts on providing the sort of liquidity that will attract customers (including broker-dealers and professionals) to the Exchange, and is extending this exclusion to the New Alternative for the same reason. As with the 1000/300 Alternative currently in effect, ROTs will continue to be able to participate in crowd trades, and those crowd trades will count towards the new trading requirement, unless the contra-side is another ROT. ROT-to-ROT trades in the crowd are certainly permissible on the Exchange, but the Exchange seeks to better target liquidity and attract order flow by designing the trading requirement to exclude them. \11\ See Rule 1014.03. \12\ See Rule 1014.01. --------------------------------------------------------------------------- By way of background, the Exchange adopted the 1000/300 Alternative, the existing requirement, in 2011.\13\ At that time the Exchange believed this quarterly requirement would be a reasonable and fair measure to ensure ROTs were actively providing liquidity. Since that time the Exchange has observed that larger order sizes continue to seek liquidity on the trading floor, drawing regular responses from non-SQT ROTs whose business is centered around larger sized transactions, but not always resulting in transactions for these larger non-SQT ROT firms providing liquidity. --------------------------------------------------------------------------- \13\ See Securities Exchange Act Release No. 65644 (October 27, 2011), 76 FR 67786 (November 2, 2011) (SR-Phlx-2011-123). --------------------------------------------------------------------------- The Exchange has observed that certain non-SQT ROTs, who trade larger sized orders and who only trade a handful of underlying stocks are making markets on a daily basis but are having less opportunity because larger orders are often placed into the Qualified Contingent Cross (QCC) mechanism.\14\ Consequently there are fewer opportunities for some non-SQT ROTs to make certain trades. The Exchange notes that ROTs may not enter responses to QCC Orders which are paired orders entered into the QCC Mechanism and are not exposed. While the introduction of QCC accounts for a portion of the types of qualifying orders that a non-SQT ROT can transact to fulfill the floor requirement, lower volumes on the trading floor has also contributed to the desire among market participants to fulfill the trading requirement in an alternative fashion. --------------------------------------------------------------------------- \14\ See Securities Exchange Act Release No. 64249 (April 7, 2011), 76 FR 20773 (April 13, 2011) (SR-Phlx-2011-47) (a rule change to establish a QCC Order to facilitate the execution of stock/option Qualified Contingent Trades (``QCTs'') that satisfy the requirements of the trade through exemption in connection with Rule 611(d) of the Regulation NMS). --------------------------------------------------------------------------- The Exchange is now proposing to address this issue by modifying the 1000/300 Alternative trading requirement to include the New Alternative as an additional metric, one that could be satisfied by fewer transactions but more traded contracts, such that the overall trading requirement originally contemplated by the 1000/300 Alternative is not diluted. After discussing this issue with the larger non-SQT ROTs who are very active on a daily basis, the Exchange determined that 100 transactions per quarter was a reasonable number to measure whether an non-SQT ROT is providing liquidity to the market. The Exchange concluded that a reduced number of 100 transactions per quarter would permit non-SQT ROTs to make their trading decisions without undue influence of quoting [sic] obligations alone, and instead choose whether to participate in trades based on factors independent of the actual quoting [sic] obligation. The Exchange believes that the value of a non-SQT ROT is not limited to only whether they actually execute transactions, but as important is that they are actively quoting markets and providing pricing information. Since 100 transactions is only 33% of the current requirement, the Exchange determined to increase the total executed contracts number by 900 percent to 10,000 contracts, to ensure that the Exchange did not diminish the trading requirement when viewed from an overall perspective. The Exchange believes this alternative requirement is a good measure that improves the analysis of whether the larger non- SQT ROT's are participating in an expected manner, and providing liquidity to the market. The Exchange notes that in order to meet the floor trading requirements a non-SQT ROT may either continue to comply with the current requirement or may voluntarily comply with the New Alternative. The existing requirement is based on the ability to trade 1,000 contracts and 300 transactions on the Exchange each quarter, more contracts but of a smaller size. The New Alternative permits compliance with the quoting [sic] rules by transacting fewer transactions (100 transactions) but larger sized volume (10,000 contracts). The two options to comply with the floor trading rule do not vary in terms of benefits or obligations. The Exchange believes the combined test of ``10,000 contracts'' and ``100 transactions'' would be a fair measure of liquidity as an alternative to complement the current requirement, and is a fair and balanced way to measure whether a non-SQT ROT is providing liquidity to the marketplace. This proposed new measure will be a fairer measure for market makers on the trading floor in that it considers another perspective of liquidity--specifically, the offering of deep liquid markets [[Page 39928]] which result in fewer executions, but of greater size. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\15\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\16\ 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, by adopting a new alternative trading requirement which will narrow the requirement for ROTs, who have other quoting obligations, while also providing flexibility to non-SQT ROTs to encourage market making which should enhance liquidity on the Exchange. It would be unjust and inequitable to continue to impose the 1000/300 Alternative trading requirement without also offering non-SQT ROTs this New Alternative given the recent availability of QCC to handle large orders that previously may have been executed by certain non-SQT ROTs in satisfaction of the 1000/300 Alternative test along with lower volumes on the trading floor. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78f(b). \16\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that removing the requirement that SQTs and RSQTs [sic] are required to meet the trading requirement is consistent with just and equitable principles of trade because these market participants are subject to continuous quoting requirements today.