82 FR 50921 - Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, To Establish a Nonstandard Expirations Pilot Program on a Pilot Basis, for an Initial Period of Twelve Months From the Date of Approval of This Proposed Rule Change

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 211 (November 2, 2017)

Page Range		50921-50924
FR Document		2017-23831
Federal Register, Volume 82 Issue 211 (Thursday, November 2, 2017)
[Federal Register Volume 82, Number 211 (Thursday, November 2, 2017)]
[Notices]
[Pages 50921-50924]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-23831]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81975; File No. SR-Phlx-2017-79]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
of Proposed Rule Change, as Modified by Amendment No. 1, To Establish a 
Nonstandard Expirations Pilot Program on a Pilot Basis, for an Initial 
Period of Twelve Months From the Date of Approval of This Proposed Rule 
Change

October 27, 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 October 12, 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. On October 26, 2017, 
the Exchange filed Amendment No.1 to the proposal to amend and replace 
the original filing of SR-Phlx-2017-79 in its entirety. The Commission 
is publishing this notice, as modified by Amendment No. 1, 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 [sic] a [sic] proposal [sic] to establish 
a Nonstandard Expirations Pilot Program on a pilot basis, for an 
initial period of twelve months from the date of approval of this 
proposed rule change.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqphlx.cchwallstreet.com/ 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this rule filing is to permit the listing and 
trading, on a pilot basis, of p.m.-settled options on broad-based 
indexes with nonstandard expiration dates for an initial period of 
twelve months (the ``Nonstandard Expirations Pilot Program'' or ``Pilot 
Program'') from the date of approval of this proposed rule change.\3\ 
The Pilot Program would permit both weekly expirations (``Weekly 
Expirations'') and end of month (``EOM'') expirations as explained 
below. Contract terms for the Weekly Expirations and EOM expirations 
will be similar to those of the a.m. settled broad-based index options, 
except that the exercise settlement value will be based on the index 
value derived from the closing prices of component stocks.
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    \3\ P.M.-settled NASDAQ-100 index options with standard third 
Friday of the month expiration dates (``NDXPM'') have previously 
been approved for listing on the Exchange on a pilot basis. NDXPM 
and NDX are separate option classes. See Securities Exchange Act 
Release No. 81293 (August 2, 2017), 82 FR 37138 (August 8, 2017) 
(Order Granting Approval of a Proposed Rule Change, as Modified by 
Amendment Nos. 1 and 2, To Permit the Listing and Trading of P.M.-
Settled NASDAQ-100 Index(R) Options on a Pilot Basis). The Exchange 
anticipates that it will file a proposed rule change in the near 
future to move these NDXPM index options with standard third Friday 
of the month expiration dates to the NDX index option class. The 
Exchange notes that the Chicago Board Options Exchange (``CBOE'') 
recently did likewise with its P.M.-settled S&P 500 Index Options 
(``SPXPM''). See Securities Exchange Act Release No. 80060 (February 
17, 2017), 82 FR 11673 (February 24, 2017) (approving SR-CBOE-2016-
091).
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Weekly Expirations
    The Exchange proposes to add new subsection (b)(vii)(1), Weekly 
Expirations, to Rule 1101A, Terms of Options Contracts. Under the 
proposed new rule the Exchange would be permitted to open for trading 
Weekly Expirations on any broad-based index eligible for standard 
options trading to expire on any Monday, Wednesday, or Friday (other 
than the third Friday-of-the-month or days that coincide with an EOM 
expiration). Weekly Expirations would be subject to all provisions of 
Rule 1101A and would be treated the same as options on the same 
underlying index that expire on the third Friday of the expiration 
month. Unlike the standard monthly options, however, Weekly Expirations 
would be p.m.-settled. New series in Weekly

[[Page 50922]]

