Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices 6389 

19 15 U.S.C. 78s(b)(3)(A). 

20 17 CFR 240.19b–4(f). 

21 17 CFR 200.30–3(a)(12). 

1 15 U.S.C.78s(b)(1). 

2 17 CFR 240.19b–4. 

3The term ‘‘Floor Broker’’ means an individual 

who is registered with the Exchange for the 

purpose, while on the Options Floor, of accepting 

and handling options orders. See Options 8, Section 

2(2). 

4FBMS, an order management system, is the 

gateway for the electronic execution of equity, 

equity index and U.S. dollar-settled foreign 

currency option orders represented by Floor 

Brokers on the Exchange’s Options Floor. Floor 

Brokers contemporaneously upon receipt of an 

order and prior to the representation of such an 

order in the trading crowd, record all options orders 

represented by such Floor Broker to FBMS, which 

creates an electronic audit trail. The execution of 

orders to Phlx’s electronic trading system also 

occurs via FBMS. The FBMS application is 

available on hand-held tablets and stationary 

desktops. 

5Utilizing FBMS while not physically present on 

the Trading Floor would be considered remote 

access. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 19 and paragraph (f) of Rule 

19b–4 20 thereunder. 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 will 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, 

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 rule-comments@

sec.gov. Please include File Number SR– 

CboeBZX–2021–005 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–CboeBZX–2021–005. 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–CboeBZX–2021–005 and 

should be submitted on or before 

February 11, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–01131 Filed 1–19–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90909; File No. SR–Phlx– 

2021–02] 

Self-Regulatory Organizations; Nasdaq 

Phlx LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Modify Phlx Options 8, 

Section 28, ‘‘Responsibilities of Floor 

Brokers’’ and Section 30, ‘‘Crossing, 

Facilitation and Solicited Orders’’ 

January 13, 2021. 

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 January 

4, 2021, 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 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to modify 

Phlx Options 8, Section 28, 

‘‘Responsibilities of Floor Brokers’’ and 

Section 30, ‘‘Crossing, Facilitation and 

Solicited Orders.’’ 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of, and basis for, 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in Sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Phlx proposes to amend its Trading 

Floor rules at Options 8, Section 28, 

‘‘Responsibilities of Floor Brokers’’ and 

Section 30, ‘‘Crossing, Facilitation and 

Solicited Orders’’ to permit Floor 

Brokers 3 to utilize the Options Floor 

Based Management System (‘‘FBMS’’),4

remotely,5 to enter certain orders that do 

not require exposure in open outcry. 

This proposal is intended to provide 

greater accessibility to Floor Brokers for 

the portion of their business which does 

not require the physical infrastructure 

afforded by the Trading Floor and allow 

member organizations to more 

efficiently staff their operations. 

Background 

Today, Phlx Rules provide a Business 

Continuity and Disaster Recovery Plan 

for its Trading Floor (‘‘BCP’’) which is 


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6390 Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices 

6Options 8, Section 26(g) provides: 

(1) Loss of Trading Floor. If the physical location 

designated as the ‘‘Trading Floor’’ becomes 

unavailable, Phlx will enact its Business Continuity 

Plan and designate the Philadelphia Navy Yard as 

its ‘‘Back-Up Trading Floor.’’ 

(2) Back-up Trading Floor Unavailable. In the 

event that the Back-Up Trading Floor becomes 

inoperable, the Exchange will only operate its 

electronic market and will not operate a Trading 

Floor. The Exchange will operate only its electronic 

market until the Exchange’s Trading Floor facility 

is operational. Open outcry trading will not be 

available in the interim. 

(3) Other Back-Up Trading Arrangements. This 

Rule does not preclude the Exchange from 

conducting business, in the event the Trading Floor 

and Back-Up Trading Floor are rendered 

inoperable, pursuant to Options 4, Section 10. 

7See Options Trader Alert #2020–07. 

8See Options Trader Alert #2020–13. 

9See Options Trader Alert #2020–8. 

10See Options 8, Section 28(g) and 30(e). 

