Notice2024-13316
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Delay Implementation of Certain Exchange Options 8 Rules and Amend Options 8, Section 34(b)
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 18, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 89 Issue 118 (Tuesday, June 18, 2024)</title>
</head>
<body><pre>
[Federal Register Volume 89, Number 118 (Tuesday, June 18, 2024)]
[Notices]
[Pages 51580-51582]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-13316]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100321; File No. SR-Phlx-2024-24]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Delay
Implementation of Certain Exchange Options 8 Rules and Amend Options 8,
Section 34(b)
June 12, 2024.
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 30, 2024, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') a 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to delay the implementation of SR-Phlx-2023-
22 \3\ and amend Options 8, Section 34(b), FLEX Trading (order types),
which is also being delayed.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 97658 (June 7,
2023), 88 FR 38562 (June 13, 2023) (SR-Phlx-2023-22) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Various Options 8 Rules). See also Securities Exchange Act Release
No. 98919 (November 13, 2024), 88 FR 80363 (November 17, 2023) (SR-
Phlx-2023-48) (Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Delay the Implementation of the FLEX and
Cabinet Automation) (``SR-Phlx-2023-22'').
---------------------------------------------------------------------------
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/phlx/rules">https://listingcenter.nasdaq.com/rulebook/phlx/rules</a>, 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 proposes to delay the implementation of SR-Phlx-2023-
22 and amend Options 8, Section 34(b), FLEX Trading (order types),
which is also being delayed. These rules are currently effective, but
not operative. Each change is described below.
Delay of Implementation
As noted herein, Phlx filed SR-Phlx-2023-22 to amend several Phlx
Options 8 rules related to Phlx's trading floor and stated that the
rule change would be implemented on or before March 29, 2024.\4\
Thereafter, the Exchange delayed the implementation of SR-Phlx-2023-22
to permit the Exchange additional
[[Page 51581]]
time to code and test the functionality.\5\ These rules are currently
effective, but not operative.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 97658 (June 7,
2023), 88 FR 38562 (June 13, 2023) (SR-Phlx-2023-22) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Various Options 8 Rules) (``SR-Phlx-2023-22'').
\5\ See Securities Exchange Act Release No. 98919 (November 13,
2024), 88 FR 80363 (November 17, 2023) (SR-Phlx-2023-48) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Delay
the Implementation of the FLEX and Cabinet Automation).
---------------------------------------------------------------------------
By way of background, with respect to FLEX Orders, SR-Phlx-2023-22
amended FLEX Orders in 3 ways. First, the Exchange amended the rules to
require FLEX Orders to be reported into Phlx's Options Floor Based
Management System or ``FBMS,'' thereby further automating the execution
and reporting of FLEX Options. All executed FLEX contracts will be
reported to OPRA and sent to the OCC for clearing, similar to all other
equity, equity index and U.S. dollar-settled foreign currency options
orders executed on the Exchange's trading floor. Second, the Exchange
removed its RFQ process including the BBO Improvement Interval Process,
with the rule change. Third, the Exchange reorganized Options 8,
Section 34 to restructure the rule to include additional information
which describes current FLEX trading on Phlx. With respect to Cabinet
Orders, SR-Phlx-2023-22 amended Options 8, Section 33 to require
Cabinet Orders to be reported into FBMS. With this change, members and
member organizations will be required to record all Cabinet Orders
represented in the trading crowd into FBMS. All executed contracts will
be reported to OPRA and sent to OCC for clearing similar to all other
equity, equity index and U.S. dollar-settled foreign currency options
orders executed on the Exchange's trading floor.
At this time, the Exchange proposes to delay the implementation of
SR-Phlx-2023-22 so that it may also implement the other rule changes
proposed herein at the same time and complete an OCC industry rule
change prior to implementation as well as a Phlx technology migration.
The Exchange proposes to implement SR-Phlx-2023-22 and the proposed
changes noted in this proposal prior to the end of Q4 2025. The
Exchange would issue an Options Trader Alert announcing the exact
implementation date to members and member organizations at least thirty
days prior to implementation.
Options 8, Section 34(b)(3)
Phlx proposes to correct a drafting error in Options 8, Section
34(b)(3) to remove one clause.\6\ Options 8, Section 34(b)(3) currently
states, ``. . . for a FLEX Index Option, may have a different
settlement type (a.m.-settled or p.m.- settled), except each leg must
have the same settlement type.'' At this time, Phlx proposes to delete
the clause ``. . . except each leg must have the same settlement type''
in Options 8, Section 34(b)(3) to correct a drafting error. The rule
text does not apply as Phlx does not support Asian-settled or Cliquet-
settled options.
---------------------------------------------------------------------------
\6\ This rule text was copied from Cboe Exchange Inc.'s Rule
5.70(b). The copied rule text included a clause related to Asian-
settled or Cliquet-settled options. This clause is not applicable to
Phlx which does not utilize these settlement styles. However, part
of the clause related to the Asian-settled or Cliquet-settled
options was inadvertently copied with respect to its application to
complex orders. This clause is being removed as it is inapplicable
to Phlx.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\7\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\8\ 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.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b)
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Delay of Implementation
The Exchange's proposal to delay the implementation of SR-Phlx-2023
prior to the end of Q4 2025 is consistent with the Act because it will
allow Phlx time to implement the other rule changes proposed herein at
the same time and complete an OCC industry rule change as well as a
Phlx technology migration prior to implementation.
Options 8, Section 34(b)(3)
Phlx's proposal to amend rule text at Options 8, Section 34(b)(3)
that was adopted in SR-Phlx-2023-22 is consistent with the Act because
it merely corrects a drafting error.
B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
Delay of Implementation
The Exchange's proposal to delay the implementation of SR-Phlx-2023
prior to the end of Q4 2025 does not impose an undue burden on
competition because it will allow Phlx time to implement the other rule
changes proposed herein at the same time and complete an OCC industry
rule change as well as a Phlx technology migration prior to
implementation.
Options 8, Section 34(b)(3)
Phlx's proposal to amend rule text at Options 8, Section 34(b)(3)
that was adopted in SR-Phlx-2023-22 does not impose an undue burden on
competition because it merely corrects a drafting error.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
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 \11\ and subparagraph (f)(6) of
Rule 19b-4 thereunder.\12\
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 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.
---------------------------------------------------------------------------
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 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.
[[Page 51582]]
Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#8ffdfae3eaa2ece0e2e2eae1fbfccffceaeca1e8e0f9"><span class="__cf_email__" data-cfemail="0a787f666f27696567676f647e794a796f69246d657c">[email protected]</span></a>. Please include
file number SR-Phlx-2024-24 on the subject line.
Paper Comments
<bullet> 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-2024-24. 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 (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-Phlx-2024-24 and should be
submitted on or before July 9, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-13316 Filed 6-17-24; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on June 18, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.