Expirations could be added up to and including on the expiration date 
for an expiring Weekly Expiration.
    The maximum number of expirations that could be listed for each 
Weekly Expiration (i.e., a Monday expiration, Wednesday expiration, or 
Friday expiration, as applicable) in a given class would be the same as 
the maximum number of expirations permitted for standard options on the 
same broad-based index. Weekly Expirations would not need to be for 
consecutive Monday, Wednesday, or Friday expirations as applicable. 
However, the expiration date of a non-consecutive expiration would not 
be permitted beyond what would be considered the last expiration date 
if the maximum number of expirations were listed consecutively. Weekly 
Expirations that are first listed in a given class could expire up to 
four weeks from the actual listing date. If the last trading day of a 
month were a Monday, Wednesday, or Friday and the Exchange were to list 
EOMs and Weekly Expirations as applicable in a given class, the 
Exchange would list an EOM instead of a Weekly Expiration in the given 
class. Other expirations in the same class would not be counted as part 
of the maximum number of Weekly Expirations for a broad-based index 
class. If the Exchange were not open for business on a respective 
Monday, the normally Monday expiring Weekly Expirations would expire on 
the following business day. If the Exchange were not open for business 
on a respective Wednesday or Friday, the normally Wednesday or Friday 
expiring Weekly Expirations would expire on the previous business day.
End of Month (``EOM'') Expirations
    Under the proposal, the Exchange could open for trading EOMs on any 
broad-based index eligible for standard options trading to expire on 
last trading day of the month. EOMs would be subject to all provisions 
of Rule 1101A and treated the same as options on the same underlying 
index that expire on the third Friday of the expiration month. However, 
the EOMs would be P.M.-settled and new series in EOMs could be added up 
to and including on the expiration date for an expiring EOM.
    The maximum number of expirations that could be listed for EOMs in 
a given class would be the same as the maximum number of expirations 
permitted for standard options on the same broad-based index. EOM 
expirations would not need to be for consecutive end of month 
expirations. However, the expiration date of a non-consecutive 
expiration may not be beyond what would be considered the last 
expiration date if the maximum number of expirations were listed 
consecutively. EOMs that are first listed in a given class could expire 
up to four weeks from the actual listing date. Other expirations would 
not be counted as part of the maximum numbers of EOM expirations for a 
broad-based index class.
Contract Terms Trading Rules
    Weekly Expirations and EOMs would be subject to the same rules that 
currently govern the trading of standard monthly broad-based index 
options, including sales practice rules, margin requirements, and floor 
trading procedures. Contract terms for Weekly Expirations and EOMs 
would be the same as those for standard monthly broad-based index 
options. Since Weekly Expirations and EOMs will be a new type of 
series, and not a new class, the Exchange proposes that Weekly 
Expirations and EOMs shall be aggregated for any applicable reporting 
and other requirements.\4\ Pursuant to new subsection (b)(vii)(4) of 
Rule 1101A, transactions in Weekly Expirations and EOMs could be 
effected on the Exchange between the hours of 9:30 a.m. (Eastern Time) 
and 4:15 p.m. (Eastern Time).
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    \4\ See Rule 1001A(d) which sets forth the reporting 
requirements for certain market indexes that do not have position 
limits, including NDX. The Exchange is adding Nonstandard 
Expirations to Rule 1001A(e), Aggregation, to reflect the 
aggregation requirement. The Exchange notes that the proposed 
aggregation is consistent with the aggregation requirements for 
other types of option series (e.g. quarterly expiring options) that 
are listed on the Exchange and which do not expires on the customary 
``third Friday''.
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    The Exchange has analyzed its capacity and represents that it 
believes the Exchange and the Options Price Reporting Authority 
(``OPRA'') have the necessary systems capacity to handle any additional 
traffic associated with the listing of the maximum number nonstandard 
expirations permitted under the Pilot.
Pilot Program
    As stated above, this proposal is to establish a Nonstandard 
Expirations Pilot Program for broad-based index options on a pilot 
basis, for an initial period of twelve months from the date of approval 
of this proposed rule change. If the Exchange were to propose an 
extension of the Pilot or should the Exchange propose to make the Pilot 
permanent, the Exchange would submit a filing proposing such amendments 
to the Pilot.
    Further, any positions established under the Pilot would not be 
impacted by the expiration of the Pilot. For example, if the Exchange 
lists a Weekly Expiration or EOM that expires after the Pilot expires 
(and is not extended) then those positions would continue to exist.
    However, any further trading in those series would be restricted to 
transactions where at least one side of the trade is a closing 
transaction.
    As part of the Pilot, the Exchange will submit a Pilot report to 
the Commission at least two months prior to the expiration date of the 
Pilot (the ``annual report''). The annual report will contain an 
analysis of volume, open interest and trading patterns. In addition, 
for series that exceed certain minimum open interest parameters, the 
annual report will provide analysis of index price volatility and, if 
needed, share trading activity. The annual report will be provided to 
the Commission on a confidential basis.
Analysis of Volume and Open Interest
    For all Weekly Expirations and EOM series, the annual report will 
contain the following volume and open interest data for each broad-
based index overlying Weekly Expiration and EOM options:
    (1) Monthly volume aggregated for all Weekly Expiration and EOM 
series,
    (2) Volume in Weekly Expiration and EOM series aggregated by 
expiration date,
    (3) Month-end open interest aggregated for all Weekly Expiration 
and EOM series,
    (4) Month-end open interest for EOM series aggregated by expiration 
date and open interest for Weekly Expiration series aggregated by 
expiration date,
    (5) Ratio of monthly aggregate volume in Weekly Expiration and EOM 
series to total monthly class volume, and
    (6) Ratio of month-end open interest in EOM series to total month-
end class open interest and ratio of open interest in each Weekly 
Expiration series to total class open interest.
    In addition, the annual report will contain the information noted 
above for standard Expiration Friday, AM-settled series, if applicable, 
for the period covered in the pilot report as well as for the six-month 
period prior to the initiation of the pilot.
    Upon request by the SEC, the Exchange will provide a data file 
containing: (1) Weekly Expiration and EOM option volume data aggregated 
by series, and (2) Weekly Expiration open interest for each expiring 
series and EOM month-end open interest for expiring series.