11See Options 8, Section 1(a). 

12See note 3 above, by definition Floor Brokers 

accept and handle options orders while on the 

Options Floor. 

13See Securities Exchange Act Release No. 68960 

(February 20, 2013), 78 FR 13132, 13134 (February 

26, 2013) (SR–Phlx–2013–09) (Notice of Filing of 

Proposed Rule Change To Enhance the 

Functionality Offered on Its Options Floor Broker 

Management System (‘‘FBMS’’) by, Among Other 

Things, Automating Functions Currently Performed 

by Floor Brokers). This filing provided the 

following explanation, ‘‘For example, if a Floor 

Broker enters a two-sided order through the new 

FBMS and there is an order on the book at a price 

that prevents the Floor Broker’s order from 

executing, FBMS will indicate to the Floor Broker 

how many contracts need to be satisfied before the 

Floor Broker’s order can execute at the agreed-upon 

price. If the Floor Broker agrees to satisfy that order, 

consistent with the order placed in his care, he can 

cause FBMS to send a portion of one of his orders 

to Phlx XL to trade against the order on the book, 

thereby clearing it and permitting the remainder of 

the Floor Broker’s order to trade. This functionality 

is optional in the sense that the Floor Broker can 

decide not to trade against the book, consistent with 

order instructions he has been given, and therefore 

not execute his two-sided order at that particular 

price.’’ Phlx XL refers to the electronic order book. 

described within Options 8, Section 

26(g).6 The Exchange may activate its 

business continuity and disaster 

recovery plans to maintain fair and 

orderly markets in the event of a System 

failure, disaster, or other unusual 

circumstance that may threaten the 

ability to conduct business on the 

Exchange. On March 17, 2019,7 Phlx 

suspended open outcry trading as a 

result of precautions taken with respect 

to COVID–19. The Trading Floor reopened on June 3, 2020.8 During that 

period from March 17, 2019 to June 3, 

2020, open outcry trading was 

unavailable. 

At the time of the Phlx Trading Floor 

closure in March 2020, the Exchange 

permitted Floor Brokers, who otherwise 

had no means of trading on Phlx in an 

electronic environment, to utilize FBMS 

remotely, solely for the purpose of 

submitting limit orders to the electronic 

limit order book pursuant to Options 8, 

Section 28(g), or submitting a Floor 

Qualified Contingent Cross Order to the 

System pursuant to Options 8, Section 

30(e).9 Submitting a limit order to the 

electronic limit order book does not 

require exposure of that order in open 

outcry trading as the order is 

immediately exposed on the electronic 

limit order book. Similarly, a Floor 

Qualified Contingent Cross Order 

submitted to the System does not 

require exposure in open outcry as this 

order type is immediately executed 

upon entry to the System, provided the 

order complies with the provisions of 

Options 8, Section 30(e) and therefore a 

Floor Broker was not required to be 

present on the Trading Floor to transact 

these order types. Floor Brokers were 

not permitted to transact other order 

types within Options 3, Section 32 

through FBMS during the floor closure. 

Phlx Surveillance staff surveilled Floor 

Qualified Contingent Cross Orders 

submitted through FBMS in real-time. 

Electronic limit orders must comply 

with automated System entry checks for 

compliance with Exchange rules. 

When the Trading Floor reopened on 

June 3, 2020, the Exchange permitted 

each Trading Floor member 

organization to be represented on the 

Trading Floor. However, due to the 

social distancing measures that were put 

in place to comply with Commonwealth 

of Pennsylvania health standards as 

well as Nasdaq’s safety measures 

designed to prevent the spread of 

COVID–19, not all members and 

employees associated with a Phlx 

member organization were able to return 

to the Trading Floor. Floor Brokers were 

permitted to continue remotely 

submitting the aforementioned orders 

through FBMS, due to the Exchange’s 

inability to allow all Floor Members 

access to the physical Trading Floor. 

