82 FR 52959 - Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Index Options Rules To Be More Clear and Conformed More Closely to Those of the Options Clearing Corporation (“OCC”) and Other Exchanges
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 219 (November 15, 2017)
Federal Register Volume 82, Issue 219 (November 15, 2017)
| Page Range | 52959-52962 | |
| FR Document | 2017-24656 |
[Federal Register Volume 82, Number 219 (Wednesday, November 15, 2017)] [Notices] [Pages 52959-52962] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-24656] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82035; File No. SR-Phlx-2017-89] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Index Options Rules To Be More Clear and Conformed More Closely to Those of the Options Clearing Corporation (``OCC'') and Other Exchanges November 8, 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 November 1, 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 the Substance of the Proposed Rule Change The Exchange proposes to amend its index options rules to be more clear and conformed more closely to those of the Options Clearing Corporation (``OCC'') and other exchanges. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqphlx.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to amend its index options rules in a number of respects to be more clear and reflective of current market practice, and to be conformed more closely to OCC rules and those of other exchanges in order to minimize the potential for confusion, in addition to other index option rule changes as discussed below. Definition and Use of the Term ``Closing Index Value'' The Exchange currently assigns the term ``closing index value'' a meaning which differs from that term's meaning on other exchanges, which presents the potential for needless confusion. Rule 1000A(b)(8) currently provides that the closing index value in respect of a particular index means (a) with respect to P.M.-settled options, the current index value calculated at the close of business on the day of exercise, or, if the day of exercise is not a trading day, on the last trading day before exercise, or (b) with respect to A.M.-settled options, the opening price of each component issue on the primary market on the day of exercise, or, if the day of exercise is not a trading day, on the last trading day before exercise. This definition is proposed to be deleted. The Exchange now proposes to define the term ``closing index value'' to mean simply the last index value reported on a business day. The new definition tracks the definition of ``closing index value'' on CBOE, ISE and NOM.\3\ --------------------------------------------------------------------------- \3\ CBOE Rule 24.1, ISE Rule 2001(e) and NOM Chapter XIV, Section 2(e), for example, all define ``closing index value'' as the last index value reported on a business day. --------------------------------------------------------------------------- The substantive provisions of the index rules that currently refer to ``closing index value'' are proposed to be amended as well as discussed below, in light of this amendment to the definition of that term. The use of more consistent terminology across exchanges, both in the definition itself and in substantive provisions using the defined term, should minimize potential for confusion, especially in the context of multiply listed index options. It is in the public interest to avoid use of different terminology across different exchanges to describe the same concept. Substitute the Term ``Current Index Value'' for the term ``Closing Index Value'' The term ``current index value'' is defined in Rule 1000A(b)(7) in respect of a particular index as ``the level of the index that is derived from the reported prices of the underlying securities that are the basis of the index, as reported by the reporting authority for the index.'' Other options exchanges define ``current index value'' in a similar fashion.\4\ --------------------------------------------------------------------------- \4\ CBOE Rule 24.1(g), ISE Rule 2001(e) and NOM Chapter XIV, Section 2(e), for example, all define the term ``current index value'' with respect to a particular index options contract in relevant part as the level of the underlying index reported by the reporting authority for the index, or any multiple or fraction of such reported level specified by the exchange. --------------------------------------------------------------------------- However, the Exchange currently uses the term ``closing index value'' in provisions where other exchanges use the term ``current index value.'' In order to use more consistent terminology across exchanges, the Exchange proposes to replace the term ``closing index value'' with the term ``current [[Page 52960]] index value'' in Rules 1000A(b)(1), (2) and (6). Thus the term ``put'' will be defined in Rule 1000A(b)(1) as an option contract under which the holder of the option has the right, in accordance with the terms and provisions of the option, to sell to the Options Clearing Corporation the current index value times the index multiplier. Rule 1000A(b)(2) would be revised to define the term ``call'' as an option contract under which the holder of the option has the right, in accordance with the terms of the option, to purchase from OCC the current index value times the index multiplier. Similarly, the term ``index multiplier'' would be defined to mean the amount specified in the contract by which the current index value is to be multiplied to arrive at the value required to be delivered to the holder of a call or by the holder of a put upon valid exercise of the contract. In all three of the revised definitions, the only change proposed is the substitution of the term ``current index value'' for the existing term ``closing index value'' which itself is proposed to be revised as discussed below to be consistent with the definition of that term on other exchanges.