Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Notices 3217 

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

2 17 CFR 240.19b–4. 

included on the subject line if email is 

used. To help us process and review 

your statement more efficiently, please 

use only one method. The Commission 

will post all statements on the SEC’s 

website at www.sec.gov. 

Statements also 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. (ET). 

All statements received will be posted 

without change; we do not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. 

FOR FURTHER INFORMATION CONTACT: Julie 

Z. Davis, Senior Special Counsel, Office 

of the Advocate for Small Business 

Capital Formation, at (202) 551–5407, 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 

20549–3628. 

SUPPLEMENTARY INFORMATION: The 

meeting will be open to the public. 

Persons needing special 

accommodations because of a disability 

should notify the contact person listed 

in the section above entitled FOR

FURTHER INFORMATION CONTACT. The 

agenda for the meeting includes matters 

relating to rules and regulations 

affecting small and emerging companies 

and their investors under the federal 

securities laws. 

Dated: January 11, 2021. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2021–00764 Filed 1–13–21; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–422, OMB Control No. 

3235–0471] 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: U.S. Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Extension: 

Rule 15c1–5 

Notice is hereby given that pursuant 

to the Paperwork Reduction Act of 1995 

(‘PRA’’) (44 U.S.C. 3501 et seq.), the 

Securities and Exchange Commission 

(‘‘Commission’’) has submitted to the 

Office of Management and Budget 

(‘‘OMB’’) a request for approval of 

extension of the previously approved 

collection of information provided for in 

Rule 15c1–5 (17 CFR 240.15c1–5) under 

the Securities Exchange Act of 1934 (15 

U.S.C. 78a et seq.). 

Rule 15c1–5 states that any brokerdealer controlled by, controlling, or 

under common control with the issuer 

of a security that the broker-dealer is 

trying to sell to or buy from a customer 

must give the customer written 

notification disclosing the control 

relationship at or before completion of 

the transaction. The Commission 

estimates that 181 respondents provide 

notifications annually under Rule 15c1– 

5 and that each respondent would 

spend approximately 10 hours per year 

complying with the requirements of the 

rule for a total burden of approximately 

1,810 hours per year. There is no 

retention period requirement under 

Rule 15c1–5. This Rule does not involve 

the collection of confidential 

information. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

under the PRA unless it displays a 

currently valid OMB control number. 

The public may view background 

documentation for this information 

collection at the following website: 

www.reginfo.gov. Find this particular 

information collection by selecting 

‘‘Currently under 30-day Review—Open 

for Public Comments’’ or by using the 

search function. Written comments and 

recommendations for the proposed 

information collection should be sent 

within 30 days of publication of this 

notice to (i) www.reginfo.gov/public/do/ 

PRAMain and (ii) David Bottom, 

Director/Chief Information Officer, 

Securities and Exchange Commission, c/ 

o Cynthia Roscoe, 100 F Street NE, 

Washington, DC 20549, or by sending an 

email to: PRA_Mailbox@sec.gov. 

Dated: January 11, 2021. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–00732 Filed 1–13–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90880; File No. SR–Phlx– 

2021–03] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing of 

Proposed Rule Change To Modify Phlx 

Options 8, Section 26, ‘‘Trading Halts, 

Business Continuity and Disaster 

Recovery’’ 

January 8, 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 7, 

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, 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. 

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 26, ‘‘Trading 

Halts, Business Continuity and Disaster 

Recovery’’ to permit a Virtual Trading 

Crowd in the event that the Trading 

Floor is unavailable. 

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. 


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3218 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Notices 

3Phlx’s physical Trading Floor is located at 2929 

Walnut Street, Philadelphia, PA. 

4This 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. 

Current Options 4, Section 10, Backup Trading 

Arrangements, outlines rules applicable to hosting 

Phlx at another exchange in the event Phlx is 

disabled. 

5See Options Trader Alert #2020–07. Phlx’s 

Trading Floor did not re-open until June 3, 2020. 

See Options Trader Alert #2020–08. 

6On March 11, 2020, the World Health 

Organization characterized COVID–19 as a 

pandemic and to slow the spread of the disease, 

federal and state officials implemented socialdistancing measures, placed significant limitations 

on large gatherings, limited travel, and closed nonessential businesses. 

7Certain aspects of open outcry trading, 

particularly the ability for persons to negotiate 

pricing and to facilitate executions of larger orders 

in a trading crowd as well as the handling of highrisk and complicated strategies, are not easily 

replicated in electronic markets. 

8The proposed rule regarding the Virtual Trading 

Crowd is located in the Exchange’s broader rule 

regarding disaster recovery and business continuity, 

as the Exchange currently only plans to use the 

Virtual Trading Crowd for business continuity 

purposes if the physical Trading Floor becomes 

unavailable, the Back-Up Trading Floor becomes 

inoperable or the Exchange otherwise determines 

not to operate the Back-Up Trading Floor. If the 

Exchange were to determine to use the Virtual 

Trading Crowd in more permanent manner, it 

would submit a separate rule filing. 