Proposal 

At this time, the Exchange proposes to 

amend Options 8, Section 28(g) and 

Options 8, Section 30(e) to continue to 

allow Floor Brokers the ability to submit 

limit orders to the electronic limit order 

book and Floor Qualified Contingent 

Cross Orders to the System via FBMS 

remotely, notwithstanding the existence 

of BCP measures. Floor Brokers may 

continue to submit limit orders to the 

electronic limit order book and Floor 

Qualified Contingent Cross Orders to 

the System while on the Trading Floor. 

Prior to permitting Floor Brokers to 

access FBMS remotely for the limited 

purpose of submitting limit orders to the 

electronic limit order book and Floor 

Qualified Contingent Cross Orders to 

the System, the Exchange permitted 

Floor Brokers to submit limit orders to 

the electronic limit order book and 

Floor Qualified Contingent Cross Orders 

to the System utilizing FBMS while on 

the Trading Floor.10 Phlx Options 8 

Trading Rules apply to members and 

member organizations engaging in to 

transact options transactions while 

physically located on the Trading Floor, 

including trading crowds.11 The 

Options 8 Trading Rules do not permit 

options transactions to be submitted to 

the Trading Floor through FBMS 

remotely by Floor Brokers.12 Today, 

Phlx utilizes its Business Continuity 

Plan to permit Floor Brokers to access 

the Exchange’s System remotely, 

through FBMS, for the limited purpose 

of submitting limit orders to the 

electronic limit order book and Floor 

Qualified Contingent Cross Orders to 

the System. 

Due to the social distancing measures 

that were put in place to comply with 

Commonwealth of Pennsylvania health 

standards as well as Nasdaq’s safety 

measures designed to prevent the spread 

of COVID–19, not all members and 

employees associated with a Phlx 

member organization were able to return 

to the Trading Floor. This proposal 

would create an exception to the 

Options 8 Rules for a limited purpose. 

Today, Options 8, Section 28(g) 

permits a Floor Broker who wishes to 

place a limit order on the electronic 

limit order book to submit such a limit 

order electronically through FBMS. This 

capability exists to enable Floor Brokers 

to access electronic liquidity and/or to 

clear priority orders on the limit order 

book prior to transacting an order in the 

trading crowd through FBMS.13 Placing 

limit orders on the order book does not 

require exposure in open outcry. The 

Exchange desires to permit Floor 

Brokers, by rule, the ability to continue 

to remotely submit limit orders to the 

electronic limit order book on a 

permanent basis. This would 

specifically allow Floor Brokers the 

ability to clear resting Customers orders 

from the limit order book for their 

customers in the event that a Customer 

order had priority on the limit order 

book that would otherwise prevent a 

Floor Qualified Contingent Cross Order 

from being entered in compliance with 

Options 8, Section 30(e). 

Today, Options 8, Section 30(e) 

permits Floor Qualified Contingent 

Cross Orders to be submitted to the 

System by Floor Brokers on the Floor 

via FBMS. These orders are not required 

to be exposed in open outcry. In 2011, 

Phlx established a Floor Qualified 


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Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices 6391 

14See Securities Exchange Act Release No. 64415 

(May 5, 2011), 76 FR 27732 (May 12, 2011) (SR– 

Phlx–2011–56) (Notice of Filing of Proposed Rule 

Change To Establish a Qualified Contingent Cross 

Order for Execution on the Floor of the Exchange). 

15 Id at 27732 and 27733. 

16 Id at 27733. 

17 15 U.S.C. 78f(b). 

18 15 U.S.C. 78f(b)(5). 

19See Options 8, Section 28(g) and 30(e). 

20See Options 8, Section 1(a). 

21See note 3 above, by definition Floor Brokers 

accept and handle options orders while on the 

Options Floor. 