\5\ --------------------------------------------------------------------------- \5\ Upon implementation of the proposed amendments, the Exchange will be using terminology that is consistent with definitions of ``put'', ``call'' and ``index multiplier'' on CBOE, ISE and NOM. See CBOE Rules 24.1(a), 24.1(b), and 24.1(f); ISE Rules 2001(c), 2001(i) and 2001(l); and NOM Chapter XIV, Sections 2(d), 2(i) and 2(m). The amendments will also give the terms ``put'', ``call'' and ``index multiplier'' definitions that are consistent with the existing Phlx definition of ``exercise price'' which is the specific price per unit at which the current index value may be purchased in the case of a call or sold in the case of a put upon the exercise of an option. Unlike the current Phlx definitions of ``put'', ``call'' and ``index multiplier'', the current Phlx definition of ``exercise price'' is consistent with the definition of ``exercise price'' on other exchanges. See, e.g., CBOE Rule 24.1(d), ISE Rule 2001(f) and NOM Chapter XIV, Section 2(f), all of which define ``exercise price'' using the defined term ``current index value''. --------------------------------------------------------------------------- Current Rule 1000A(b)(8) defining ``closing index value'' already points to the current index value. Specifically, it defines ``closing index value'' to mean, with respect to P.M.-settled options, the current index value calculated at the close of business on the day of exercise, or, if the day of exercise is not a trading day, on the last trading day before exercise. In view of the amendment to Rule 1101A(d) discussed below providing generally that the current index value used to settle the exercise of an index options contract is the closing index value (proposed to be defined as the last index value reported on a business day) for the day, the net effect of these amendments with respect to P.M.-settled options is for the most part a change in terminology only, to be consistent with terminology used by other options exchanges. Currently, with respect to P.M.- settled options the relevant value for Rules 1000A(b)(1), (2) and (6) is the ``index value calculated at the close of business on the day of exercise''. As amended, the relevant value would be ``the last index value reported on a business day''. Both formulations express the same concept. These definitional changes are not intended to change current practice with respect to P.M.-settled options. New Definition of ``A.M. Settled Index Option'' The Exchange proposes to add a new definition of A.M. settled index option. Consistent with the CBOE, ISE and NOM definitions of this term, new Rule 1000A(18) would define ``A.M. settled index option'' as an index option for which the current index value at expiration shall be determined as provided in Rule 1101A(e).\6\ --------------------------------------------------------------------------- \6\ See the consistent definitions of ``A.M.-settled index option'' in CBOE Rule 24.1(r), ISE Rule 2001(c), and NOM Chapter XIV, Section 2(c). Like proposed Phlx Rule 1000A(b)(18), each of these definitions incorporates by reference a separate rule governing the determination of the current settlement value at expiration. --------------------------------------------------------------------------- The Exchange proposes to adopt new Rule 1101A(d), Index Values for Settlement, which recites that OCC rules specify that, unless the rules of the Exchange provide otherwise, the current index value used to settle the exercise of an index options contract is the closing index value for the day on which the index options contract is exercised in accordance with OCC rules, or if such day is not a business day, for the most recent business day. Other options exchanges have similar rules. \7\ --------------------------------------------------------------------------- \7\ See, e.g., CBOE Rule 24.9.05 and ISE Rule 2009(e). --------------------------------------------------------------------------- As an exception to the baseline rule set forth in Rule 1101A(d) regarding settlement based on closing index values, the Exchange proposes to add new Rule 1101A(e) to provide that the last day of trading for A.M.-settled index options shall be the business day preceding the business day of expiration, or, in the case of an option contract expiring on a day that is not a business day, the business day preceding the last day of trading in the underlying securities prior to the expiration date. Under the new rule the current index value at the expiration of an A.M.-settled index option will be determined on the last day of trading in the underlying securities prior to expiration, by reference to the reported level of such index as derived from first reported sale (opening) prices of the underlying securities on the primary market on such day.\8\ The current language of Rule 1000A(b)(8)(b) suggests that exercise settlement values for A.M. settled options are always based upon opening prices. In fact, however, closing prices are used in the case of an early exercise. This new language makes clear that for A.M.