[[Page 50923]]

Monthly Analysis of Weekly Expiration and EOM Trading Patterns
    In the annual report, the Exchange also proposes to identify Weekly 
Expiration and EOM trading patterns by undertaking a time series 
analysis of open interest in Weekly Expiration and EOM series 
aggregated by expiration date compared to open interest in near-term 
standard Expiration Friday A.M.-settled series in order to determine 
whether users are shifting positions from standard series to Weekly 
Expiration and EOM series. Declining open interest in standard series 
accompanied by rising open interest in Weekly Expiration and EOM series 
would suggest that users are shifting positions.
Provisional Analysis of Index Price Volatility and Share Trading 
Activity
    For each Weekly Expiration and EOM expiration that has open 
interest that exceeds certain minimum thresholds, the annual report 
will contain the following analysis related to index price changes and, 
if needed, underlying share trading volume at the close on expiration 
dates:
    (1) a comparison of index price changes at the close of trading on 
a given expiration date with comparable price changes from a control 
sample. The data will include a calculation of percentage price changes 
for various time intervals and compare that information to the 
respective control sample. Raw percentage price change data as well as 
percentage price change data normalized for prevailing market 
volatility, as measured by an appropriate index agreed by the 
Commission and the Exchange, will be provided; and
    (2) if needed, a calculation of share volume for a sample set of 
the component securities representing an upper limit on share trading 
that could be attributable to expiring in-the-money Weekly Expiration 
and EOM expirations. The data, if needed, will include a comparison of 
the calculated share volume for securities in the sample set to the 
average daily trading volumes of those securities over a sample period.
    The minimum open interest parameters, control sample, time 
intervals, method for selecting the component securities, and sample 
periods will be determined by the Exchange and the Commission.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\6\ 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 expanding the ability of investors to hedge risks against market 
movements stemming from economic releases or market events that occur 
during the month and at the end of the month. Accordingly, the Exchange 
believes that weekly expirations and EOMs should create greater trading 
and hedging opportunities and flexibility, and provide customers with 
the ability to more closely tailor their investment objectives.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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. Specifically, the Exchange does 
not believe the proposal will impose any burden on intramarket 
competition as all market participants will be treated in the same 
manner with respect to Weekly Expirations and EOMs. Additionally, the 
Exchange does not believe the proposal will impose any burden on 
intermarket competition as market participants are welcome to become 
members and trade at Phlx if they determine that this proposed rule 
change has made Phlx more attractive or favorable. Finally, all options 
exchanges are free to compete by listing and trading their own broad-
based index options with weekly or end of month expirations.