22See Securities Exchange Act Release No. 68960 

(February 20, 2013), 78 FR 13132, 13134 (February 

26, 2013) (SR–Phlx–2013–09) (Notice of Filing of 

Continued 

Contingent Cross Order.14 The proposal 

specifically provided that ‘‘. . . PHLX 

proposes to amend Rule 1064 to provide 

that a PHLX member effectuating a trade 

on the floor of the Exchange pursuant to 

the Regulation NMS Qualified 

Contingent Trade Exemption to Rule 

611(a) (‘‘QCT Exemption’’) can cross the 

options legs of the trade on PHLX as a 

Floor QCC Order immediately upon 

entry and without order exposure if no 

Customer Orders exist on the Exchange’s 

order book at the same price. Floor QCC 

Orders will be electronically entered by 

a Floor Broker on the floor of the 

Exchange using the Floor Broker 

Management System and the execution 

will then be executed electronically. 

Only Floor Brokers will be permitted to 

enter Floor QCC Orders.’’ 15 The 

proposal specifically provided for a 

Floor Qualified Contingent Cross Order 

to be entered by Floor Brokers through 

FBMS while on the Trading Floor 

without order exposure. The filing 

further provides that ‘‘. . . it would be 

incorrect to say that the Floor QCC 

Order differs from the electronic QCC 

Order due to the Options Floor Broker’s 

presence on the Floor.’’ 16

The Exchange’s proposal seeks to 

continue to permit Floor Brokers to 

enter both limit orders to the electronic 

limit order book and Floor Qualified 

Contingent Cross Orders to the System 

through FBMS, albeit remotely, without 

amending the manner in which these 

orders, which require no order 

exposure, are handled by FBMS or the 

System. 

The Exchange believes that permitting 

Floor Brokers the ability to utilize FBMS 

remotely, for the limited purposes of 

submitting limit orders to the electronic 

limit order book and Floor Qualified 

Contingent Cross Order to the System, 

would allow Floor Brokers to conduct 

the portion of their business which does 

not require the infrastructure afforded 

by the Trading Floor remotely and, 

therefore, allow member organizations 

flexibility to more efficiently staff their 

operations. The ability to service certain 

orders, such as limit orders and Floor 

Qualified Contingent Cross Orders, 

which do not require open outcry 

exposure, is a relevant part of a Floor 

Broker’s business. The Exchange is 

proposing to expand the ability of a 

member organization to conduct this 

limited portion of the Floor Broker 

business model to assist firms in being 

able to continuously operate this 

portion of their business, 

notwithstanding any closures or halts of 

the Trading Floor. Every Floor Broker 

must be registered with the Exchange 

pursuant to Options 8, Section 6 and 

would be assessed applicable fees 

provided for within Options 7. The 

Exchange notes that this proposal does 

not amend the manner in which fees or 

other pricing incentives, such as caps, 

apply to Floor Brokers. Any transaction 

originating from open outcry on the 

Trading Floor is considered a floor 

transaction. With offering FBMS 

remotely, the Exchange has not 

amended the manner in which fees are 

assessed or rebates are paid for purposes 

of Options 7 pricing to Floor Brokers. A 

limit order entered to the limit order 

book via FBMS was subject to electronic 

fees and rebates prior to the 

introduction of remote FBMS and that 

remains the case with the introduction 

of remote FBMS. These transactions are 

submitted to the electronic order book 

directly and are assessed the same fees 

and rebates as other limit orders 

submitted to the electronic order book. 

Also, the Exchange does not distinguish 

the manner in which it assesses pricing 

for Floor Qualified Contingent Cross 

Orders or electronic Qualified 

Contingent Cross Orders. The pricing is 

the same regardless of the manner in 

which the Qualified Contingent Cross 

Order was submitted. The Exchange 

proposes to add a sentence to Options 

7, Section 1 to define a floor transaction 

to add clarity to the manner in which 

floor based pricing is assessed. The 

Exchange proposes to add the following 

definition to Options 7, Section 1, ‘‘A 

‘floor transaction’ is a transaction that is 

effected in open outcry on the 

Exchange’s Trading Floor.’’ 

Finally, the Exchange represents that 

it has the proper security infrastructure 

in place to offer FBMS remotely and 

securely to Floor Brokers. 

Technical Amendment 

The Exchange proposes a technical 

amendment to Options 8, Section 1(a) to 

add the word ‘‘System’’ to the end of 

‘‘Options Floor Based Management’’ 

within the first sentence to conform the 

manner in which the Exchange utilizes 

this term within Options 8. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,17 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,18

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. 