9For example, there are certain aspects of trading 

where the rules differ electronically and on the 

Trading Floor. Complex Orders are traded 

differently electronically versus on the Trading 

Floor based on Exchange rules. 

10See Options 8, Section 25(l) which provides, 

‘‘In the interest of fair and orderly markets, the 

Exchange may adopt policies affecting the location 

of members in the trading crowd on a crowd-bycrowd basis.’’ 

11A ‘‘zone’’ is a virtual room representing a 

Virtual Trading Crowd. For example, each trading 

crowd will have its own zoom password-protected 

log-in. 

12See Options 8, Section 28, ‘‘. . . An Options 

Floor Broker shall ascertain that at least one Floor 

Market Maker is present at the trading post prior to 

representing an order for execution. . . .’’ 

13The Exchange notes that as a result of COVID– 

19, the Exchange implemented various safety 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Phlx proposes to modify Phlx Options 

8, Section 26, ‘‘Trading Halts, Business 

Continuity and Disaster Recovery.’’ This 

proposal creates an additional 

contingency within Phlx’s Business 

Continuity Plan (‘‘BCP’’) to prepare for 

potential closure of its physical Trading 

Floor in light of COVID–19. Specifically, 

the Exchange proposes to amend 

Options 8, Section 26(g) to permit Phlx 

to operate a newly proposed Virtual 

Trading Crowd in the event the physical 

Trading Floor is unavailable. 

Background 

Currently, Options 8, Section 26(g) 

describes certain actions the Exchange 

may take as part of its BCP, if its 

Trading Floor became inoperable, so 

that it may maintain fair and orderly 

markets if unusual circumstances were 

to occur which may impact the 

Exchange’s ability to conduct its options 

floor business. Specifically, in the event 

of loss of the Trading Floor, if the 

physical location 3 designated as the 

‘‘Trading Floor’’ becomes unavailable 

Phlx will enact its BCP and designate 

the Philadelphia Navy Yard as its 

‘‘Back-Up Trading Floor.’’ Further, in 

the event that the Back-Up Trading 

Floor becomes unavailable or 

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.4

Phlx’s Trading Floor closed on March 

17, 2019,5 as a result of precautions 

taken with respect to COVID–19.6 The 

Exchange continued to operate in an allelectronic configuration during this time 

period. Since that time, Phlx has been 

exploring alternatives to permit open 

outcry trading in the event of an 

extended closure related to COVID–19 

or potentially a second closure in 2020 

and/or 2021 given the uncertainty 

related to the ongoing pandemic. Phlx 

notes that an all-electronic trading 

environment cannot fully replicate open 

outcry trading, and therefore, the 

Exchange continues to evaluate 

potential enhancements that it believes 

would permit trading, in the event the 

Trading Floor is inoperable, to more 

closely replicate its trading environment 

that exists during normal operations.7

Phlx proposes to amend Options 8, 

Section 26(g)(2) to provide, 

Back-up Trading Floor Unavailable. In the 

event that the Back-Up Trading Floor 

becomes inoperable, or the Exchange 

otherwise determines not to operate its BackUp Trading Floor the Exchange will operate 

its electronic market and may elect to enact 

a Virtual Trading Crowd pursuant to 

subsection (g)(3). 

Today, Options 8, Section 26(g)(2) 

provides that if the Back-Up Trading 

Floor becomes inoperable, the Exchange 

will only operate its electronic market 

and will not operate a Trading Floor. 

Further, the rule provides 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. 

At this time, the Exchange desires to 

adopt a virtual option in the event the 

physical Trading Floor is unavailable, 

the Back-Up Trading Floor becomes 

inoperable or the Exchange otherwise 

determines not to operate the Back-Up 

Trading Floor.8 Specifically, Phlx’s 

proposal would permit certain aspects 

of open outcry trading, which are 

normally conducted in-person on the 

Trading Floor, to be conducted in a 

virtual trading crowd (‘‘Virtual Trading 

Crowd’’). This proposal is intended to 

enhance Phlx’s BCP by offering an 

alternative which comports with 

shelter-in-place and social distancing 

guidelines and would provide 

institutional investors with a means to 

execute orders that are unable to meet 

guidelines of the electronic market.9

Specifically, this proposal would further 

enhance the Exchange’s trading 

environment when the Trading Floor is 

unavailable, the Back-up Trading Floor 

is inoperable or the Exchange otherwise 

determines not to operate the Back-Up 

Trading Floor, by permitting market 

participants that generally operate on 

the physical Trading Floor to continue 

to interact in a substantially similar 

manner as they do on the Trading Floor. 