\17\ The Exchange intends to separate the two requirements. If a non-SQT ROT trades electronically, that market maker would be required to continuously quote in his or her assigned option pursuant to the requirement in Rule 1014(b)(ii)(D), whereas if that market maker was on the trading floor in the capacity of a non-SQT ROT, the market maker would be required to separately meet the requirements of Phlx Rule 1014 at Commentary .01. Non-SQT ROTs are not subject to continuous quoting requirements today and therefore the Exchange proposes to separately applying a standard consistent with their business model and exclude other ROTs from this floor-based requirement. --------------------------------------------------------------------------- \17\ See Rule 1014(b)(ii)(D). --------------------------------------------------------------------------- The proposal will remove impediments to and perfect the mechanism of a free and open market and a national market system by providing a new alternative to an existing requirement that today non-SQT ROTs have difficulty meeting given the current trading environment, thus enabling them to continue making markets to the benefit of investors by requiring ample liquidity. Investors and the public interest are protected by the proposal in that it should help preserve the number of non-SQT ROTs making markets and providing liquidity to the benefit of users of the Exchange's market. It is important to note that a non-SQT ROT cannot control the size and frequency of crowd trades, even less so crowd trades where the contra-side is not an ROT. The Exchange represents that the only other way to participate in trades other than through the use of orders is by quoting; while SQTs quote electronically by ``streaming'' quotations into the Exchange, non-SQT ROTs may only quote verbally in response to floor brokers representing orders in the trading crowd. The Exchange believes that it has become difficult for such ROTs to comply with the trading requirements. The Exchange believes that this new trading requirement should increase the likelihood that an ROT is actively providing liquidity on Phlx. The Exchange believes that the proposed new trading requirement should enhance the market making functions for non-SQT ROTs and serve to maintain a fair and orderly market thereby promoting the protection of investors and the public interest. The Exchange notes that non-SQT ROTs may meet the proposed requirement by entering limits orders, but the Exchange notes that the Exchange is not seeking to burden these market participants by limiting the type of qualifying transactions to meet the requirement. The Exchange recognizes that floor trading is a competitive space and that Phlx is the only floor trading venue requiring its market makers on the trading floor to transact a minimum amount of contracts. The Exchange is not proposing to remove the ability to enter limit orders to meet the New Alternative because it seeks to encourage market makers to transact business on Phlx. 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. With respect to intra-market competition, limiting the trading requirement to non-SQT ROTS, the Exchange does not believe this imposes an undue burden on competition because SQTs and RSQTs are subject to continuous quoting requirements today,\18\ while non-SQT ROTs are not subject to continuous quoting obligations. --------------------------------------------------------------------------- \18\ See Rule 1014(b)(ii)(D). --------------------------------------------------------------------------- Further, with respect to inter-market competition, the Exchange also notes that other options exchanges with physical trading floors do not have a minimum trading requirement similar to Phlx. The New Alternative trading requirement would be available to non-SQT ROTs without distinction, as an alternative to the existing 1000/300 Alternative trading requirement. The Exchange's proposal to permit non- SQT ROTs to comply with the trading requirement in one of two ways provides these market participants a means to compete in a space which has witnessed lower trading volumes. Also, the Exchange does not seek to disadvantage these market participants who compete with other trading floors who do not have trading requirements, as noted above, and also who do not have the automated compliance checks. 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 Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission shall: (a) By order approve or disapprove such proposed rule change, or (b) institute proceedings to determine whether the proposed rule change should be 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 CommentsUse 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-2017-67 on the subject line. [[Page 39929]] 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-2017-67. 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-2017-67, and should be submitted on or before September 12, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-17685 Filed 8-21-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 161 / Tuesday, August 22, 2017 / Notices 39925
Rule 102 of Regulation M permitting persons who may be deemed This Order should not be considered
Rule 102 of Regulation M prohibits to be participating in a distribution of a view with respect to any other
issuers, selling security holders, or any Shares of the Fund to bid for or question that the proposed transactions
affiliated purchaser of such person from purchase such Shares during their may raise, including, but not limited to
bidding for, purchasing, or attempting to participation in such distribution. the adequacy of the disclosure
induce any person to bid for or purchase It is further ordered, pursuant to Rule concerning, and the applicability of
a covered security during the applicable 102(e) of Regulation M, that the Trust, other federal or state laws to, the
restricted period in connection with a based on the representations and the proposed transactions.
distribution of securities effected by or facts presented in the Letter, is exempt For the Commission, by the Division of
on behalf of an issuer or selling security from the requirements of Rule 102 with Trading and Markets, pursuant to delegated
holder. respect to Shares of the Fund, thus authority.7
Based on the representations and facts permitting the Fund to redeem Shares of Robert W. Errett,
presented in the Letter, particularly that the Fund during the continuous offering Deputy Secretary.