The Exchange’s proposal to permit 

Floor Brokers the ability to utilize FBMS 

remotely, for the limited purposes of 

submitting limit orders to the electronic 

limit order book and Floor Qualified 

Contingent Cross Order to the System, is 

consistent with the Act. This proposal 

would allow member organizations to 

utilize their Floor Brokers, who may be 

located off the Trading Floor to conduct 

certain aspects of their business that do 

not require open outcry, remotely. Every 

Floor Broker would continue to be 

required to be registered with the 

Exchange pursuant to Options 8, 

Section 6 and would be assessed 

applicable fees provided for within 

Options 7. 

Prior to permitting Floor Brokers to 

access FBMS remotely for the limited 

purpose of submitting limit orders to the 

electronic limit order book and Floor 

Qualified Contingent Cross Orders to 

the System, the Exchange permitted 

Floor Brokers to submit limit orders to 

the electronic limit order book and 

Floor Qualified Contingent Cross Order 

to the System utilizing FBMS while on 

the Trading Floor.19 Phlx Options 8 

Trading Rules require members and 

member organizations to transact 

options transactions while physically 

located on the Trading Floor, including 

trading crowds.20 The Options 8 

Trading Rules do not permit options 

transactions to be submitted to the 

Trading Floor through FBMS remotely 

by Floor Brokers.21 This proposal would 

create an exception to the Options 8 

Rules to allow Floor Brokers to submit 

limit orders and Floor Qualified 

Contingent Cross Orders remotely 

through FBMS. 

Today, Options 8, Section 28(g) 

permits a Floor Broker who wishes to 

place a limit order on the electronic 

limit order book to submit such a limit 

order electronically through the FBMS. 

This capability exists to enable Floor 

Brokers to access electronic liquidity 

and/or to clear a priority orders on the 

limit order book prior to transacting an 

order in the trading crowd with the help 

of the FBMS.22 Placing limit orders on 


jbell on DSKJLSW7X2PROD with NOTICES
6392 Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices 

Proposed Rule Change To Enhance the 

Functionality Offered on Its Options Floor Broker 

Management System (‘‘FBMS’’) by, Among Other 

Things, Automating Functions Currently Performed 

by Floor Brokers). This filing provided, ‘‘For 

example, if a Floor Broker enters a two-sided order 

through the new FBMS and there is an order on the 

book at a price that prevents the Floor Broker’s 

order from executing, FBMS will indicate to the 

Floor Broker how many contracts need to be 

satisfied before the Floor Broker’s order can execute 

at the agreed-upon price. If the Floor Broker agrees 

to satisfy that order, consistent with the order 

placed in his care, he can cause FBMS to send a 

portion of one of his orders to Phlx XL to trade 

against the order on the book, thereby clearing it 

and permitting the remainder of the Floor Broker’s 

order to trade. This functionality is optional in the 

sense that the Floor Broker can decide not to trade 

against the book, consistent with order instructions 

he has been given, and therefore not execute his 

two-sided order at that particular price.’’ 

23See Securities Exchange Act Release No. 64415 

(May 5, 2011), 76 FR 27732 (May 12, 2011) (SR– 

Phlx–2011–56) (Notice of Filing of Proposed Rule 

Change To Establish a Qualified Contingent Cross 

Order for Execution on the Floor of the Exchange). 

the Order Book does not require 

exposure in open outcry. The Exchange 

desires to continue to grant this 

capability remotely to allow Floor 

Brokers the ability to continue to clear 

Customer orders on the limit order book 

for their customers in the event that a 

Customer order had priority on the limit 

order book and prevents a Floor 

Qualified Contingent Cross Order from 

being entered. 

Today, Options 8, Section 30(e) 

permits Floor Qualified Contingent 

Cross Orders to be submitted to the 

System by Floor Brokers on the Floor 

via FBMS. These orders are not required 

to be exposed in open outcry. In 2011, 

Phlx established a Floor Qualified 

Contingent Cross Order.23 The proposal 

specifically provided for a Floor 

Qualified Contingent Cross Order to be 

entered by Floor Brokers through FBMS 

while on the Trading Floor without 

order exposure. 