Specifically, the Exchange proposes to 

further amend Options 7, Section 26(g) 

to permit it to make available an audio 

and video communication program to 

serve as a ‘‘Virtual Trading Crowd’’ if 

the physical Trading Floor is 

unavailable, the Back-Up Trading Floor 

becomes inoperable or the Exchange 

otherwise determines not to operate the 

Back-Up Trading Floor. The Exchange 

would create ‘‘Virtual Trading Crowds,’’ 

in each of which the Exchange will 

determine which options class(es) will 

be available for trading. This is similar 

to the Exchange’s authority with respect 

to open outcry trading on the Trading 

Floor.10 Phlx members will access a 

Virtual Trading Crowd via ‘‘zones.’’ 11

Multiple classes may trade in a single 

Virtual Trading Crowd available for 

trading in a single zone. This is similar 

to the physical Trading Floor today. The 

Exchange may determine to have only 

one zone or several zones as necessary 

to ensure a fair and orderly market. The 

Exchange will assign each Floor Market 

Maker to a zone and Floor Brokers may 

determine in which zone(s) they will be 

present. This is similar to the 

arrangement on the Exchange’s physical 

Trading Floor. Unlike Cboe, Phlx has a 

requirement that each trading crowd 

have a Floor Market Maker present.12

Phlx ensures that this requirement is 

met by assigning Floor Market Makers to 

a trading crowd.13 If a Floor Market 


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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Notices 3219 

protocols including socially distancing floor 

members by assigning spaces to all floor market 

participants on the physical Trading Floor. 

14Currently available programs with this 

functionality include Zoom, Webex, Microsoft 

Teams, and others. 

15FBMS, 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. 

16The 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). 

17See General 3, Section 1, Options 8, Sections 

5–9, and Options 8, Sections 11 and 12. 

18Members would also be visible on video, 

however the Exchange will still require members to 

announce themselves. 

Maker hears a Floor Broker located in 

another trading crowd represent an 

order, the Floor Market Maker may 

attempt to trade with that order. The 

Exchange intends that the concept of a 

zone replicate a crowd on the physical 

Trading Floor. 

Phlx proposes to replicate the open 

outcry features on the physical Trading 

Floor within a Virtual Trading Crowd. 

The Exchange will use a communication 

program that has audio, video, and 

‘‘chat’’ functionality.14 Floor members 

would log into the Virtual Trading 

Crowd, as described in more detail 

below, and would communicate trades 

within the conferencing feature. This 

will allow the same communication 

capabilities floor members generally 

have on the physical Trading Floor so 

that they may conduct open outcry 

trading in the Virtual Trading Crowd in 

the same manner as they do on the 

physical Trading Floor. 

All Options 8 Rules will apply to 

open outcry trading in the Virtual 

Trading Crowd, in the same manner as 

they apply to open outcry trading on the 

physical Trading Floor, except as 

otherwise provided for in proposed 

Options 8, Section 26(g)(3)(E). The 

proposed changes are described below. 

The Exchange proposes to adopt a new 

Options 8, Section 26(g)(3) to permit the 

Exchange to make available an audio 

and video communication program to 

serve as a ‘‘Virtual Trading Crowd’’ if 

the physical Trading Floor is not 

available. 

Proposed Options 8, Section 

26(g)(3)(A) lists certain terms in the 

Rules related to open outcry trading on 

the physical Trading Floor that will be 

deemed to refer to corresponding terms 

related to trading in the Virtual Trading 

Crowd. Specifically, 

• References in the Rules to the 

‘‘floor,’’ ‘‘Trading Floor,’’ and 

‘‘Exchange floor’’ (and any other terms 

with the same meaning) will be deemed 

to refer to the ‘‘Virtual Trading Crowd’’; 

and 

• References in the Rules to ‘‘physical 

presence’’ or ‘‘on-floor’’ or ‘‘floor’’ (and 

any other terms with the same meaning) 

will be deemed to refer to ‘‘presence’’ in 

a Virtual Trading Crowd. 

The proposal does not amend or 

replace any aspects of Phlx’s Options 

Floor Based Management System 

(‘‘FBMS’’) or order execution 

functionalities.15 Today, FBMS is 

designed to execute orders entered by 

Floor Brokers,16 including multi-leg 

orders up to 15 legs, after representation 

in the trading crowd. When a Floor 

Broker submits an order for execution 

through FBMS, the order will be 

executed based on market conditions at 

the time of execution and in accordance 

with Phlx rules. FBMS execution 

functionality checks the Order Book to 

ensure compliance with priority rules. 

Orders that do not comply with priority 

and trade-through rules will not be 

executed. All FBMS order and 

transaction data that would normally be 

available from the physical Trading 

Floor would continue to be captured by 

FBMS and the System. These 

compliance checks, which are crucial to 

ensuring compliance with Exchange 

rules, will continue with the Virtual 

Trading Crowd model. 