the Trust is a registered open-end of such Shares. [FR Doc. 2017–17688 Filed 8–21–17; 8:45 am]
management investment company that It is further ordered, pursuant to Rule BILLING CODE 8011–01–P
will redeem at the NAV Creation Units 10b–17(b)(2), that the Trust, based on
of Shares of the Fund and that a close the representations and the facts
alignment between the market price of presented in the Letter, and subject to SECURITIES AND EXCHANGE
Shares and the Fund’s NAV is expected, the conditions below, is exempt from COMMISSION
the Commission finds that it is the requirements of Rule 10b–17 with
appropriate in the public interest, and respect to transactions in the Shares of
[Release No. 34–81409; File No. SR–Phlx–
consistent with the protection of the Fund. 2017–67)]
investors, to grant the Trust an This exemptive relief is subject to the
exemption under paragraph (e) of Rule following conditions: Self-Regulatory Organizations;
102 of Regulation M with respect to • The Trust will comply with Rule NASDAQ PHLX LLC; Notice of Filing of
Shares of the Fund, thus permitting the 10b–17 except for Rule 10b– Proposed Rule Change Related to the
Fund to redeem Shares of the Fund 17(b)(1)(v)(a) and (b); and Floor Requirements
during the continuous offering of such • The Trust will provide the
Shares. information required by Rule 10b– August 16, 2017.
Rule 10b–17 17(b)(1)(v)(a) and (b) to the Exchange as Pursuant to Section 19(b)(1) of the
soon as practicable before trading begins Securities Exchange Act of 1934
Rule 10b–17, with certain exceptions, on the ex-dividend date, but in no event (‘‘Act’’),1 and Rule 19b–4 thereunder,2
requires an issuer of a class of publicly later than the time when the Exchange notice is hereby given that on August 3,
traded securities to give notice of certain last accepts information relating to 2017, NASDAQ PHLX LLC (‘‘Phlx’’ or
specified actions (for example, a distributions on the day before the ex- ‘‘Exchange’’) filed with the Securities
dividend distribution) relating to such dividend date. and Exchange Commission (‘‘SEC’’ or
class of securities in accordance with ‘‘Commission’’) the proposed rule
This exemptive relief is subject to
Rule 10b–17(b). Based on the change as described in Items I, II, and
modification or revocation at any time
representations and facts presented in III, below, which Items have been
the Commission determines that such
the Letter, and subject to the conditions prepared by the Exchange. The
action is necessary or appropriate in
below, we find that it is appropriate in Commission is publishing this notice to
furtherance of the purposes of the
the public interest, and consistent with solicit comments on the proposed rule
Exchange Act. This exemption is based
the protection of investors, to grant the change from interested persons.
on the facts presented and the
Trust a conditional exemption from
representations made in the Letter. Any I. Self-Regulatory Organization’s
Rule 10b–17 because market
participants will receive timely different facts or representations may Statement of the Terms of Substance of
notification of the existence and timing require a different response. Persons the Proposed Rule Change
of a pending distribution, and thus the relying upon this exemptive relief shall
discontinue transactions involving the The Exchange proposes to amend
concerns that the Commission raised in Commentary .01 of Rule 1014,
adopting Rule 10b–17 will not be Shares of the Fund, pending
presentation of the facts for the Obligations and Restrictions Applicable
implicated.6 to Specialists and Registered Options
Commission’s consideration, in the
Conclusion event that any material change occurs Traders, to change quarterly trading
It is hereby ordered, pursuant to Rule with respect to any of the facts or requirements applicable to Registered
101(d) of Regulation M, that the Trust, representations made by the Requestors Options Traders (‘‘ROTs’’), as described
based on the representations and the and, as is the case with all preceding below.3
facts presented in the Letter, is exempt letters, particularly with respect to the The text of the proposed rule change
from the requirements of Rule 101 with close alignment between the market is set forth below. Proposed new
respect to Shares of the Fund, thus price of Shares and the Fund’s NAV. In language is italicized; deletions are
addition, persons relying on this bracketed.
6 We also note that timely compliance with Rule exemptive relief are directed to the anti- * * * * *
10b–17(b)(1)(v)(a) and (b) would be impractical fraud and anti-manipulation provisions
sradovich on DSK3GMQ082PROD with NOTICES
because it is not possible for the Fund to accurately of the Exchange Act, particularly 7 17 CFR 200.30–3(a)(6) and (9).
project ten days in advance what dividend, if any,
would be paid on a particular record date. Further, Sections 9(a) and 10(b), and Rule 10b– 1 15 U.S.C. 78s(b)(1).
the Commission finds, based upon the 5 thereunder. Responsibility for 2 17 CFR 240.19b–4.
representations in the Letter, that the provision of 3 A Registered Options Trader or ROT is a regular
compliance with these and any other
the notices as described in the Letter would not member of the Exchange located on the trading
constitute a manipulative or deceptive device or
applicable provisions of the federal floor who has received permission from the
contrivance comprehended within the purpose of securities laws must rest with the Exchange to trade in options for his own account.
Rule 10b–17. persons relying on this exemptive relief. See Exchange Rule 1014(b)(i).