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, as modified by Amendment No.1, is consistent with the Act. In 
particular, the Commission solicits comment on the following:
     Will the pilot data contemplated in this notice allow the 
Commission to determine whether the weekly and monthly PM-settled 
options proposed in this filing have adverse effects on market 
volatility and the operation of fair and orderly markets in the 
underlying cash market?
     Will the pilot data contemplated in this notice allow the 
Commission to determine whether the weekly and monthly PM-settled 
options proposed in this filing have adverse effects on liquidity, 
volume, open interest, trading patterns, and volatility in other option 
contracts with standard expirations?
     Will the pilot data contemplated in this notice allow the 
Commission to determine whether the weekly and monthly PM-settled 
options proposed in this filing have adverse effects on index price 
volatility?
     Will the weekly and monthly PM-settled options proposed in 
this filing affect the market for options contracts with nonstandard 
expirations offered by CBOE? If so, how? In addition, how would this 
proposal affect the data and information related to nonstandard 
expirations that are provided by CBOE?
     What concerns do market participants have related to the 
proposed Nonstandard Expirations Pilot Program? If any, please be 
specific in describing your concerns. If any, will the pilot data 
contemplated in this notice allow the Commission to examine whether the 
concerns are valid?
    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-2017-79 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange

[[Page 50924]]

Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2017-79. 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. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-Phlx-2017-79, and should be 
submitted on or before November 24, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-23831 Filed 11-1-17; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 211 / Thursday, November 2, 2017 / Notices 50921