Access to the Virtual Trading Crowd 

will be substantially similar to access to 

the physical Trading Floor. Only 

members registered to access Phlx’s 

Trading Floor would be permitted to 

participate. The Exchange is not 

proposing to amend its membership 

requirements with respect to virtual 

open outcry trading. Currently, 

admission to the physical Trading Floor 

is limited to members and member 

organizations, Exchange employees, 

clerks employed by members and 

member organizations, Inactive 

Nominees, and Exchange visitors that 

receive authorized admission to the 

Trading Floor pursuant to Exchange 

policy, and any other persons that the 

Exchange authorizes admission to the 

Trading Floor.17 Persons and entities 

may apply to become a Phlx member by 

complying with the membership 

requirements noted within Phlx General 

3, Membership and Access. Proposed 

Options 8, Section 26(g)(3)(B) provides, 

‘‘Admission to the Virtual Trading 

Crowd is limited to members and 

member organizations, Clerks, Exchange 

employees, and any other persons the 

Exchange authorizes admission to the 

Virtual Trading Crowd.’’ 

The Exchange proposes to limit the 

number of members, per member 

organization, that may participate in a 

Virtual Trading Crowd based on the 

ability of Phlx to accommodate 

members within the remote 

conferencing feature in an orderly 

fashion. The Exchange would limit 

personnel in a fair and equitable manner 

ensuring there is fair and equal 

representation from each member and 

member organization. This proposal 

would allow each of the trading crowds 

that exist on Phlx’s physical Trading 

Floor to participate in this ‘‘Virtual 

Trading Crowd’’ in one or more separate 

zones as described above. 

While clerks may access the Virtual 

Trading Crowd, they may only perform 

the same functions for their associated 

member organizations in connection 

with open outcry trading in the Virtual 

Trading Crowd as they do for open 

outcry trading on the physical Trading 

Floor. The Exchange understands 

permitting access to Clerks to access the 

Virtual Trading Crowd will provide 

them with access to the information that 

they normally have access to on the 

physical Trading Floor, which will 

make it more efficient for them to 

perform their tasks. Also, the Exchange 

would not permit visitors into the 

Virtual Trading Crowd as the Exchange 

believes that allowing these types of 

persons to have access to the Virtual 

Trading Crowd is unnecessary as these 

persons are not essential to the 

functioning of the Virtual Trading 

Crowd. As is the case with the physical 

Trading Floor, the Exchange will 

provide access to the Virtual Trading 

Crowd to members the Exchange has 

approved to perform a Trading Floor 

function (including Floor Brokers and 

Floor Market Makers). 

While floor members would not be 

required to display badges, pursuant to 

Options 8, Section 39 at Regulation 3, in 

the Virtual Trading Crowd, as the size 

of the view on the communication 

program may not permit badges to be 

visible, members would be required to 

join the Virtual Trading Crowd in a 

manner that clearly identifies the 

member or member’s employee. 

Pursuant to proposed Options 3, 

Section 26(g)(3)(E)(8)(a), prior to 

speaking on remote conferencing, each 

member must announce themselves 

each time.18 As specified within 


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19The conferencing room would be password 

protected and equipped with audio, video and text 

capabilities. Attendance control requirements 

would be in place. Private chat features will not be 

permitted on the platform. Unknown callers would 

be removed from the conferencing room. Nasdaq 

non-regulatory staff would be in control of the 

conference room. 

20Options 8, Section 38(a) provides, ‘‘No member 

or member organization shall establish or maintain 

any private wire connection, private radio, 

television or wireless system, between the Exchange 

Trading Floor and a nonmember without 

application to and approval by the Exchange. Every 

such means of communication shall be registered 

with the Exchange. Notice of the discontinuance of 

any such means of communication shall be 

promptly given to the Exchange.’’ 

21At 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). See Options 

Trader Alert #2020–8. 

Recently, the Exchange filed a proposal 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. See SR–Phlx–2021– 

01. This recent proposal did not permit FBMS to 

be utilized remotely for the purpose of executing 

transactions which require exposure in open outcry. 

22See Phlx Options 9, Section 1; and Options 9, 

Section 5. See also Options 3, Section 22(d). 

23See Phlx General 9, Section 21. 

proposed Options 8, Section 

26(g)(3)(E)(2), members must join via a 

computer and either (a) computer audio; 

(b) cell phone; or (c) hard-wired phone, 

as determined by Nasdaq. Phlx will 

send a password-protected invitation to 

each floor participant permitted access 

to the Virtual Trading Crowd. This 

invitation will permit each permitted 

participant to access the Virtual Trading 

Crowd in a safe and secure manner. Any 

floor member may access any zone 

within the Virtual Trading Crowd, 

although Floor Market Makers will be 

required to be present in their assigned 

zone if present within the Virtual 

Trading Crowd. Any unidentified 

attendee will be removed from the 

Virtual Trading Crowd. The Exchange 

will have an audit trail of the telephone 

numbers that have joined each remote 

conferencing session in order to ensure 

that only members join the remote 

conferencing feature. Every member in 

the Virtual Trading Crowd must provide 

Market Operations with a contact 

number where Market Operations will 

be able to reach them during the trading 

day. The contact number may not be the 

same number that is being used to 

connect to the Virtual Trading Crowd. 

