83 FR 25095 - Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Risk Protections

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 105 (May 31, 2018)

[Federal Register Volume 83, Number 105 (Thursday, May 31, 2018)]
[Notices]
[Pages 25095-25097]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-11612]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83322; File No. SR-Phlx-2018-41]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Related to Risk 
Protections

May 24, 2018
    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 May 16, 2018, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I and II below, which Items have been 
prepared by the Exchange. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 1095, entitled ``Automated 
Removal of Quotes'' and Rule 1099, entitled ``Order Protections.''
    The text of the proposed rule change is available on the Exchange's 
website 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

[[Page 25096]]

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 purpose of the proposed rule change is to amend Rule 1099, 
entitled ``Order Protections'' and reorganize the Rulebook. The 
Exchange proposes to rename Rule 1099 ``Risk Protections'' and relocate 
all the risk protections into a single rule. The Exchange also proposes 
to categorize the risk protections as order protections, order and 
quote protections or Specialist \3\ and Registered Options Trader \4\ 
protections. The Exchange believes that reorganizing the various risk 
protection rules into a single rule and providing labels for the 
different types of protections will provide an easy reference for 
market participants. The Exchange is not amending the text of the 
existing rules, rather the Exchange proposes to reletter and renumber 
the rule as well to provide a more organized structure. The Exchange 
believes that categorizing the various protections provides more 
information to market participants as to each of the risk protections.
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    \3\ A Specialist is an Exchange member who is registered as an 
options Specialist. See Phlx Rule 1020(a).
    \4\ Rule 1014(b) defines a ROT as ``a regular member or a 
foreign currency options participant of the Exchange located on the 
trading floor who has received permission from the Exchange to trade 
in options for his own account.'' For purposes of Rule 1014, the 
term ``ROT'' shall include a Streaming Quote Trader and a Remote 
Streaming Quote Trader, as defined in Rule 1014.
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Order Price Protection
    The Exchange proposes to relocate Order Price Protection from Rule 
1099(c) to proposed Rule 1099(a)(1) under the title of order 
protections.
Market Order Spread Protection
    The Exchange proposes to relocate Market Order Spread Protection 
from Rule 1099(d) to proposed Rule 1099(a)(2) under the title of order 
protections.
Acceptable Trade Range
    The Exchange proposes to renumber the Acceptable Trade Protection 
rule text as Rule 1099(b)(1) under the title for order and quote 
protections.
Anti-Internalization
    The Exchange proposes to renumber the Anti-Internalization rule 
from Rule Rule [sic] 1099(b) to 1099(c)(1) under the title Specialist 
and Registered Options Traders protections.
Automated Removal of Quotes and Orders
    The Exchange proposes to relocate the Automated Removal of Quotes 
rule from Rule 1095 to Rule 1099(c)(2) under the title Specialist and 
Registered Options Traders protections. The Exchange proposes to 
reserve Rule 1095.
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 grouping the various risk protections into a single rule for ease of 
reference and adding headers to the rule to make clear whether the risk 
protection is an order, quote or order protection or a protection 
applicable to Specialists and Registered Options Traders. The Exchange 
believes the reorganization of the existing rule and relocation of 
various rules into Rule 1099 is a non-substantive rule change. The 
Exchange believes that this rule change is consistent with the 
protection of investors and the public interest because it will bring 
greater transparency to the protections offered on Phlx.
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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. The proposal does not impose an 
intra-market burden on competition with respect to the reorganization 
and relocation of the various rules into Rule 1099 because the various 
risk protections will continue to apply uniformly to all market 
participants.

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) of the Act\7\ and Rule 19b-
4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \9\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \10\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay so 
that the proposed rule change may become operative upon filing. Waiver 
of the operative delay would allow the Exchange to reorganize its rules 
without delay to provide market participants with a single point of 
reference for the risk protections offered by the Exchange. Therefore, 
the Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the operative delay and 
designates the proposed rule change operative upon filing.\11\
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    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
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 change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing,

[[Page 25097]]

including whether the proposed rule change is consistent with the Act. 
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-Phlx-2018-41 on the subject line.
Paper Comments
     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2018-41. 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 website (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 website 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-2018-41, and should be submitted on 
or before June 21, 2018.
    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-11612 Filed 5-30-18; 8:45 am]
 BILLING CODE 8011-01-P