Comments may be submitted by any of SECURITIES AND EXCHANGE the most significant aspects of such
the following methods: COMMISSION statements.
Electronic Comments [Release No. 34–81975; File No. SR–Phlx– A. Self-Regulatory Organization’s
2017–79] Statement of the Purpose of, and the
• Use the Commission’s Internet Statutory Basis for, the Proposed Rule
comment form (http://www.sec.gov/ Self-Regulatory Organizations; Nasdaq Change
rules/sro.shtml); or PHLX LLC; Notice of Filing of
Proposed Rule Change, as Modified by 1. Purpose
• Send an email to rule-comments@
sec.gov. Please include File Number SR– Amendment No. 1, To Establish a The purpose of this rule filing is to
MIAX–2017–44 on the subject line. Nonstandard Expirations Pilot permit the listing and trading, on a pilot
Program on a Pilot Basis, for an Initial basis, of p.m.-settled options on broad-
Paper Comments Period of Twelve Months From the based indexes with nonstandard
Date of Approval of This Proposed expiration dates for an initial period of
• Send paper comments in triplicate Rule Change
to Brent J. Fields, Secretary, Securities twelve months (the ‘‘Nonstandard
and Exchange Commission, 100 F Street October 27, 2017. Expirations Pilot Program’’ or ‘‘Pilot
NE., Washington, DC 20549–1090. Pursuant to Section 19(b)(1) of the Program’’) from the date of approval of
Securities Exchange Act of 1934 this proposed rule change.3 The Pilot
All submissions should refer to File Program would permit both weekly
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
Number SR–MIAX–2017–44. This file expirations (‘‘Weekly Expirations’’) and
notice is hereby given that on October
number should be included on the end of month (‘‘EOM’’) expirations as
12, 2017 Nasdaq PHLX LLC (‘‘Phlx’’ or
subject line if email is used. To help the explained below. Contract terms for the
‘‘Exchange’’) filed with the Securities
Commission process and review your Weekly Expirations and EOM
and Exchange Commission (‘‘SEC’’ or
comments more efficiently, please use expirations will be similar to those of
‘‘Commission’’) the proposed rule
only one method. The Commission will the a.m. settled broad-based index
change as described in Items I, II, and
post all comments on the Commission’s options, except that the exercise
III, below, which Items have been
Internet Web site (http://www.sec.gov/ settlement value will be based on the
prepared by the Exchange. On October
rules/sro.shtml). Copies of the index value derived from the closing
26, 2017, the Exchange filed
submission, all subsequent prices of component stocks.
Amendment No.1 to the proposal to
amendments, all written statements
amend and replace the original filing of Weekly Expirations
with respect to the proposed rule
SR–Phlx–2017–79 in its entirety. The
change that are filed with the The Exchange proposes to add new
Commission is publishing this notice, as
Commission, and all written subsection (b)(vii)(1), Weekly
modified by Amendment No. 1, to
communications relating to the Expirations, to Rule 1101A, Terms of
solicit comments on the proposed rule
proposed rule change between the Options Contracts. Under the proposed
change from interested persons.
Commission and any person, other than new rule the Exchange would be
those that may be withheld from the I. Self-Regulatory Organization’s permitted to open for trading Weekly
public in accordance with the Statement of the Terms of Substance of Expirations on any broad-based index
provisions of 5 U.S.C. 552, will be the Proposed Rule Change eligible for standard options trading to
available for Web site viewing and The Exchange proposes to [sic] a [sic] expire on any Monday, Wednesday, or
printing in the Commission’s Public proposal [sic] to establish a Friday (other than the third Friday-of-
Reference Room, 100 F Street NE., Nonstandard Expirations Pilot Program the-month or days that coincide with an
Washington, DC 20549, on official on a pilot basis, for an initial period of EOM expiration). Weekly Expirations
business days between the hours of twelve months from the date of approval would be subject to all provisions of
10:00 a.m. and 3:00 p.m. Copies of the of this proposed rule change. Rule 1101A and would be treated the
filing also will be available for The text of the proposed rule change same as options on the same underlying
inspection and copying at the principal is available on the Exchange’s Web site index that expire on the third Friday of
office of the Exchange. All comments at http://nasdaqphlx.cchwallstreet. the expiration month. Unlike the
received will be posted without change. com/, at the principal office of the standard monthly options, however,
Persons submitting comments are Exchange, and at the Commission’s Weekly Expirations would be p.m.-
cautioned that we do not redact or edit Public Reference Room. settled. New series in Weekly
personal identifying information from
comment submissions. You should II. Self-Regulatory Organization’s 3 P.M.-settled NASDAQ–100 index options with

submit only information that you wish Statement of the Purpose of, and standard third Friday of the month expiration dates
Statutory Basis for, the Proposed Rule (‘‘NDXPM’’) have previously been approved for
to make available publicly. All listing on the Exchange on a pilot basis. NDXPM
submissions should refer to File Change and NDX are separate option classes. See Securities
Number SR–MIAX–2017–44 and should In its filing with the Commission, the Exchange Act Release No. 81293 (August 2, 2017),
82 FR 37138 (August 8, 2017) (Order Granting
be submitted on or before November 24, Exchange included statements Approval of a Proposed Rule Change, as Modified
2017. concerning the purpose of and basis for by Amendment Nos. 1 and 2, To Permit the Listing
For the Commission, by the Division of the proposed rule change and discussed and Trading of P.M.-Settled NASDAQ–100 Index(R)
asabaliauskas on DSKBBXCHB2PROD with NOTICES