-settled index options opening prices of the underlying securities determine the current index value used to settle an exercise only on the last day of trading prior to expiration, consistent with market practice and OCC processes regarding A.M. settlement. Exercise of an American style A.M.-settled option prior to the day of expiration will result in settlement based upon closing prices in the underlying market, consistent with proposed new Rule 1101A(d) and OCC rules. The new language in 1101A(d) and (e) corrects existing Exchange Rule 1000A(b)(8) which does not make this distinction and is at variance with existing market practice and OCC settlement processes. --------------------------------------------------------------------------- \8\ See ISE Rule 2009(a)(5) and NOM Chapter XIV, Section 11(a)(5), which are similar. --------------------------------------------------------------------------- Proposed Rule 1101A(e) incorporates one exception. In the event that the primary market for an underlying security is open for trading on that day, but that particular security does not open for trading on that day, the price of that security, for the purposes of calculating the current index value at expiration, will be the last reported sale price of the security.\9\ --------------------------------------------------------------------------- \9\ NOM and ISE rules contain similar exceptions. See NOM Chapter XIV Section 11(a)(5) and ISE Rule 2009(a)(5). --------------------------------------------------------------------------- Finally, new language is added to Rule 1101A(e) which specifically identifies the six A.M.-settled index options that are currently approved for trading on the Exchange.\10\ The listing of these A.M.- settled index options is consistent with proposed new Rule 1101A(d), which recites that the Rules of the Options Clearing Corporation specify that, unless the Rules of the Exchange provide otherwise (which Rule 1101A(e) is doing by identifying AM-settled index options), the current index value used to settle the exercise of an index options contract shall be the closing index value for the day on which the index options contract is exercised in accordance with the Rules of the Options Clearing Corporation or, [[Page 52961]] if such day is not a business day, for the most recent business day. It is also consistent with the existing Commentary to Rule 1000A(b)(8) which provides that for any series of index options the Exchange may, in its discretion, provide that the calculation of the final index settlement value of any index on which options are traded at the Exchange will be determined by reference to the prices of the constituent stocks at a time other than the close of trading on the last trading day before expiration. --------------------------------------------------------------------------- \10\ The change is being made in conformance with Article XVII, Section 5 of the OCC By-Laws. Article XVII, Section 5 of the OCC By- Laws provides that an Exchange may provide by rule that the current index value shall be determined by reference to the reported level of such index at a time or times other than the close of trading. Other options exchanges identify individual AM-settled options in their rules. See, e.g., CBOE Rule 24.9(a)(4). --------------------------------------------------------------------------- Deletion of Rule 1044A, Delivery and Payment Rule 1044A, Delivery and Payment, currently provides that in accordance with the applicable Rules of the Options Clearing Corporation, the settlement of index option contracts will be by the delivery of the difference between the closing index value on the day of exercise and the exercise price times the index multiplier. The Exchange proposes to delete this provision, given the proposed amendment to the defined term ``closing index value'' as discussed above. The Exchange has not found a similar rule on other options exchanges and believes it to be unnecessary given the definitions of put, call and index multiplier, which imply that settlement will be by the delivery of the difference between the closing index value on the day of exercise and the exercise price, times the index multiplier. OCC Bylaws provide for the calculation of the exercise settlement amount by reference the [sic] difference between the aggregate exercise price and the aggregate current index value on the day of the exercise.\11\ --------------------------------------------------------------------------- \11\ See also Article XVII of the OCC Bylaws. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\12\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\13\ 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 adding clarity to the rules, correcting the description of the manner of calculation of the exercise settlement amount in the case of early exercise of A.M.-settled options to conform with OCC rules and processes, and conforming index option terminology more closely to that used by OCC and other exchanges that list index options. In addition to correcting the inaccuracy regarding early exercise of A.M.-settled index options, the proposed rule change would result in Exchange index option rules that are substantially similar to rules that are currently in place on other options exchanges as discussed in detail above, thereby reducing potential investor confusion. The Exchange believes that the proposed changes will provide greater clarity to members and the public regarding the Exchange's index option rules. