83 FR 2240 - Self-Regulatory Organizations; Nasdaq PHLX LLC; Order Granting Approval of a Proposed Rule Change To Amend Rule 1009 To Modify the Criteria for Listing an Option on an Underlying Covered Security
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 10 (January 16, 2018)
Federal Register Volume 83, Issue 10 (January 16, 2018)
| Page Range | 2240-2241 | |
| FR Document | 2018-00531 |
[Federal Register Volume 83, Number 10 (Tuesday, January 16, 2018)] [Notices] [Pages 2240-2241] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-00531] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82474; File No. SR-Phlx-2017-75] Self-Regulatory Organizations; Nasdaq PHLX LLC; Order Granting Approval of a Proposed Rule Change To Amend Rule 1009 To Modify the Criteria for Listing an Option on an Underlying Covered Security January 9, 2018. I. Introduction On September 27, 2017, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to amend the criteria for listing an option on an underlying covered security in Phlx Rule 1009, Commentary .01. The proposed rule change was published for comment in the Federal Register on October 11, 2017.\3\ On November 15, 2017 the Exchange submitted a comment letter on the proposed rule change.\4\ The Commission received no other comment letters. On November 22, 2017, pursuant to Section 19(b)(2) of the Act,\5\ the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved.\6\ This order approves the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 81814 (Oct. 4, 2017), 82 FR 47254 (``Notice''). \4\ See Letter to Brett J. Fields, Secretary, Commission, from Sun Kim, Assistant General Counsel, Exchange, dated November 15, 2017 (``Exchange Letter''). \5\ 15 U.S.C. 78s(b)(2). \6\ See Securities Exchange Act Release No. 82147, 82 FR 47254 (November 25, 2017). The Commission designated January 9, 2017, as the date by which it should approve, disapprove, or institute proceedings to determine whether the proposed rule change should be disapproved. --------------------------------------------------------------------------- II. Description of the Proposal The Exchange proposes to amend Phlx Rule 1009, Commentary .01 to modify the criteria for listing options on an underlying security as defined in Section 18(b)(1)(A) of the Securities Act of 1933 (hereinafter ``covered security''). In particular, the Exchange proposes to modify Phlx Rule 1009, Commentary .01(4)(i) which currently requires that to list an option, the underlying covered security has to have a market price of at least $3.00 per share for the previous [[Page 2241]] five consecutive business days preceding the date on which the Exchange submits a certificate to the Options Clearing Corporation (``OCC'') for listing and trading. The Proposal would shorten the current ``look back'' period of five consecutive business days to three consecutive business days. The Exchange does not propose to amend any other criteria in Phlx Rule 1009 and the accompanying Commentary to list an option on the Exchange. III. Discussion and Commission's Findings After careful review of the proposed rule change, the Commission finds that the proposal is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange.\7\ Specifically, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,\8\ which requires that the rules of a national securities exchange be designed, among other things, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and to protect investors and the public interest; and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \7\ In approving this rule change, the Commission has considered the rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \8\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- As noted above, although the Exchange proposes to shorten the look back period for listing options on the Exchange found in Phlx Rule 1009, Commentary .01(4)(i) from five consecutive business days \9\ to three consecutive business days, it does not propose to change any other listing provision found in Phlx Rule 1009 and the accompanying Commentary, including the requirement of Phlx Rule 1009, Commentary .01(2) that the Exchange verify the number of shareholders of a security underlying an option. The Exchange states that the proposed look back period of three consecutive business days is intended to correspond to the securities industry's recent shortening of the settlement period from T+3 to the current T+2.\10\ The Exchange represents that stock trades would clear within T+2 of their trade date (i.e., within three consecutive business days) and therefore the number of shareholders could be verified within three consecutive business days.