Floor members are responsible for 

maintaining updated contact 

information. This number must be 

updated immediately if it changes. 

Nasdaq staff must be able to reach a 

member if there is an issue with 

trading.19 Nasdaq non-regulatory staff 

would be responsible for the operation 

of the remote conferencing feature, 

which includes monitoring members to 

ensure that only floor members and 

member’s employees are admitted into 

remote conferencing and are properly 

identified. 

As specified within proposed Options 

3, Section 26(g)(3)(E)(1), every member 

and the member’s employees in the 

Virtual Trading Crowd must consent to 

video and audio recording in order to 

participate in the Virtual Trading 

Crowd. Members and members’ 

employees will be asked to provide this 

consent, as well as other consents, 

before being permitted to join the 

Virtual Trading Crowd. For example, 

member organizations would be 

required to execute an addendum to the 

Nasdaq Services Agreement regarding 

their use of the remote conferencing 

feature in addition to consenting to 

voice recording. 

Today, pursuant to Options 8, Section 

38, floor members must register their 

means of communication with the 

Exchange.20 Pursuant to proposed 

Options 8, Section 26(g)(3)(E)(4), 

members and member organizations 

may use any equipment to access the 

Virtual Trading Crowd and do not need 

to register devices they use while in the 

Virtual Trading Crowd. Floor members 

and member organizations would be 

permitted remote access to FBMS when 

the Virtual Trading Floor is enacted.21

The Exchange proposes to provide 

within Options 8, Section 26(g)(3)(C) 

that, ‘‘. . . Notwithstanding Options 8, 

Section 28(g) and Options 8, Section 

30(e), members and member 

organizations would be permitted 

remote access to the Options Floor 

Based Management System (‘‘FBMS’’) 

when the Virtual Trading Floor is 

enacted for the purpose of executing 

transactions which require exposure in 

open outcry.’’ Floor members must use 

Exchange-provided FBMS, to the extent 

applicable, while transacting in the 

Virtual Trading Crowd. As noted above, 

prior to using a communications device 

for business purposes on the Trading 

Floor of the Exchange, members and 

member organizations must register the 

communications device in a form and 

manner prescribed by the Exchange. 

Because individuals in the Virtual 

Trading Crowd will not be on the 

Exchange’s premises (and thus will not 

be using Exchange-provided bandwidth 

to be shared with all market participants 

and do not pose the same security risks), 

the proposed rule change will not 

require members and member 

organizations to register devices they 

use while in the Virtual Trading Crowd. 

Options 8, Section 38 will otherwise 

apply in the same manner to the Virtual 

Trading Crowd as it does to the physical 

Trading Floor (to the extent the context 

requires). This includes requirements 

related to audit trail and record 

retention, prohibition on using any 

device for the purpose of recording 

activities in the Virtual Trading Crowd 

or maintaining an open line of 

continuous communication whereby a 

person not located in the trading crowd 

may continuously monitor the activities 

in the trading crowd, and the 

prohibition on using devices to 

disseminate quotes or last sale reports. 

Surveillance staff will be present in 

each Virtual Trading Crowd to monitor 

the activity of each participant, who 

must be present by video, and to 

observe participant behavior. The 

Exchange will continue to surveil 

options transactions, as it does today, to 

identify transactions which are violative 

of Phlx Rules.22 Phlx surveils for 

transactions which have been executed 

on its market to determine if those 

transactions utilized information which 

would have been available in open 

outcry trading and was not yet public or 

otherwise ascertainable due to the 

execution of a transaction. The 

Exchange notes that in both the 

electronic market and on the trading 

floor, members and member 

organizations must ensure that they 

have procedures reasonably designed to 

prevent the misuse of material, nonpublic information by employees.23

Further, the Exchange proposes to 

provide within proposed Options 8, 

Section 26(g)(3)(E)(8)(g) that ‘‘A member 

may not permit any unauthorized other 

person to gain audio or video access to 

the Virtual Trading Crowd. A member 

shall not record any trading sessions,’’ 

to make clear that the Exchange will 

enforce the prohibitions of Options 8, 

Section 38 with respect to the remote 

conferencing aspects as well. Finally, 

the Exchange represents that it has the 

proper security infrastructure in place to 

offer FBMS remotely and securely to 

floor participants. 