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![39926 Federal Register / Vol. 82, No. 161 / Tuesday, August 22, 2017 / Notices
Rule 1014 Obligations and II. Self-Regulatory Organization’s SQTs 6 (‘‘RSQTs’’) or non-SQT ROTs.7
Restrictions Applicable to Specialists Statement of the Purpose of, and Today, quarterly trading requirements
and Registered Options Traders Statutory Basis for, the Proposed Rule apply to two types of ROTs: SQTs and
Change non-SQT ROTs. Specialists and RSQTs
(a)–(g) No change. are subject to different requirements. By
Commentary In its filing with the Commission, the definition, non-SQT ROTs do not
Exchange included statements ‘‘stream’’ quotes, meaning send quotes
.01 An ROT electing to engage in concerning the purpose of and basis for electronically to the Exchange; instead,
Exchange options transactions is the proposed rule change and discussed pursuant to Commentary .18 of Rule
designated as a specialist on the any comments it received on the 1014, they submit limit orders
Exchange for all purposes under the proposed rule change. The text of these electronically and respond to Floor
Securities Exchange Act of 1934 and the statements may be examined at the Brokers verbally.
rules and regulations thereunder with places specified in Item IV below. The Specifically, the Exchange is
respect to options transactions initiated Exchange has prepared summaries, set proposing to amend a quarterly trading
and effected by him on the floor in his forth in sections A, B, and C below, of requirement set forth in Commentary
capacity as an ROT. For purposes of this the most significant aspects of such .01.8 Phlx Rule 1014 at Commentary .01
commentary, the term ‘‘transactions currently requires a ROT (other than an
statements.
initiated and effected on the floor’’ shall RSQT or Remote Specialist) to trade
not include transactions initiated by an A. Self-Regulatory Organization’s 1,000 contracts and 300 transactions on
ROT off the floor, but which are Statement of the Purpose of, and the the Exchange each quarter (excluding
considered ‘‘on-floor’’ pursuant to Statutory Basis for, the Proposed Rule transactions executed in the trading
Commentaries .07 and .08 of Rule 1014. Change crowd where the contra-side is an ROT).
Similarly, an RSQT electing to engage in This proposal seeks to amend this
Exchange options transactions is 1. Purpose quarterly requirement of Commentary
designated as a specialist on the .01 in two ways: (1) By limiting the
The purpose of the proposed rule trading requirement to non-SQT ROTs;
Exchange for all purposes under the change is to add flexibility to one of the
Securities Exchange Act of 1934 and the and (2) by adding a new test as an
Exchange’s quarterly trading alternative. The Exchange proposes to
rules and regulations thereunder with
requirements to encourage liquidity- amend Commentary .01 to require a
respect to options transactions initiated
and effected by him in his capacity as providing activity by market makers on non-SQT ROT (other than an RSQT or
an ROT. the Exchange’s trading floor. Phlx
imposed this trading requirement 6 An RSQT is an ROT that is a member affiliated
[An ROT (other than an RSQT or a initially to require market makers to with and RSQTO with no physical trading floor
Remote Specialist)] A non-SQT ROT is ensure available liquidity on the trading
presence who has received permission from the
required to trade either (a) 1,000 Exchange to generate and submit option quotations
floor. Liquidity provided by market electronically in options to which such RSQT has
contracts and 300 transactions, or (b) been assigned. A qualified RSQT may function as
makers is a key ingredient to ensuring
10,000 contracts and 100 transactions, a Remote Specialist upon Exchange approval. See
on the Exchange each quarter. a competitive trading floor. Market Rule 1014(b)(ii)(B).
Transactions executed in the trading maker liquidity benefits all market 7 A non-SQT ROT is an ROT who is neither an
crowd where the contra-side is an ROT participants by providing more trading SQT nor an RSQT. See Rule 1014(b)(ii)(C).
8 In addition to the trading requirement being
are not included. opportunities. The Exchange’s proposal
amended herein, the ‘‘in assigned’’ quarterly trading
is intended to ensure that market requirement in Commentary .03 requires that,
In addition, in order for an ROT (other
makers on the trading floor are ready except for unusual circumstances, at least 50% of
than an RSQT or a Remote Specialist) to the trading activity in any quarter (measured in
and able to participate to provide a
receive specialist margin treatment for terms of contract volume) of an ROT (other than an
off-floor orders in any calendar quarter, reasonable pool of liquidity on the floor RSQT) shall ordinarily be in classes of options to
the ROT must execute the greater of trading. The Exchange also notes that which he is assigned. Temporarily undertaking the
1,000 contracts or 80% of his total other options exchanges with physical obligations of paragraph (c) at the request of a
member of the Exchange in non-assigned classes of
contracts that quarter in person (not trading floors do not have a minimum options is not deemed trading in non-assigned
through the use of orders, except that trading requirement similar to Phlx. option contracts. Furthermore, Commentary .13
non-streaming ROTs can use orders further provides that, within each quarter, an ROT
The general term ‘‘market makers’’ on must execute in person, and not through the use of
entered in person) and 75% of his total the Exchange includes Specialists 4 and orders, a specified number of contracts, such
contracts that quarter in assigned ROTs. ROTs can be either Streaming number to be determined from time to time by the
options. Transactions executed in the Quote Traders 5 (‘‘SQTs’’), Remote Exchange. Options Floor Procedure Advice
(‘‘Advice’’) B–3, Trading Requirements, establishes
trading crowd where the contra-side is a quarterly requirement to trade the greater of 1,000
an ROT are not included. 4 A Specialist is an Exchange member who is contracts or 50% of contract volume in person;