\11\ This would facilitate options trading within four business days of an IPO (three consecutive business days plus the day the listing certificate is submitted to OCC). --------------------------------------------------------------------------- \9\ See Securities Exchange Act Release Nos. 47190 (January 15, 2003), 68 FR 3072 (January 22, 2003) (SR-CBOE-2002-62) (Order approving CBOE's proposal to, among other things, shorten the look back period from the majority of business days during the preceding three calendar months to the current five consecutive business days); 47794 (May 5, 2003), 68 FR 25076 (May 9, 2003) (SR-Phlx-2003- 27) (Notice and immediate effectiveness of the Exchange's filing adopting the same changes to its options listing standards). \10\ See Securities Exchange Act Release No. 80295 (March 22, 2017), 82 FR 15564 (March 29, 2017) (Securities Transaction Settlement Cycle) (File No. S7-22-16). \11\ In addition to confirming through large clearing agencies such as the Depository Trust and Clearing Corporation, the Exchange also represents that it can verify the shareholder count with various brokerage firms that have a large retail customer clientele, and that it has confirmed with some of these brokerage firms who provide shareholder numbers to the Exchange that they are able to provide these numbers within T+2 after an IPO. --------------------------------------------------------------------------- The Exchange also represents that its surveillance technologies and procedures concerning manipulation provide adequate prevention or detection of rule or securities law violations in relation to the proposed shortened time frame, and specifically, that its existing trading surveillances are adequate to monitor the trading in the underlying security and subsequent trading of options.\12\ The Commission notes the limited nature of the proposal to shorten the look back period of Phlx Rule 1009, Commentary .01(4)(i) from the current five consecutive business days to the proposed three consecutive business days. In addition, the Exchange represents that its surveillance program is comprehensive and adequate to monitor for manipulation of the underlying security and overlying option. The Commission also notes that it has not received any comments on the proposal, aside from the Exchange Letter. --------------------------------------------------------------------------- \12\ See Notice, supra note 3 at 47255-256; Exchange Letter, supra note 4 at 2-3. --------------------------------------------------------------------------- The Commission finds that the proposal, coupled with the recent move to T+2 settlement, would facilitate transactions in securities, while providing customers safeguards comparable to those provided under the current five consecutive business day look back period. Accordingly, the Commission finds that the proposed rule change is consistent with the requirements of the Act, specifically the requirements that the rules of an Exchange be designed to prevent fraudulent and manipulative acts and practices. IV. Conclusion It is therefore ordered that, pursuant to Section 19(b)(2) of the Act,\13\ that the proposed rule change (SR-Phlx-2017-75), be and hereby is, approved. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\14\ --------------------------------------------------------------------------- \14\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-00531 Filed 1-12-18; 8:45 am] BILLING CODE 8011-01-P
![2240 Federal Register / Vol. 83, No. 10 / Tuesday, January 16, 2018 / Notices
considered irrelevant factors in order to • Send an email to rule-comments@ SECURITIES AND EXCHANGE
establish fair, reasonable, and not sec.gov. Please include File Number SR– COMMISSION
unreasonably discriminatory fees and an CboeBZX–2017–018 on the subject line.
[Release No. 34–82474; File No. SR–Phlx–
equitable allocation of fees among all 2017–75]
Users. The existence of alternatives to Paper Comments
BZX Depth, including existing similar • Send paper comments in triplicate Self-Regulatory Organizations; Nasdaq
feeds by other exchanges, consolidated to Secretary, Securities and Exchange PHLX LLC; Order Granting Approval of
data, and proprietary data from other a Proposed Rule Change To Amend
Commission, 100 F Street NE,
sources, ensures that the Exchange Rule 1009 To Modify the Criteria for
Washington, DC 20549–1090.
cannot set unreasonable fees, or fees Listing an Option on an Underlying
that are unreasonably discriminatory, All submissions should refer to File Covered Security
when subscribers can elect these Number CboeBZX–2017–018. This file
alternatives or choose not to purchase a number should be included on the January 9, 2018.