The Exchange’s proposal seeks to 

continue to permit Floor Brokers to 

enter both limit orders to the electronic 

limit order book and Floor Qualified 

Contingent Cross Orders to the System 

through FBMS, albeit remotely, without 

amending the manner in which these 

orders, which require no order 

exposure, are handled by FBMS or the 

System. 

Floor Brokers are an essential part of 

the Trading Floor and their business is 

largely dependent on access to the 

physical Trading Floor and the ability of 

market participants to expose orders in 

open outcry. Floor Brokers service 

multiple customer segments and several 

subsets of order flow. Their largest 

customers are bank trading desks, interdealer brokerage desks, liquidity 

providers, and hedge funds. Each of 

these client types direct certain orders 

to Floor Brokers. Banks and interdealers primarily utilize Floor Brokers 

for manual handling of stock-tied Floor 

Qualified Contingent Cross Orders, 

complicated order structures with 

abnormal ratios (beyond 3:1 allowable 

electronically) and ‘‘cash spreads,’’ 

where a notional trade value is 

negotiated and relayed to the trading 

crowd for participation. Banks also look 

to facilitate larger bank customer orders 

that exhibit considerable real-time risk. 

While Floor Brokers represent the bank 

side of these transactions, Floor Market 

Makers provide additional liquidity and 

efficiently perform the price discovery 

process through manual handling and 

exposure. Inter-dealers will also utilize 

Floor Brokers for price discovery and 

additional sourcing of liquidity for 

larger orders where they need 

assistance. Finally, complicated strategy 

transactions are often represented by 

Floor Brokers. End-users are more 

inclined to use their services due to 

their expertise in order handling and 

knowledge of the trading ecosystem. 

Notwithstanding the importance of 

Floor Brokers on the Exchange’s Trading 

Floor, the ability to service other orders, 

such as limit orders and Floor Qualified 

Contingent Cross Orders, which do not 

require open outcry exposure, is a 

relevant part of a Floor Broker’s 

business. The Exchange is proposing to 

expand the ability of a member 

organization to conduct this limited 

portion of the Floor Broker business 

model to assist firms in being able to 

continuously operate this portion of 

their business, notwithstanding any 

closures or halts of the Trading Floor. 

The Exchange notes that a closure of 

the Trading Floor renders the Floor 

Broker business, which is largely reliant 

on open outcry trading, inoperable. The 

Exchange believes that this proposal is 

designed to protect investors and the 

public interest as a form of risk 

mitigation as the proposal would allow 

the portion of the Floor Broker business, 

which is not dependent on open outcry, 

to continue regardless of the status of 

the Trading Floor. Further, the proposal 

would allow member organizations to 

more efficiently staff their operations. 

For example, member organizations may 

utilize staff in other locations as the 

remote access removes the dependency 

on physical presence on the Trading 

Floor. 

This proposal does not amend the 

manner in which fees or other pricing 

incentives, such as caps, apply to Floor 

Brokers. Any transaction originating 

from open outcry on the Trading Floor 

is considered a floor transaction. With 

offering FBMS remotely, the Exchange 

has not amended the manner in which 

fees are assessed or rebates are paid for 

purposes of Options 7 pricing to Floor 

Brokers. A limit order entered to the 

limit order book via FBMS was subject 

to electronic fees and rebates prior to 

the introduction of remote FBMS and 

that remains the case with the 

introduction of remote FBMS. These 

transactions are submitted to the 

electronic order book directly and are 

assessed the same fees and rebates as 

other limit orders submitted to the 

electronic order book. Also, the 

Exchange does not distinguish the 

manner in which it assesses pricing for 

Floor Qualified Contingent Cross Orders 

or electronic Qualified Contingent Cross 

Orders. The pricing is the same 

regardless of the manner in which the 

Qualified Contingent Cross Order was 

submitted. Phlx Surveillance staff 

surveilled Floor Qualified Contingent 

Cross Orders submitted through FBMS 

in real-time. Electronic limit orders 

must comply with automated System 

entry checks for compliance with 

Exchange rules. Finally, the Exchange 

represents that it has the proper security 

infrastructure in place to offer FBMS 

remotely and securely to Floor Brokers. 