any comments it received on the Options on a Pilot Basis). The Exchange anticipates
Trading and Markets, pursuant to delegated that it will file a proposed rule change in the near
authority.38 proposed rule change. The text of these future to move these NDXPM index options with
Eduardo A. Aleman, statements may be examined at the standard third Friday of the month expiration dates
places specified in Item IV below. The to the NDX index option class. The Exchange notes
Assistant Secretary. that the Chicago Board Options Exchange (‘‘CBOE’’)
Exchange has prepared summaries, set
[FR Doc. 2017–23825 Filed 11–1–17; 8:45 am] recently did likewise with its P.M.-settled S&P 500
forth in sections A, B, and C below, of Index Options (‘‘SPXPM’’). See Securities Exchange
BILLING CODE 8011–01–P
Act Release No. 80060 (February 17, 2017), 82 FR
1 15 U.S.C. 78s(b)(1). 11673 (February 24, 2017) (approving SR–CBOE–
38 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. 2016–091).

VerDate Sep<11>2014 22:28 Nov 01, 2017 Jkt 244001 PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 E:\FR\FM\02NON1.SGM 02NON1
50924 Federal Register / Vol. 82, No. 211 / Thursday, November 2, 2017 / Notices

Commission, 100 F Street NE., (‘‘Act’’),1 and Rule 19b–4 thereunder,2 The Kill Switch is an optional tool
Washington, DC 20549–1090. notice is hereby given that on October that enables Members to initiate a
All submissions should refer to File 18, 2017, Nasdaq MRX, LLC (‘‘MRX’’ or message(s) 4 [sic] to the trading system
Number SR–Phlx–2017–79. This file ‘‘Exchange’’) filed with the Securities (‘‘System’’) to promptly cancel orders
number should be included on the and Exchange Commission (‘‘SEC’’ or and restrict entry of new orders until re-
subject line if email is used. To help the ‘‘Commission’’) the proposed rule entry has been enabled. Members may
Commission process and review your change as described in Items I and II submit a request to the System to cancel
comments more efficiently, please use below, which Items have been prepared orders for that Member. Members may
only one method. The Commission will by the Exchange. The Commission is not remove orders by symbol using the
post all comments on the Commission’s publishing this notice to solicit Kill Switch. The System will send an
Internet Web site (http://www.sec.gov/ comments on the proposed rule change automated message to the Member when
rules/sro.shtml). Copies of the from interested persons. a Kill Switch request has been
submission, all subsequent processed by the Exchange’s System.5
I. Self-Regulatory Organization’s The Member must send a message to
amendments, all written statements Statement of the Terms of the Substance
with respect to the proposed rule the Exchange to request the cancellation
of the Proposed Rule Change of all orders for the Member. The
change that are filed with the
Commission, and all written The Exchange proposes to Member is unable to enter additional
communications relating to the memorialize an optional Kill Switch orders until re-entry has been enabled
proposed rule change between the protection.3 The Kill Switch allows pursuant to subsection (d)(2) of Rule
Commission and any person, other than Members to cancel open orders and 711.
prevent new order submission. Proposed subsection (d)(2) stipulates
those that may be withheld from the
The text of the proposed rule change that after orders are cancelled by the
public in accordance with the
is available on the Exchange’s Web site Member utilizing the Kill Switch, the
provisions of 5 U.S.C. 552, will be
at www.ise.com, at the principal office Member is unable to enter additional
available for Web site viewing and
of the Exchange, and at the orders until the Member has made a
printing in the Commission’s Public
Commission’s Public Reference Room. request to the Exchange and Exchange
Reference Room, 100 F Street NE.,
staff has set a re-entry indicator to
Washington, DC 20549, on official II. Self-Regulatory Organization’s enable re-entry.6 Once enabled for re-
business days between the hours of Statement of the Purpose of, and entry, the System will send a Re-entry
10:00 a.m. and 3:00 p.m. Copies of the Statutory Basis for, the Proposed Rule Notification Message to the Member.
filing also will be available for Change The applicable Clearing Member for that
inspection and copying at the principal Member also is notified of the re-entry
office of the Exchange. All comments In its filing with the Commission, the
into the System after orders are
received will be posted without change. Exchange included statements
cancelled as a result of the Kill Switch,
Persons submitting comments are concerning the purpose of and basis for
provided the Clearing Member has
cautioned that we do not redact or edit the proposed rule change and discussed
requested to receive such notification.
personal identifying information from any comments it received on the
comment submissions. You should proposed rule change. The text of these 2. Statutory Basis
submit only information that you wish statements may be examined at the The Exchange believes that its
to make available publicly. All places specified in Item IV below. The proposal is consistent with Section 6(b)
submissions should refer to File Exchange has prepared summaries, set of the Act 7 in general, and furthers the
Number SR–Phlx–2017–79, and should forth in sections A, B, and C below, of objectives of Section 6(b)(5) of the Act 8
be submitted on or before November 24, the most significant aspects of such in particular, in that it is designed to
2017. statements. promote just and equitable principles of
For the Commission, by the Division of A. Self-Regulatory Organization’s trade, to remove impediments to and
Trading and Markets, pursuant to delegated Statement of the Purpose of, and perfect the mechanism of a free and
authority.7 Statutory Basis for, the Proposed Rule open market and a national market
Eduardo A. Aleman, Change system, and, in general to protect
Assistant Secretary. investors and the public interest, by
1. Purpose memorializing a risk protection
[FR Doc. 2017–23831 Filed 11–1–17; 8:45 am]
BILLING CODE 8011–01–P The Exchange proposes to available to Exchange Members. This
memorialize its Kill Switch risk risk feature promotes policy goals of the
protection which is applicable to all Commission which has encouraged
SECURITIES AND EXCHANGE Members at MRX Rule 711(d). The Kill execution venues, exchange and non-
COMMISSION Switch allows Members to cancel open exchange alike, to offer risk protection
orders and prevent new order tools and other mechanisms to decrease
[Release No. 34–81969; File No. SR–MRX– risk and increase stability. The
2017–23] submission. This feature provides
Members with a powerful risk
4 Members are able to send a message to the
Self-Regulatory Organizations; Nasdaq management tool for immediate control
Exchange to initiate the Kill Switch or they may
MRX, LLC; Notice of Filing and of their order activity. contact the Exchange directly. A message to remove
asabaliauskas on DSKBBXCHB2PROD with NOTICES