specific proprietary data product if its subject line if email is used. To help the I. Introduction
cost to purchase is not justified by the Commission process and review your
returns any particular vendor or On September 27, 2017, Nasdaq PHLX
comments more efficiently, please use
subscriber would achieve through the LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with
only one method. The Commission will the Securities and Exchange
purchase. post all comments on the Commission’s
The Exchange believes the adoption Commission (‘‘Commission’’), pursuant
internet website (http://www.sec.gov/ to Section 19(b)(1) of the Securities
of the fee for Non-Display Usage for rules/sro.shtml). Copies of the
BZX Depth would increase competition Exchange Act of 1934 (‘‘Act’’) 1 and Rule
submission, all subsequent 19b–4 thereunder,2 a proposed rule
amongst the exchanges that offer depth-
amendments, all written statements change to amend the criteria for listing
of-book products. In addition, the
with respect to the proposed rule an option on an underlying covered
proposed Non-Display Usage fee is less
than similar fees currently charged by change that are filed with the security in Phlx Rule 1009, Commentary
the NYSE and NYSE Arca for their Commission, and all written .01. The proposed rule change was
depth-of-book data.18 communications relating to the published for comment in the Federal
proposed rule change between the Register on October 11, 2017.3 On
C. Self-Regulatory Organization’s Commission and any person, other than November 15, 2017 the Exchange
Statement on Comments on the those that may be withheld from the submitted a comment letter on the
Proposed Rule Change Received From public in accordance with the proposed rule change.4 The Commission
Members, Participants, or Others provisions of 5 U.S.C. 552, will be received no other comment letters. On
The Exchange has neither solicited available for website viewing and November 22, 2017, pursuant to Section
nor received written comments on the printing in the Commission’s Public 19(b)(2) of the Act,5 the Commission
proposed rule change. Reference Room, 100 F Street NE, designated a longer period within which
Washington, DC 20549 on official to approve the proposed rule change,
III. Date of Effectiveness of the disapprove the proposed rule change, or
Proposed Rule Change and Timing for business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the institute proceedings to determine
Commission Action whether the proposed rule change
filing also will be available for
The foregoing rule change has become should be disapproved.6 This order
inspection and copying at the principal
effective pursuant to Section 19(b)(3)(A) approves the proposed rule change.
office of the Exchange. All comments
of the Act 19 and paragraph (f) of Rule
received will be posted without change. II. Description of the Proposal
19b–4 thereunder.20 At any time within
60 days of the filing of the proposed rule Persons submitting comments are The Exchange proposes to amend
change, the Commission summarily may cautioned that we do not redact or edit Phlx Rule 1009, Commentary .01 to
temporarily suspend such rule change if personal identifying information from modify the criteria for listing options on
it appears to the Commission that such comment submissions. You should an underlying security as defined in
action is necessary or appropriate in the submit only information that you wish Section 18(b)(1)(A) of the Securities Act
public interest, for the protection of to make available publicly. All of 1933 (hereinafter ‘‘covered security’’).
investors, or otherwise in furtherance of submissions should refer to File In particular, the Exchange proposes to
the purposes of the Act. Number CboeBZX–2017–018 and modify Phlx Rule 1009, Commentary
should be submitted on or before .01(4)(i) which currently requires that to
IV. Solicitation of Comments February 6, 2018. list an option, the underlying covered
Interested persons are invited to security has to have a market price of at
For the Commission, by the Division of
submit written data, views, and Trading and Markets, pursuant to delegated
least $3.00 per share for the previous
arguments concerning the foregoing, authority.21
including whether the proposed rule 1 15 U.S.C. 78s(b)(1).
Eduardo A. Aleman, 2 17 CFR 240.19b–4.
change is consistent with the Act.