Today, members on the physical 

Trading Floor only verbalize their 

interest to trade against a represented 

order, so not requiring bids and offers to 

be included in a chat conforms to 

current practice on the Trading Floor. 

However, given potential limitations of 

communication software (such as 


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24The Exchange would issue an Options Trader 

Alert announcing any determination to require bids 

and offers to be expressed in a chat within the 

communication program pursuant to proposed 

Options 8, Section 26(g)(3)(D). The Exchange will 

provide such notice with sufficient advance notice. 

25See Options 8, Section 22(c) Public Outcry— 

Pursuant to Options 8, Section 24 (this citation is 

being amended in this rule change from Section 35 

to the correct Section 24) at Supplementary 

Material .01, bids and offers must be made in an 

audible tone of voice. A member shall be 

considered ‘‘in’’ on a bid or offer, while he remains 

at the post, unless he shall distinctly and audibly 

say ‘‘out.’’ A member bidding and offering in 

immediate and rapid succession shall be deemed 

‘‘in’’ until he shall say ‘‘out’’ on either bid or offer. 

Once the trading crowd has provided a quote, it 

will remain in effect until: (A) A reasonable amount 

of time has passed, or (B) there is a significant 

change in the price of the underlying security, or 

(C) the market given in response to the request has 

been improved. In the case of a dispute, the term 

‘‘significant change’’ will be interpreted on a caseby-case basis by an Options Exchange Official based 

upon the extent of the recent trading in the option 

and, in the case of equity and index options, in the 

underlying security, and any other relevant factors. 

26 Id at 25. 

27The Exchange notes that today members are 

responsible for the operation of their own 

equipment while on the Trading Floor. 

28Options 8, Section 39, Regulation 4(a) provides, 

‘‘Members and associated persons shall not conduct 

themselves in a disorderly manner on the trading 

floor or on the premises immediately adjacent to the 

trading floor. Further, members, participants and 

associated persons shall not conduct themselves in 

an indecorous manner that is disruptive to the 

conduct of business on the trading floor, including 

but not limited to the use of profanity.’’ 

29See Options 8, Sections 25 and 30. 

30See Options 8, Section 32. 

limitations on how many people may be 

heard at the same time in a Virtual 

Trading Crowd or potential buffering or 

echoing), the Exchange believes it may 

be appropriate to require members to 

use a chat tool in the communication 

program to indicate their interest in 

participating in a trade so that the 

representing Floor Broker is able to 

know the market from the trading crowd 

and fairly allocate the trade pursuant to 

the Rules.24 The Exchange would 

require members to utilize the chat 

function if Surveillance determines that 

increased volume or activity in the 

Virtual Trading Crowd warrant 

mandatory use of the chat feature for 

members to maintain a fair and orderly 

market. Chats will be visible to all 

participants in a zone and will not be 

permitted directly between individual 

participants (i.e., the Exchange will 

disable direct messaging functionality 

within the communication program). 

The Exchange believes the flexibility to 

impose this requirement in a Virtual 

Trading Crowd is appropriate, as these 

limitations may ultimately not interfere 

with a Floor Broker’s ability to hear all 

interest (particularly in Virtual Trading 

Crowd) and thus the additional 

requirement may potentially slow down 

executions. Flexibility will permit the 

Exchange to balance system limitations 

with the additional burden of a new 

workflow step for each class, some of 

which have different open outcry 

trading environments than others. 

The Exchange will retain records of 

the chats as well as consents, and any 

other records related to the Virtual 

Trading Crowds that are subject to the 

Exchange’s record retention obligations 

under the Exchange Act. 

Pursuant to Options 3, Section 

26(g)(3)(E)(8)(b), if a member 

experiences a technical issue accessing 

the remote conferencing, the Exchange 

will not be responsible for unexecuted 

trades. Also, pursuant to Options 3, 

Section 26(g)(3)(E)(8)(c), Floor Market 

Maker quotes will be considered firm in 

the event the Floor Market Maker is 

disconnected from the Virtual Trading 

Crowd and the parties have a meeting of 

the minds with respect to the terms of 

the transaction. A ‘‘Meeting of the 

Minds’’ means the contra-side(s) 

verbally confirmed participation in the 

trade. In the event that a Floor Market 

Maker is disconnected from the Virtual 

Trading Crowd, a Floor Market Maker 

quote would not be considered firm if 

the quote were provided and the parties 

did not have a Meeting of the Minds 

with respect to the terms of the 

transaction. 