Immediate Effectiveness of Proposed orders may be sent through FIX, OTTO or Precise.
Rule Change Relating to an Optional 1 15 U.S.C. 78s(b)(1). 5 Opening Sweep Orders will also be cancelled.

Kill Switch Protection 2 17 CFR 240.19b–4. Consistent with current auction functionality, PIM
3 Today, this feature is offered to Members. MRX auction orders and responses will not be cancelled.
October 27, 2017. transitioned from its legacy trading system to INET, See MRX Rule 723. Other auctions orders and
the current technology, in 2017. While MRX offered responses would cancel. Quotes are unaffected.
Pursuant to Section 19(b)(1) of the 6 The Member must directly and verbally contact
this feature on its legacy system, the feature was not
Securities Exchange Act of 1934 codified in the MRX Rulebook. At this time, the the Exchange to request the re-set.
7 15 U.S.C. 78f(b).
Exchange is codifying the Kill Switch feature to
7 17 CFR 200.30–3(a)(12). reflect the functionality. 8 15 U.S.C. 78f(b)(5).

VerDate Sep<11>2014 22:28 Nov 01, 2017 Jkt 244001 PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 E:\FR\FM\02NON1.SGM 02NON1
Document Created: 2017-11-02 02:40:51
Document Modified: 2017-11-02 02:40:51
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		82 FR 50921