Comments may be submitted by any of Assistant Secretary. 3 See Securities Exchange Act Release No. 81814
[FR Doc. 2018–00532 Filed 1–12–18; 8:45 am] (Oct. 4, 2017), 82 FR 47254 (‘‘Notice’’).
the following methods: 4 See Letter to Brett J. Fields, Secretary,
BILLING CODE 8011–01–P Commission, from Sun Kim, Assistant General
Electronic Comments
daltland on DSKBBV9HB2PROD with NOTICES
Counsel, Exchange, dated November 15, 2017
• Use the Commission’s internet (‘‘Exchange Letter’’).
5 15 U.S.C. 78s(b)(2).
comment form (http://www.sec.gov/
6 See Securities Exchange Act Release No. 82147,
rules/sro.shtml); or
82 FR 47254 (November 25, 2017). The Commission
designated January 9, 2017, as the date by which
18 See supra note 17. it should approve, disapprove, or institute
19 15 U.S.C. 78s(b)(3)(A). proceedings to determine whether the proposed
20 17 CFR 240.19b–4(f). 21 17 CFR 200.30–3(a)(12). rule change should be disapproved.
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![Federal Register / Vol. 83, No. 10 / Tuesday, January 16, 2018 / Notices 2241
five consecutive business days shareholders of a security underlying an Exchange be designed to prevent
preceding the date on which the option. The Exchange states that the fraudulent and manipulative acts and
Exchange submits a certificate to the proposed look back period of three practices.
Options Clearing Corporation (‘‘OCC’’) consecutive business days is intended to
IV. Conclusion
for listing and trading. The Proposal correspond to the securities industry’s
would shorten the current ‘‘look back’’ recent shortening of the settlement It is therefore ordered that, pursuant
period of five consecutive business days period from T+3 to the current T+2.10 to Section 19(b)(2) of the Act,13 that the
to three consecutive business days. The The Exchange represents that stock proposed rule change (SR–Phlx–2017–
Exchange does not propose to amend trades would clear within T+2 of their 75), be and hereby is, approved.
any other criteria in Phlx Rule 1009 and trade date (i.e., within three consecutive For the Commission, by the Division of
the accompanying Commentary to list business days) and therefore the number Trading and Markets, pursuant to delegated
an option on the Exchange. of shareholders could be verified within authority.14
III. Discussion and Commission’s three consecutive business days.11 This Eduardo A. Aleman,
Findings would facilitate options trading within Assistant Secretary.
four business days of an IPO (three [FR Doc. 2018–00531 Filed 1–12–18; 8:45 am]
After careful review of the proposed consecutive business days plus the day BILLING CODE 8011–01–P
rule change, the Commission finds that the listing certificate is submitted to
the proposal is consistent with the OCC).
requirements of the Act and the rules The Exchange also represents that its SECURITIES AND EXCHANGE
and regulations thereunder that are surveillance technologies and COMMISSION
applicable to a national securities procedures concerning manipulation
exchange.7 Specifically, the provide adequate prevention or [SEC File No. 270–104, OMB Control No.
Commission finds that the proposed 3235–0119]
detection of rule or securities law
rule change is consistent with Section violations in relation to the proposed
6(b)(5) of the Act,8 which requires that Proposed Collection; Comment
shortened time frame, and specifically, Request
the rules of a national securities that its existing trading surveillances are
exchange be designed, among other adequate to monitor the trading in the Upon Written Request Copies Available
things, to prevent fraudulent and underlying security and subsequent From: Securities and Exchange
manipulative acts and practices, to trading of options.12 The Commission Commission, Office of FOIA Services,
promote just and equitable principles of notes the limited nature of the proposal 100 F Street NE, Washington, DC
trade, to foster cooperation and to shorten the look back period of Phlx 20549–2736
coordination with persons engaged in Rule 1009, Commentary .01(4)(i) from
regulating, clearing, settling, processing Extension:
the current five consecutive business Rule 12g3–2
information with respect to, and days to the proposed three consecutive
facilitating transactions in securities, to Notice is hereby given that, pursuant
business days. In addition, the Exchange
remove impediments to and perfect the to the Paperwork Reduction Act of 1995
represents that its surveillance program
mechanism of a free and open market (44 U.S.C. 3501 et seq.), the Securities
is comprehensive and adequate to
and a national market system, and to and Exchange Commission
monitor for manipulation of the
protect investors and the public interest; (‘‘Commission’’) is soliciting comments
underlying security and overlying
and are not designed to permit unfair on the collection of information
option. The Commission also notes that
discrimination between customers, summarized below. The Commission
it has not received any comments on the
issuers, brokers, or dealers. plans to submit this existing collection
As noted above, although the proposal, aside from the Exchange
of information to the Office of
Exchange proposes to shorten the look Letter.