Today, Floor Market Maker quotes are 

considered firm when announced in 

open outcry 25 and once accepted the 

transaction may be effectuated within 

FBMS. A Floor Market Maker may 

declare he or she is ‘‘out’’ prior to a 

Meeting of the Minds occurring in open 

outcry and the Floor Broker submitting 

the trade into FBMS.26 Today, a Floor 

Market Maker that experiences issues 

with internet connection,27 makes an 

error or otherwise is unaware of recent 

news in a particular option, would be 

held to a quote verbalized in open 

outcry. In the event that the negotiation 

continues and the terms change, the 

Floor Marker Maker would not be held 

to the new terms without additional 

acceptance of those terms. In the event 

that the transaction is not effectuated in 

FBMS, the trade would not stand. To 

that end, the Exchange believes 

continuing to require quotes to remain 

firm once the parties have arrived at a 

Meeting of the Minds with respect to the 

terms of the transaction creates fair and 

equitable expectations for members 

trading in the Virtual Trading Crowd. 

Today, FLEX transactions are 

permitted on the Trading Floor in 

accordance with Options 3, Section 34. 

With this proposal, FLEX Trade tickets 

must be sent by email to the Phlx 

Correction Post pursuant to proposed 

Options 8, Section 26(g)(3)(E)(8)(d). This 

proposal would allow the Exchange to 

receive these in a timely manner. 

The Exchange notes within proposed 

Options 8, Section 26(g)(3)(E)(8)(e) that 

a break-out room may be utilized to 

declare a dispute or otherwise notify an 

Options Floor Official of any required 

notifications. The Exchange would 

establish a break-out room within the 

remote conferencing for each dispute. 

This would provide an effective manner 

in which to communicate disputes and 

maintain a record of those disputes. 

Pursuant to proposed Options 8, 

Section 26(g)(3)(E)(8)(f) disruptive or 

unnecessary conversations or comments 

in the remote conferencing or on chat 

feature will not be permitted. This type 

of behavior would subject a member to 

disciplinary action. Today, disruptive 

behavior on the Trading Floor is subject 

to Options 8, Section 39 at Regulation 

4.28

As noted above, the Exchange may 

determine to make the Virtual Trading 

Crowd available if the physical Trading 

Floor is unavailable, the Back-Up 

Trading Floor becomes inoperable or the 

Exchange otherwise determines not to 

operate the Back-Up Trading Floor. 

Proposed Options 8, Section 26(g)(3) 

provides that ‘‘The Exchange may elect 

to permit open outcry trading to take 

place in a Virtual Trading Crowd if the 

Trading Floor becomes unavailable, the 

Back-Up Trading Floor becomes 

inoperable or the Exchange otherwise 

determines not to operate the Back-Up 

Trading Floor.’’ These amendments to 

the Options 8 Rules are intended to 

make trading in a Virtual Trading 

Crowd similar to open outcry trading 

when open outcry trading is not 

available by replicating certain features 

of open outcry trading in the Virtual 

Trading Crowd. The Virtual Trading 

Crowd will permit open outcry trading 

to continue in a separate environment if 

the physical Trading Floor becomes 

unavailable, the Back-Up Trading Floor 

becomes inoperable or the Exchange 

otherwise determines not to operate the 

Back-Up Trading Floor. Therefore, 

trading opportunities that are generally 

only available in open outcry trading 

will continue to be available in the 

Virtual Trading Crowd. 

All trading in the Virtual Trading 

Crowd will occur in the same manner, 

including priority and allocation 

rules.29 The Exchange will make the 

same order types and instructions 

available in the Virtual Trading Crowd 

as it makes available on the physical 

Trading Floor.30 Floor Brokers will be 

subject to the responsibilities in each 


khammond on DSKJM1Z7X2PROD with NOTICES
3222 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Notices 

31See Options 8, Sections 18 and 28. 

32See Options 8 generally. 

33See Options 8 generally. 

34 15 U.S.C. 78f(b). 

35 15 U.S.C. 78f(b)(5). 36See note 15 above. 

environment.31 Additionally, members 

and member organizations participating 

in the Virtual Trading Crowd will be 

subject to the same regulatory 

requirements as they are on the physical 

Trading Floor.32 Orders must be 

systematized, and represented, and 

transactions reported, in connection 

with the Virtual Trading Crowd floor in 

the same manner as they are when 

trading on the physical Trading Floor.33

Therefore, the audit trail for open outcry 

trading in the Virtual Trading Crowd 

will capture the same information that 

it does for open outcry trading on the 

physical Trading Floor. 

Surveillance 

Phlx Surveillance staff would 

remotely surveil transactions in the 

Virtual Trading Crowd, in real-time. 

Specifically, there would be an Options 

Floor Official present in each Virtual 

Trading Crowd. Nasdaq Surveillance 

would conduct real-time surveillance 

for violations of Phlx rules, as is the 

case with physical open outcry. Floor 

Surveillance Procedures would be 

updated to account for the conferencing 

and chat requirements, as well as any 

changes to surveil a Virtual Trading 

Crowd. All surveillance patterns would 

be operable and function normally. 