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78f(b). \13\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act, as the added clarity and the increased conformity to index rules of other options exchanges and acknowledgement of OCC rules will benefit all market participants trading Exchange listed index options. The proposed rule change does not affect competition in that it conforms the Phlx index rulebook to OCC rules and to existing market practice, and will apply equally to all market participants transacting in index options on the Exchange. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act \14\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\15\ --------------------------------------------------------------------------- \14\ 15 U.S.C. 78s(b)(3)(A)(iii). \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic 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-2017-89 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Phlx-2017-89. 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 such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. 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 [[Page 52962]] submissions should refer to File Number SR-Phlx-2017-89, and should be submitted on or before December 6, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\16\ --------------------------------------------------------------------------- \16\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-24656 Filed 11-14-17; 8:45 am] BILLING CODE 8011-01-P
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has received no comments on the (‘‘Act’’),1 and Rule 19b–4 thereunder,2 potential for needless confusion. Rule
proposal. notice is hereby given that on November 1000A(b)(8) currently provides that the
Section 19(b)(2) of the Act 5 provides 1, 2017, Nasdaq PHLX LLC (‘‘Phlx’’ or closing index value in respect of a
that, within 45 days of the publication ‘‘Exchange’’) filed with the Securities particular index means (a) with respect
of notice of the filing of a proposed rule and Exchange Commission (‘‘SEC’’ or to P.M.-settled options, the current
change, or within such longer period up ‘‘Commission’’) the proposed rule index value calculated at the close of
to 90 days as the Commission may change as described in Items I, II, and business on the day of exercise, or, if the
designate if it finds such longer period III below, which Items have been day of exercise is not a trading day, on
to be appropriate and publishes its prepared by the Exchange. The the last trading day before exercise, or
reasons for so finding, or as to which the Commission is publishing this notice to (b) with respect to A.M.-settled options,
self-regulatory organization consents, solicit comments on the proposed rule the opening price of each component
the Commission shall either approve the change from interested persons. issue on the primary market on the day
proposed rule change, disapprove the of exercise, or, if the day of exercise is
I. Self-Regulatory Organization’s
proposed rule change, or institute not a trading day, on the last trading day
Statement of the Terms of the Substance
proceedings to determine whether the before exercise. This definition is
of the Proposed Rule Change
proposed rule change should be proposed to be deleted. The Exchange
disapproved. The 45th day after The Exchange proposes to amend its now proposes to define the term
publication of the notice for this index options rules to be more clear and ‘‘closing index value’’ to mean simply
proposed rule change is November 13, conformed more closely to those of the the last index value reported on a
2017. The Commission is extending this Options Clearing Corporation (‘‘OCC’’) business day. The new definition tracks
45-day time period. and other exchanges. the definition of ‘‘closing index value’’
The Commission finds that it is The text of the proposed rule change on CBOE, ISE and NOM.3
appropriate to designate a longer period is available on the Exchange’s Web site The substantive provisions of the
within which to take action on the at http://nasdaqphlx.cchwallstreet.com/ index rules that currently refer to
proposed rule change so that it has , at the principal office of the Exchange, ‘‘closing index value’’ are proposed to
sufficient time to consider the proposed and at the Commission’s Public be amended as well as discussed below,
rule change, as modified by Amendment Reference Room. in light of this amendment to the
No. 1. Accordingly, the Commission, II. Self-Regulatory Organization’s definition of that term. The use of more
pursuant to Section 19(b)(2) of the Act,6 Statement of the Purpose of, and consistent terminology across
designates December 28, 2017, as the Statutory Basis for, the Proposed Rule exchanges, both in the definition itself
date by which the Commission shall Change and in substantive provisions using the
either approve or disapprove, or defined term, should minimize potential
In its filing with the Commission, the for confusion, especially in the context
institute proceedings to determine Exchange included statements
whether to disapprove, the proposed of multiply listed index options. It is in
concerning the purpose of and basis for the public interest to avoid use of
rule change (File No. SR–NYSEArca– the proposed rule change and discussed
2017–111), as modified by Amendment different terminology across different
any comments it received on the exchanges to describe the same concept.