The Commission finds that the Management and Budget for extension
back period for listing options on the and approval.
proposal, coupled with the recent move
Exchange found in Phlx Rule 1009, Rule 12g3–2 (17 CFR 240.12g3–2)
to T+2 settlement, would facilitate
Commentary .01(4)(i) from five under the Securities Exchange Act of
consecutive business days 9 to three transactions in securities, while
1934 (the ‘‘Exchange Act’’) provides an
consecutive business days, it does not providing customers safeguards
exemption from Section 12(g) of the
propose to change any other listing comparable to those provided under the
Exchange Act (15 U.S.C. 78l(g)) for
provision found in Phlx Rule 1009 and current five consecutive business day
foreign private issuers. Rule 12g3–2 is
the accompanying Commentary, look back period. Accordingly, the
designed to provide investors in foreign
including the requirement of Phlx Rule Commission finds that the proposed
securities with information about such
1009, Commentary .01(2) that the rule change is consistent with the
securities and the foreign issuer. The
Exchange verify the number of requirements of the Act, specifically the
information filed under Rule 12g3–2
requirements that the rules of an
must be filed with the Commission and
7 In approving this rule change, the Commission
10 See Securities Exchange Act Release No. 80295
is publicly available. We estimate that it
has considered the rule’s impact on efficiency,
competition, and capital formation. See 15 U.S.C. (March 22, 2017), 82 FR 15564 (March 29, 2017) takes 8.95 hours per response to prepare
78c(f). (Securities Transaction Settlement Cycle) (File No. and is filed by approximately 1,386
8 15 U.S.C. 78f(b)(5). S7–22–16). respondents. Each respondent files an
11 In addition to confirming through large clearing
9 See Securities Exchange Act Release Nos. 47190
estimated 12 times submissions
(January 15, 2003), 68 FR 3072 (January 22, 2003) agencies such as the Depository Trust and Clearing
pursuant to Rule 12g3–2 per year for a
daltland on DSKBBV9HB2PROD with NOTICES
(SR–CBOE–2002–62) (Order approving CBOE’s Corporation, the Exchange also represents that it
proposal to, among other things, shorten the look can verify the shareholder count with various total of 16,632 respondents. We estimate
back period from the majority of business days brokerage firms that have a large retail customer that 25% of 8.95 hours per response
during the preceding three calendar months to the clientele, and that it has confirmed with some of (2.237 hours per response) to provide
current five consecutive business days); 47794 (May these brokerage firms who provide shareholder
numbers to the Exchange that they are able to the information required under Rule
5, 2003), 68 FR 25076 (May 9, 2003) (SR–Phlx–
2003–27) (Notice and immediate effectiveness of provide these numbers within T+2 after an IPO.
12 See Notice, supra note 3 at 47255–256; 13 15 U.S.C. 78s(b)(2).
the Exchange’s filing adopting the same changes to
its options listing standards). Exchange Letter, supra note 4 at 2–3. 14 17 CFR 200.30–3(a)(12).
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Document Created: 2018-01-13 02:02:46
Document Modified: 2018-01-13 02:02:46
| 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 | 83 FR 2240 |
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