Technical Amendment 

The Exchange’s proposal to amend 

Options 8, Section 1(a) to add the word 

‘‘System’’ to the end of ‘‘Options Floor 

Based Management’’ within the first 

sentence is consistent with the Act as 

this term conforms the manner in which 

the Exchange utilizes the term ‘‘Options 

Floor Based Management System’’ 

throughout Options 8. 

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 Exchange’s proposal to permit 

Floor Brokers the ability to utilize FBMS 

remotely, for the limited purposes of 

submitting limit orders to the electronic 

limit order book and Floor Qualified 

Contingent Cross Order to the System, 

does not impose an undue burden on 

competition. A Floor Broker, unlike a 

Market Maker, is mostly dependent on 

the infrastructure provided by a Trading 

Floor in order to operate its business 

model. Market Makers on the other 

hand may transact their business in 

either of the two models provide by 

Phlx, the Trading Floor or electronic 

model. Market Makers have the 

infrastructure to continue to conduct 

their business, even in the event of the 

closure of the Trading Floor, while 

Floor Brokers are mostly reliant on open 


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Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices 6393 

24 15 U.S.C. 78s(b)(3)(A)(iii). 

25 17 CFR 240.19b–4(f)(6). 

26 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. 

27 15 U.S.C. 78s(b)(2)(B). 

28 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

outcry trading and this portion of their 

business is inoperable if open outcry is 

unavailable. 

The Exchange’s proposal seeks to 

provide greater accessibility to Floor 

Brokers for the portion of their business 

which does not require the 

infrastructure afforded by the Trading 

Floor while not amending the manner in 

which those orders are handled by 

either FBMS or the System. This 

proposal is competitive in that it allows 

Floor Brokers the ability to participate 

more continuously and efficiently on 

Phlx. All Floor Brokers have access to 

FBMS and therefore would be able to 

remotely submit limit orders to the 

electronic limit order book and Floor 

Qualified Contingent Cross Orders to 

the System as well as continue to 

submit these types of orders while on 

the Trading Floor. Further, the 

Exchange believes that this proposal, 

which would allow member 

organizations to utilize their Floor 

Brokers, who may be located in other 

locations, to more efficiently staff their 

operations and also to conduct their 

business, even in the event of a closure 

of the Trading Floor. 

Finally, this proposal does not amend 

the manner in which fees or other 

pricing incentives, such as caps, apply 

to Floor Brokers. 

Technical Amendment 

The Exchange’s proposal to amend 

Options 8, Section 1(a) to add the word 

‘‘System’’ to the end of ‘‘Options Floor 

Based Management’’ within the first 

sentence does not impose an undue 

burden on competition as this term 

conforms the manner in which the 

Exchange utilizes the term ‘‘Options 

Floor Based Management System’’ 

throughout Options 8. 

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 24 and Rule 

19b–4(f)(6) thereunder.25 Because the 

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 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act and Rule 19b–4(f)(6)(iii) 

thereunder.26

At any time within 60 days of the 

filing of such 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 

under Section 19(b)(2)(B) 27 of the Act 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, 

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 rule-comments@

sec.gov. Please include File Number SR– 

Phlx–2021–02 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–2021–02. 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–2021–02 and should 

be submitted on or before February 11, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–01129 Filed 1–19–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90914; File No. SR– 

CboeEDGX–2021–003] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Fee Schedule To Expand the Existing 

Financial Product Distribution Program 

To Provide for a Derived Data Platform 

Service 

January 13, 2021. 

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 January 4, 

2021, Cboe EDGX Exchange, Inc. 

(‘‘Exchange’’ or ‘‘EDGX’’) filed with the 

Securities and Exchange Commission 

(‘‘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 


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