The off-floor orders for which an ROT pursuant to the Exchange’s minor rule violation and
registered as an options specialist pursuant to Rule
enforcement plan, it establishes a fine schedule for
receives specialist margin treatment 501(a). An options specialist includes a Remote violations thereof, as well as for violations of the
shall be subject to the obligations of Specialist which is defined as an options specialist quarterly trading requirement in assigned options
Rule 1014(a) and, in general, be effected in one or more classes that does not have a physical contained in Commentary .03. Commentary .01 also
presence on an Exchange floor and is approved by requires that in order for an ROT (other than an
for the purpose of hedging, reducing
the Exchange pursuant to Rule 501. RSQT or a Remote Specialist) to receive specialist
risk of, or rebalancing positions of the margin treatment for off-floor orders in any calendar
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5 An SQT is an ROT who has received permission
ROT. An ROT is responsible for from the Exchange to generate and submit option quarter, the ROT must execute the greater of 1,000
evidencing compliance with these quotations electronically in options to which such contracts or 80% of his total contracts that quarter
provisions. The Exchange may exempt in person (not through the use of orders, except that
SQT is assigned. An SQT may only submit such
non-streaming ROTs can use orders entered in
one or more classes of options from this quotations while such SQT is physically present on person) and 75% of his total contracts that quarter
calculation. the floor of the Exchange. An SQT may only trade in assigned options (excluding transactions
in a market making capacity in classes of options executed in the trading crowd where the contra-side
.02–.19 No change. in which the SQT is assigned. See Rule is an ROT). None of these trading requirements are
* * * * * 1014(b)(ii)(A). changing.
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![Federal Register / Vol. 82, No. 161 / Tuesday, August 22, 2017 / Notices 39927
a Remote Specialist) to trade either (a) still be met. Also, limit orders can requirement originally contemplated by
1,000 contracts and 300 transactions continue to be counted toward either the 1000/300 Alternative is not diluted.
(the ‘‘1000/300 Alternative,’’ which is minimum trading requirement. The After discussing this issue with the
the current requirement) or (b) 10,000 Exchange recognizes that floor trading is larger non-SQT ROTs who are very
contracts and 100 transactions (the a competitive space and that Phlx is the active on a daily basis, the Exchange
‘‘New Alternative’’), on the Exchange only floor trading venue requiring its determined that 100 transactions per
each quarter. market makers on the trading floor to quarter was a reasonable number to
With respect to limiting the transact a minimum amount of measure whether an non-SQT ROT is
requirement to non-SQT ROTs, the contracts. The Exchange is not seeking providing liquidity to the market. The
Exchange notes that today, SQTs and to burden these market participants by Exchange concluded that a reduced
RSQTs are obligated to continuous limiting the type of qualifying number of 100 transactions per quarter
quoting requirements when trading transactions to meet the requirement. would permit non-SQT ROTs to make
electronically in their assigned options By way of background, the Exchange their trading decisions without undue
series.9 Non-SQT ROTs are not subject adopted the 1000/300 Alternative, the influence of quoting [sic] obligations
to similar continuous quoting existing requirement, in 2011.13 At that alone, and instead choose whether to
requirements today on the trading floor. time the Exchange believed this participate in trades based on factors
If a non-SQT ROT trades electronically, quarterly requirement would be a independent of the actual quoting [sic]
that market maker would be required to reasonable and fair measure to ensure obligation.
continuously quote in his or her ROTs were actively providing liquidity. The Exchange believes that the value
assigned option pursuant to the Since that time the Exchange has of a non-SQT ROT is not limited to only
requirement in Rule 1014(b)(ii)(D), observed that larger order sizes continue whether they actually execute
whereas if that market maker was on the to seek liquidity on the trading floor, transactions, but as important is that
trading floor in the capacity of a non- drawing regular responses from non- they are actively quoting markets and
SQT ROT, the market maker would be SQT ROTs whose business is centered providing pricing information. Since
required to separately meet the around larger sized transactions, but not 100 transactions is only 33% of the
requirements of Phlx Rule 1014 at always resulting in transactions for current requirement, the Exchange
Commentary .01. With this proposal, the these larger non-SQT ROT firms determined to increase the total
Exchange is proposing a separate providing liquidity. executed contracts number by 900
requirement for market makers that The Exchange has observed that
percent to 10,000 contracts, to ensure
conduct business on the trading floor as certain non-SQT ROTs, who trade larger
that the Exchange did not diminish the
compared to market makers who sized orders and who only trade a
trading requirement when viewed from
transact business electronically on the handful of underlying stocks are making
an overall perspective. The Exchange
markets on a daily basis but are having
Exchange. believes this alternative requirement is
less opportunity because larger orders
With respect to adding the alternative, a good measure that improves the
are often placed into the Qualified
similar to the requirement today, analysis of whether the larger non-SQT
Contingent Cross (QCC) mechanism.14
transactions executed in the trading ROT’s are participating in an expected
Consequently there are fewer
crowd where the contra-side is an ROT manner, and providing liquidity to the
opportunities for some non-SQT ROTs
would not be included.10 Similar to the market.