No. 1. proposed rule change. The text of these
For the Commission, by the Division of statements may be examined at the Substitute the Term ‘‘Current Index
Trading and Markets, pursuant to delegated places specified in Item IV below. The Value’’ for the term ‘‘Closing Index
authority.7 Exchange has prepared summaries, set Value’’
Eduardo A. Aleman, forth in sections A, B, and C below, of The term ‘‘current index value’’ is
Assistant Secretary. the most significant aspects of such defined in Rule 1000A(b)(7) in respect
[FR Doc. 2017–24659 Filed 11–14–17; 8:45 am] statements. of a particular index as ‘‘the level of the
BILLING CODE 8011–01–P
A. Self-Regulatory Organization’s index that is derived from the reported
Statement of the Purpose of, and prices of the underlying securities that
Statutory Basis for, the Proposed Rule are the basis of the index, as reported by
SECURITIES AND EXCHANGE the reporting authority for the index.’’
COMMISSION Change
Other options exchanges define ‘‘current
[Release No. 34–82035; File No. SR–Phlx– 1. Purpose index value’’ in a similar fashion.4
2017–89] The Exchange is proposing to amend However, the Exchange currently uses
its index options rules in a number of the term ‘‘closing index value’’ in
Self-Regulatory Organizations; Nasdaq respects to be more clear and reflective provisions where other exchanges use
PHLX LLC; Notice of Filing and of current market practice, and to be the term ‘‘current index value.’’ In order
Immediate Effectiveness of Proposed conformed more closely to OCC rules to use more consistent terminology
Rule Change To Amend Its Index and those of other exchanges in order to across exchanges, the Exchange
Options Rules To Be More Clear and minimize the potential for confusion, in proposes to replace the term ‘‘closing
Conformed More Closely to Those of addition to other index option rule index value’’ with the term ‘‘current
the Options Clearing Corporation changes as discussed below.
(‘‘OCC’’) and Other Exchanges 3 CBOE Rule 24.1, ISE Rule 2001(e) and NOM
Definition and Use of the Term ‘‘Closing Chapter XIV, Section 2(e), for example, all define
November 8, 2017. Index Value’’ ‘‘closing index value’’ as the last index value
sradovich on DSK3GMQ082PROD with NOTICES
Pursuant to Section 19(b)(1) of the reported on a business day.
Securities Exchange Act of 1934 The Exchange currently assigns the 4 CBOE Rule 24.1(g), ISE Rule 2001(e) and NOM
term ‘‘closing index value’’ a meaning Chapter XIV, Section 2(e), for example, all define
which differs from that term’s meaning the term ‘‘current index value’’ with respect to a
https://www.sec.gov/comments/sr-nysearca-2017- particular index options contract in relevant part as
111/nysearca2017111-2653768-161362.pdf. on other exchanges, which presents the the level of the underlying index reported by the
5 15 U.S.C. 78s(b)(2).
reporting authority for the index, or any multiple
6 Id. 1 15 U.S.C. 78s(b)(1). or fraction of such reported level specified by the
7 17 CFR 200.30–3(a)(31). 2 17 CFR 240.19b–4. exchange.