to make certain trades. The Exchange
current 1000/300 Alternative, the New The Exchange notes that in order to
notes that ROTs may not enter
Alternative is a pure trading meet the floor trading requirements a
responses to QCC Orders which are
requirement, not limited, like the other non-SQT ROT may either continue to
paired orders entered into the QCC
trading requirements, to assigned Mechanism and are not exposed. While comply with the current requirement or
options 11 and in person trading.12 the introduction of QCC accounts for a may voluntarily comply with the New
Accordingly, the New Alternative portion of the types of qualifying orders Alternative. The existing requirement is
requirement can be fulfilled with trades that a non-SQT ROT can transact to based on the ability to trade 1,000
and contracts that are not in assigned fulfill the floor requirement, lower contracts and 300 transactions on the
options and not executed in person, volumes on the trading floor has also Exchange each quarter, more contracts
although, of course, the existing trading contributed to the desire among market but of a smaller size. The New
requirements respecting ‘‘in assigned’’ participants to fulfill the trading Alternative permits compliance with the
options and ‘‘in person’’ trading must requirement in an alternative fashion. quoting [sic] rules by transacting fewer
The Exchange is now proposing to transactions (100 transactions) but larger
9 See Rule 1014(b)(ii)(D).
address this issue by modifying the sized volume (10,000 contracts). The
10 The Exchange already excludes from the
1000/300 Alternative trading two options to comply with the floor
contracts and transactions required by the current
1000/300 Alternative, in each quarter, any requirement to include the New trading rule do not vary in terms of
transactions executed in the trading crowd where Alternative as an additional metric, one benefits or obligations.
the contra-side is an ROT in order to focus market that could be satisfied by fewer The Exchange believes the combined
making efforts on providing the sort of liquidity that
will attract customers (including broker-dealers and
transactions but more traded contracts, test of ‘‘10,000 contracts’’ and ‘‘100
professionals) to the Exchange, and is extending such that the overall trading transactions’’ would be a fair measure of
this exclusion to the New Alternative for the same liquidity as an alternative to
reason. As with the 1000/300 Alternative currently 13 See Securities Exchange Act Release No. 65644 complement the current requirement,
in effect, ROTs will continue to be able to (October 27, 2011), 76 FR 67786 (November 2, 2011) and is a fair and balanced way to
sradovich on DSK3GMQ082PROD with NOTICES
participate in crowd trades, and those crowd trades (SR–Phlx–2011–123).
will count towards the new trading requirement, 14 See Securities Exchange Act Release No. 64249
measure whether a non-SQT ROT is
unless the contra-side is another ROT. ROT-to-ROT (April 7, 2011), 76 FR 20773 (April 13, 2011) (SR– providing liquidity to the marketplace.
trades in the crowd are certainly permissible on the Phlx–2011–47) (a rule change to establish a QCC This proposed new measure will be a
Exchange, but the Exchange seeks to better target Order to facilitate the execution of stock/option
liquidity and attract order flow by designing the
fairer measure for market makers on the
Qualified Contingent Trades (‘‘QCTs’’) that satisfy
trading requirement to exclude them. the requirements of the trade through exemption in
trading floor in that it considers another
11 See Rule 1014.03.
connection with Rule 611(d) of the Regulation perspective of liquidity—specifically,
12 See Rule 1014.01. NMS). the offering of deep liquid markets
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![39928 Federal Register / Vol. 82, No. 161 / Tuesday, August 22, 2017 / Notices
which result in fewer executions, but of SQT ROTs have difficulty meeting given requirements today,18 while non-SQT
greater size. the current trading environment, thus ROTs are not subject to continuous
enabling them to continue making quoting obligations.
2. Statutory Basis
markets to the benefit of investors by Further, with respect to inter-market
The Exchange believes that its requiring ample liquidity. Investors and competition, the Exchange also notes
proposal is consistent with Section 6(b) the public interest are protected by the that other options exchanges with
of the Act,15 in general, and furthers the proposal in that it should help preserve physical trading floors do not have a
objectives of Section 6(b)(5) of the Act,16 the number of non-SQT ROTs making minimum trading requirement similar to
in particular, in that it is designed to markets and providing liquidity to the Phlx. The New Alternative trading
promote just and equitable principles of benefit of users of the Exchange’s requirement would be available to non-
trade, to remove impediments to and market. SQT ROTs without distinction, as an
perfect the mechanism of a free and It is important to note that a non-SQT alternative to the existing 1000/300
open market and a national market ROT cannot control the size and Alternative trading requirement. The
system, and, in general to protect frequency of crowd trades, even less so Exchange’s proposal to permit non-SQT
investors and the public interest, by crowd trades where the contra-side is ROTs to comply with the trading
adopting a new alternative trading not an ROT. The Exchange represents requirement in one of two ways
requirement which will narrow the that the only other way to participate in provides these market participants a
requirement for ROTs, who have other trades other than through the use of means to compete in a space which has
quoting obligations, while also orders is by quoting; while SQTs quote witnessed lower trading volumes. Also,
providing flexibility to non-SQT ROTs electronically by ‘‘streaming’’ quotations the Exchange does not seek to
to encourage market making which into the Exchange, non-SQT ROTs may disadvantage these market participants
should enhance liquidity on the only quote verbally in response to floor who compete with other trading floors
Exchange. It would be unjust and brokers representing orders in the who do not have trading requirements,
inequitable to continue to impose the trading crowd. The Exchange believes as noted above, and also who do not
1000/300 Alternative trading that it has become difficult for such have the automated compliance checks.
requirement without also offering non- ROTs to comply with the trading
SQT ROTs this New Alternative given requirements. The Exchange believes C. Self-Regulatory Organization’s
the recent availability of QCC to handle that this new trading requirement Statement on Comments on the
large orders that previously may have should increase the likelihood that an Proposed Rule Change Received From
been executed by certain non-SQT ROTs ROT is actively providing liquidity on Members, Participants, or Others
in satisfaction of the 1000/300 Phlx. The Exchange believes that the
No written comments were either
Alternative test along with lower proposed new trading requirement
solicited or received.
volumes on the trading floor. should enhance the market making
The Exchange believes that removing functions for non-SQT ROTs and serve III. Date of Effectiveness of the
the requirement that SQTs and RSQTs to maintain a fair and orderly market Proposed Rule Change and Timing for
[sic] are required to meet the trading thereby promoting the protection of Commission Action
requirement is consistent with just and investors and the public interest.
The Exchange notes that non-SQT Within 45 days of the date of
equitable principles of trade because
ROTs may meet the proposed publication of this notice in the Federal
these market participants are subject to
requirement by entering limits orders, Register or within such longer period (i)
continuous quoting requirements
but the Exchange notes that the as the Commission may designate up to
today.17 The Exchange intends to
Exchange is not seeking to burden these 90 days of such date if it finds such
separate the two requirements. If a non-
market participants by limiting the type longer period to be appropriate and
SQT ROT trades electronically, that
of qualifying transactions to meet the publishes its reasons for so finding or
market maker would be required to
requirement. The Exchange recognizes (ii) as to which the Exchange consents,
continuously quote in his or her
that floor trading is a competitive space the Commission shall: (a) By order
assigned option pursuant to the
and that Phlx is the only floor trading approve or disapprove such proposed
requirement in Rule 1014(b)(ii)(D),
venue requiring its market makers on rule change, or (b) institute proceedings
whereas if that market maker was on the
the trading floor to transact a minimum to determine whether the proposed rule
trading floor in the capacity of a non-
amount of contracts. The Exchange is change should be disapproved.
SQT ROT, the market maker would be
required to separately meet the not proposing to remove the ability to IV. Solicitation of Comments
requirements of Phlx Rule 1014 at enter limit orders to meet the New
Alternative because it seeks to Interested persons are invited to
Commentary .01. Non-SQT ROTs are
encourage market makers to transact submit written data, views, and
not subject to continuous quoting
business on Phlx. arguments concerning the foregoing,
requirements today and therefore the
including whether the proposed rule
Exchange proposes to separately B. Self-Regulatory Organization’s change is consistent with the Act.
applying a standard consistent with Statement on Burden on Competition Comments may be submitted by any of
their business model and exclude other
The Exchange does not believe that the following methods:
ROTs from this floor-based requirement.
The proposal will remove the proposed rule change will impose Electronic Comments
impediments to and perfect the any burden on competition not
necessary or appropriate in furtherance • Use the Commission’s Internet
sradovich on DSK3GMQ082PROD with NOTICES
mechanism of a free and open market
and a national market system by of the purposes of the Act. With respect comment form (http://www.sec.gov/
providing a new alternative to an to intra-market competition, limiting the rules/sro.shtml); or
existing requirement that today non- trading requirement to non-SQT ROTS, • Send an email to rule-comments@
the Exchange does not believe this sec.gov. Please include File Number SR–
15 15 U.S.C. 78f(b). imposes an undue burden on Phlx–2017–67 on the subject line.
16 15 U.S.C. 78f(b)(5). competition because SQTs and RSQTs
17 See Rule 1014(b)(ii)(D). are subject to continuous quoting 18 See Rule 1014(b)(ii)(D).
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![Federal Register / Vol. 82, No. 161 / Tuesday, August 22, 2017 / Notices 39929
Paper Comments SECURITIES AND EXCHANGE No. 1 and 2 thereto (as amended, the
COMMISSION ‘‘Proposed Rule Change’’), to adopt
• Send paper comments in triplicate certain changes to the NYSE Arca Rules
to Secretary, Securities and Exchange [Release No. 34–81411; File No. SR–
NYSEArca–2017–84]
5 and 8 series to add additional
Commission, 100 F Street NE., continued listing standards for
Washington, DC 20549–1090. Self-Regulatory Organizations; NYSE exchange-traded funds (‘‘ETFs’’) as well
All submissions should refer to File Arca, Inc.; Notice of Filing of Proposed as clarify the procedures that the
Number SR–Phlx–2017–67. This file Rule Change To Extend the Exchange will undertake when an ETF
number should be included on the Implementation Date for Certain is noncompliant with applicable rules.