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if such day is not a business day, for the other exchanges that list index options. it appears to the Commission that such
most recent business day. It is also In addition to correcting the inaccuracy action is: (i) Necessary or appropriate in
consistent with the existing regarding early exercise of A.M.-settled the public interest; (ii) for the protection
Commentary to Rule 1000A(b)(8) which index options, the proposed rule change of investors; or (iii) otherwise in
provides that for any series of index would result in Exchange index option furtherance of the purposes of the Act.
options the Exchange may, in its rules that are substantially similar to If the Commission takes such action, the
discretion, provide that the calculation rules that are currently in place on other Commission shall institute proceedings
of the final index settlement value of options exchanges as discussed in detail to determine whether the proposed rule
any index on which options are traded above, thereby reducing potential should be approved or disapproved.
at the Exchange will be determined by investor confusion. The Exchange
IV. Solicitation of Comments
reference to the prices of the constituent believes that the proposed changes will
stocks at a time other than the close of provide greater clarity to members and Interested persons are invited to
trading on the last trading day before the public regarding the Exchange’s submit written data, views, and
expiration. index option rules. arguments concerning the foregoing,
including whether the proposed rule
Deletion of Rule 1044A, Delivery and B. Self-Regulatory Organization’s change is consistent with the Act.
Payment Statement on Burden on Competition Comments may be submitted by any of
Rule 1044A, Delivery and Payment, The Exchange does not believe the the following methods:
currently provides that in accordance proposed rule change will impose any
Electronic Comments
with the applicable Rules of the Options burden on competition not necessary or
Clearing Corporation, the settlement of appropriate in furtherance of the • Use the Commission’s Internet
index option contracts will be by the purposes of the Act, as the added clarity comment form (http://www.sec.gov/
delivery of the difference between the and the increased conformity to index rules/sro.shtml); or
closing index value on the day of rules of other options exchanges and • Send an email to rule-comments@
exercise and the exercise price times the acknowledgement of OCC rules will sec.gov. Please include File Number SR–
index multiplier. The Exchange benefit all market participants trading Phlx–2017–89 on the subject line.
proposes to delete this provision, given Exchange listed index options. The Paper Comments
the proposed amendment to the defined proposed rule change does not affect
competition in that it conforms the Phlx • Send paper comments in triplicate
term ‘‘closing index value’’ as discussed
index rulebook to OCC rules and to to Brent J. Fields, Secretary, Securities
above. The Exchange has not found a
existing market practice, and will apply and Exchange Commission, 100 F Street
similar rule on other options exchanges
equally to all market participants NE., Washington, DC 20549–1090.
and believes it to be unnecessary given
the definitions of put, call and index transacting in index options on the All submissions should refer to File
multiplier, which imply that settlement Exchange. Number SR–Phlx–2017–89. This file
will be by the delivery of the difference number should be included on the
C. Self-Regulatory Organization’s subject line if email is used. To help the
between the closing index value on the Statement on Comments on the Commission process and review your
day of exercise and the exercise price, Proposed Rule Change Received From comments more efficiently, please use
times the index multiplier. OCC Bylaws Members, Participants, or Others only one method. The Commission will
provide for the calculation of the
No written comments were either post all comments on the Commission’s
exercise settlement amount by reference
solicited or received. Internet Web site (http://www.sec.gov/
the [sic] difference between the
rules/sro.shtml). Copies of the
aggregate exercise price and the III. Date of Effectiveness of the
submission, all subsequent
aggregate current index value on the day Proposed Rule Change and Timing for
amendments, all written statements
of the exercise.11 Commission Action
with respect to the proposed rule
2. Statutory Basis Because the foregoing proposed rule change that are filed with the
The Exchange believes that its change does not: (i) Significantly affect Commission, and all written
proposal is consistent with Section 6(b) the protection of investors or the public communications relating to the
of the Act,12 in general, and furthers the interest; (ii) impose any significant proposed rule change between the
objectives of Section 6(b)(5) of the Act,13 burden on competition; and (iii) become Commission and any person, other than
operative for 30 days from the date on those that may be withheld from the
in particular, in that it is designed to
which it was filed, or such shorter time public in accordance with the
promote just and equitable principles of
as the Commission may designate, it has provisions of 5 U.S.C. 552, will be
trade, to remove impediments to and
become effective pursuant to Section available for Web site viewing and
perfect the mechanism of a free and
19(b)(3)(A)(iii) of the Act 14 and printing in the Commission’s Public
open market and a national market
subparagraph (f)(6) of Rule 19b–4 Reference Room, 100 F Street NE.,
system, and, in general to protect
thereunder.15 Washington, DC 20549 on official
investors and the public interest, by At any time within 60 days of the
adding clarity to the rules, correcting business days between the hours of
filing of the proposed rule change, the 10:00 a.m. and 3:00 p.m. Copies of such
the description of the manner of Commission summarily may
calculation of the exercise settlement filing also will be available for
temporarily suspend such rule change if inspection and copying at the principal
amount in the case of early exercise of
office of the Exchange. All comments
sradovich on DSK3GMQ082PROD with NOTICES
A.M.-settled options to conform with 14 15 U.S.C. 78s(b)(3)(A)(iii).
OCC rules and processes, and 15 17
received will be posted without change.
CFR 240.19b–4(f)(6). In addition, Rule 19b–
conforming index option terminology 4(f)(6) requires a self-regulatory organization to give Persons submitting comments are
more closely to that used by OCC and the Commission written notice of its intent to file cautioned that we do not redact or edit
the proposed rule change at least five business days personal identifying information from
prior to the date of filing of the proposed rule
11 See also Article XVII of the OCC Bylaws. change, or such shorter time as designated by the
comment submissions. You should
12 15 U.S.C. 78f(b). Commission. The Exchange has satisfied this submit only information that you wish
13 15 U.S.C. 78f(b)(5). requirement. to make available publicly. All
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![52962 Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices
submissions should refer to File concerning the purpose of and basis for applicable, derivative agreements,
Number SR–Phlx–2017–89, and should the proposed rule change. The text of contracts, and transactions, the
be submitted on or before December 6, these statements may be examined at safeguarding of securities and funds in
2017. the places specified in Item IV below. the custody or control of the clearing
For the Commission, by the Division of ICE Clear Europe has prepared agency or for which it is responsible,
Trading and Markets, pursuant to delegated summaries, set forth in sections (A), (B), and the protection of investors and the
authority.16 and (C) below, of the most significant public interest. Rule 17Ad–22(e)(10) 8
Eduardo A. Aleman, aspects of such statements. requires that each covered clearing
Assistant Secretary. agency shall establish, implement,
(A) Clearing Agency’s Statement of the
maintain and enforce written policies
[FR Doc. 2017–24656 Filed 11–14–17; 8:45 am] Purpose of, and Statutory Basis for, the
and procedures reasonably designed to
BILLING CODE 8011–01–P Proposed Rule Change, Security-Based
establish and maintain transparent
Swap Submission or Advance Notice
written standards that state its
SECURITIES AND EXCHANGE (a) Purpose obligations with respect to the delivery
COMMISSION ICE Clear Europe proposes to of physical instruments, and establish
implement certain amendments and and maintain operational practices that
[Release No. 34–82041; File No. SR–ICEEU– identify, monitor, and manage the risks
2017–012]
updates to the ICE Clear Europe
Delivery Procedures relating to associated with such physical
European emissions and UK electricity deliveries. The proposed amendments
Self-Regulatory Organizations; ICE are being made to update and clarify the
Clear Europe Limited; Notice of Filing contracts. The proposed amendments
are designed (i) to update the Delivery ICE Clear Europe delivery procedures to
and Immediate Effectiveness of a make operational and documentation
Proposed Rule Change Relating to Procedures relating to deliveries under
European emissions and UK power improvements in the delivery
Amendments to the ICE Clear Europe confirmation and notification processes.