Changes to the NYSE Arca Rule 5 and Given the scope of the amendments
subject line if email is used. To help the
Rule 8 Series specified in the Proposed Rule Change,
Commission process and review your
the Exchange proposed that such
comments more efficiently, please use August 16, 2017. amendments not be implemented until
only one method. The Commission will Pursuant to Section 19(b)(1) 1 of the October 1, 2017. On March 9, 2017, the
post all comments on the Commission’s Securities Exchange Act of 1934 Commission granted accelerated
Internet Web site (http://www.sec.gov/ (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 approval of the Proposed Rule Change,
rules/sro.shtml). Copies of the notice is hereby given that on August 3, including the October 1, 2017
submission, all subsequent 2017, NYSE Arca, Inc. (‘‘Exchange’’ or implementation date.4 The Exchange
amendments, all written statements ‘‘NYSE Arca’’) filed with the Securities now proposes to extend the
with respect to the proposed rule and Exchange Commission implementation date of the amendments
change that are filed with the (‘‘Commission’’) the proposed rule specified in the Proposed Rule Change
Commission, and all written change as described in Items I and II to July 1, 2018.
communications relating to the below, which Items have been prepared Since the Proposed Rule Change was
proposed rule change between the by the self-regulatory organization. The approved, the Exchange has engaged in
Commission and any person, other than Commission is publishing this notice to extensive conversations with issuers of
solicit comments on the proposed rule listed ETFs, industry advocacy groups
those that may be withheld from the
change from interested persons. and index providers to discuss the new
public in accordance with the
provisions of 5 U.S.C. 552, will be I. Self-Regulatory Organization’s rule requirements and offer guidance on
available for Web site viewing and Statement of the Terms of Substance of rule interpretation and application. As a
printing in the Commission’s Public the Proposed Rule Change result of these conversations, ETF
Reference Room, 100 F Street NE., The Exchange proposes to extend the issuers have expressed concern about
Washington, DC 20549, on official date on which certain changes to the their ability to have in place systems
business days between the hours of NYSE Arca Rule 5 and Rule 8 series are and procedures to ensure compliance by
10:00 a.m. and 3:00 p.m. Copies of the implemented. The proposed change is the current October 1, 2017
available on the Exchange’s Web site at implementation date. In particular,
filing also will be available for
www.nyse.com, at the principal office of listed ETF issuers, and industry
inspection and copying at the principal
the Exchange, and at the Commission’s advocacy groups on their behalf, have
office of the Exchange. All comments
Public Reference Room. explained that issuers will require time
received will be posted without change; to design and test new compliance
the Commission does not edit personal II. Self-Regulatory Organization’s systems as well as engage in discussions
identifying information from Statement of the Purpose of, and with third-party providers to source and
submissions. You should submit only Statutory Basis for, the Proposed Rule track new data elements required for
information that you wish to make Change rule compliance.5
available publicly. All submissions In its filing with the Commission, the The Exchange believes it is
should refer to File Number SR–Phlx– self-regulatory organization included appropriate to extend the
2017–67, and should be submitted on or statements concerning the purpose of, implementation date of the Proposed
before September 12, 2017. and basis for, the proposed rule change Rule Change to July 1, 2018 to provide
For the Commission, by the Division of and discussed any comments it received listed ETF issuers with the time needed
Trading and Markets, pursuant to delegated on the proposed rule change. The text to develop and test their compliance
authority.19 of those statements may be examined at procedures. In support of its proposal,
Eduardo A. Aleman, the places specified in Item IV below. the Exchange notes that the Proposed
The Exchange has prepared summaries, Rule Change imposes significant new
Assistant Secretary.
set forth in sections A, B, and C below, compliance requirements on issuers that
[FR Doc. 2017–17685 Filed 8–21–17; 8:45 am] they have not been subject to
of the most significant parts of such
BILLING CODE 8011–01–P
statements. previously. To meet these new
compliance requirements, issuers must
A. Self-Regulatory Organization’s develop internal systems as well as
Statement of the Purpose of, and the coordinate with third-party service
Statutory Basis for, the Proposed Rule providers, such as index providers, to
Change
4 See Securities Exchange Act Release No. 80189
1. Purpose
sradovich on DSK3GMQ082PROD with NOTICES
(March 9, 2017), 82 FR 13889 (March 15, 2017) (SR–
On January 6, 2017, the Exchange NYSEArca–2017–01).
filed a proposed rule change, as 5 See, for example, Letter, dated July 11, 2017,
subsequently amended by Amendments from Dorothy Donohue, Acting General Counsel,
Investment Company Institute to Brent J. Fields,
Secretary, Securities and Exchange Commission,
1 15 U.S.C. 78s(b)(1). available at https://www.sec.gov/comments/sr-
2 15 U.S.C. 78a. nasdaq-2016-135/nasdaq2016135-1846208-
19 17 CFR 200.30–3(a)(12). 3 17 CFR 240.19b–4. 5175.pdf. [sic]
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Document Created: 2018-10-24 11:56:46
Document Modified: 2018-10-24 11:56:46
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| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| FR Citation | 82 FR 39925 |
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