Delivery Procedures contracts to be consistent with current
practice and reflect the use of updated As a result, in ICE Clear Europe’s view,
November 8, 2017. delivery forms and processes and (ii) to the amendments will facilitate the
Pursuant to Section 19(b)(1) of the remove certain references to contracts prompt and accurate clearance and
Securities Exchange Act of 1934 no longer traded. settlement of cleared transactions, more
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 In Part A of the Delivery Procedures clearly state the obligations of parties
notice is hereby given that on October (relating to European emissions with respect to deliveries and the
31, 2017, ICE Clear Europe Limited contracts), ICE Clear Europe is management of the risks of such
(‘‘ICE Clear Europe’’) filed with the modifying the timing for submission of deliveries, within the meaning of the
Securities and Exchange Commission delivery confirmation forms to be Act and Rule 17Ad–22(e).
(‘‘Commission’’) the proposed rule consistent with the timing of the (B) Clearing Agency’s Statement on
changes described in Items I, II, and III expiration of the relevant contracts. Burden on Competition
below, which Items have been prepared In Part C of the Delivery Procedures
(relating to UK electricity contracts), ICE ICE Clear Europe does not believe the
by ICE Clear Europe. ICE Clear Europe
Clear Europe is removing certain proposed changes to the rules would
filed the proposed rule change pursuant have any impact, or impose any burden,
to Section 19(b)(3)(A) of the Act,3 and references (and related provisions) for
contracts that are no longer traded. The on competition not necessary or
Rule 19b–4(f)(4)(ii) 4 thereunder, so that appropriate in furtherance of the
the proposal was immediately effective amendments also remove references to a
pre-delivery authorization process and purpose of the Act. ICE Clear Europe is
upon filing with the Commission. The adopting the amendments the Delivery
Commission is publishing this notice to certain reports that are no longer used,
as well as extend the deadline for Procedures and Clearing Procedures in
solicit comments on the proposed rule order to clarify certain aspects of the
change from interested persons. certain authorization requests, in light
of updates to ICE Clear Europe systems. exercise and settlement of equity futures
I. Clearing Agency’s Statement of the In addition, the amendments modify the and options currently cleared by ICE
Terms of Substance of the Proposed timing for submission of certain Clear Europe. ICE Clear Europe does not
Rule Change, Security-Based Swap delivery confirmation forms to be believe the adoption of related Delivery
Submission, or Advance Notice consistent with the timing of the Procedures and Clearing Procedures
The principal purpose of the expiration of the relevant contracts. amendments would materially affect the
proposed rule change is to implement cost of clearing these products,
(b) Statutory Basis adversely affect access to clearing in
certain amendments and updates to the
ICE Clear Europe Delivery Procedures ICE Clear Europe believes that the these products for Clearing Members or
relating to European emissions and UK proposed amendments are consistent their customers, or otherwise adversely
electricity contracts. with the requirements of Section 17A of affect competition in clearing services.
the Act 5 and the regulations thereunder (C) Clearing Agency’s Statement on
II. Clearing Agency’s Statement of the applicable to it, including the standards
Purpose of, and Statutory Basis for, the Comments on the Proposed Rule
under Rule 17Ad–22.6 Change Received From Members,
Proposed Rule Change, Security-Based Section 17A(b)(3)(F) of the Act 7
Swap Submission or Advance Notice Participants or Others
requires, among other things, that the
sradovich on DSK3GMQ082PROD with NOTICES
In its filing with the Commission, ICE rules of a clearing agency be designed to Written comments relating to the
Clear Europe included statements promote the prompt and accurate proposed changes to the rules have not
clearance and settlement of securities been solicited or received. ICE Clear
16 17 CFR 200.30–3(a)(12). transactions and, to the extent Europe will notify the Commission of
1 15 U.S.C. 78s(b)(1). any written comments received by ICE
2 17 CFR 240.19b–4. 5 15 U.S.C. 78q–1. Clear Europe.
3 15 U.S.C. 78s(b)(3)(A). 6 17 CFR 240.17Ad–22.
4 17 CFR 240.19b–4(f)(ii). 7 15 U.S.C. 78q–1(b)(3)(F). 8 17 CFR 240.17Ad–22(e)(10).
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Document Created: 2018-10-25 10:37:53
Document Modified: 2018-10-25 10:37:53
| 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 52959 |
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