The Exchange also proposes to renumber current Options 3, Section 

26(g)(3) as (4). The Exchange notes that 

this proposal does not amend the 

manner in which fees or other pricing 

incentives, such as caps, apply to floor 

participants. Any transaction originating 

from open outcry on the Trading Floor 

is considered a floor transaction and 

would continue to be considered a floor 

transaction for purposes of the Virtual 

Trading Crowd. With offering FBMS 

remotely, the Exchange does not 

propose to amend the manner in which 

fees are assessed or rebates are paid for 

purposes of Options 7 pricing to Floor 

Brokers. 

The Exchange has conducted several 

town halls with floor members in which 

the Exchange presented the 

functionality of the Virtual Trading 

Crowd and has made the Virtual 

Trading Crowd available for testing so 

that the Exchange will be ready to 

implement it if necessary. The Exchange 

has received positive feedback from 

floor members regarding the Virtual 

Trading Crowd and will continue to 

make updates as necessary and 

appropriate in response to comments it 

receives to make the Virtual Trading 

Crowd replicate the open outcry trading 

experience on the physical Trading 

Floor as much as possible. The 

Exchange believes this will provide the 

opportunity for as seamless a rollout as 

possible if circumstances cause the 

Exchange to make the Virtual Trading 

Crowd available. 

Technical Amendments 

The Exchange proposes to amend 

Options 8, Section 22, Execution of 

Options Transactions on the Trading 

Floor, to correct two citations in 

Options 8, Sections 22(b) and (c). The 

citations to Options 8, Section 35 

should be to Options 8, Section 24. 

These corrections will ensure the rule 

text is accurate. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,34 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,35

in particular, in that it is designed 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, in 

general, to protect investors and the 

public interest. 

In particular, the Exchange believes 

the proposed rule change will 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, as it will permit open 

outcry trading to continue in the event 

the Exchange’s Trading Floor is 

unavailable, the Back-Up Trading Floor 

becomes inoperable or the Exchange 

otherwise determines not to operate the 

Back-Up Trading Floor. As discussed 

above, there are certain features of open 

outcry trading that are difficult to 

replicate in an electronic trading 

environment. The Exchange has 

observed, and understands from various 

market participants, that they have had 

difficulty executing certain orders, such 

as larger orders and high-risk and 

complicated strategies, in an allelectronic trading configuration without 

the element of human interaction to 

negotiate pricing for these orders. The 

proposed rule change would provide an 

environment in which this interaction 

would be available despite the potential 

unavailability of the physical Trading 

Floor. The Exchange believes the 

proposed rule change may facilitate 

continued trading of these orders if and 

when the physical Trading Floor is 

unavailable, the Back-Up Trading Floor 

becomes inoperable or the Exchange 

otherwise determines not to operate the 

Back-Up Trading Floor. As a result, the 

Exchange believes providing continuous 

access to open outcry trading when the 

physical Trading Floor is unavailable, 

the Back-Up Trading Floor becomes 

inoperable or the Exchange otherwise 

determines not to operate the Back-Up 

Trading Floor will remove impediments 

to a free and open market and will 

ultimately benefit investors, particularly 

those desiring to execute high-risk and 

complex trading strategies. 

The Virtual Trading Crowd would 

have the same capability to utilize 

FBMS as the primary Trading Floor 

today with the availability of remote 

FBMS.36 The Exchange also believes the 

proposed rule change will promote just 

and equitable principles of trade as 

open outcry trading in a Virtual Trading 

Crowd will occur in accordance with 

the same trading rules and be subject to 

the same regulatory requirements that 

apply to open outcry trading on the 

physical Trading Floor, all of which 

have previously been filed with the 

Commission. The proposed rule change 

will merely permit this open outcry 

trading to occur in a virtual setting 

rather than a physical setting (which 

may be appropriate for health and safety 

purposes). For the Virtual Trading 

Crowd, open outcry trading will occur 

while market participants operate 

remotely as they do when they trade 

electronically. Open outcry trading on a 

physical Trading Floor or in a Virtual 

Trading Crowd will be subject to the 

same priority and allocation rules as 

open trading on the physical Trading 

Floor, as set forth in Options 8, Sections 

25 and 30. 

As is the case for open outcry trading 

on a physical Trading Floor, open 

outcry trading in a Virtual Trading 

Crowd is consistent with Section 11(a) 

of the Act, as Rule 5.85(a)(2)(E) (which 

will apply to open outcry trading in a 

Virtual Trading Crowd) requires 

members and member organizations 

relying on Section 11(a)(1)(G) of the Act 

and Rule 11a1–1(T) thereunder (the so 

called ‘‘G exemption rule’’) as an 

exemption must yield priority to any 

bid (offer) at the same price of Public 

Customer orders and broker-dealer 

orders resting in the Order Book, as well 

as any other bid (offer) that has priority 

over those broker-dealer orders under 

this Rule. 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Notices 3223 

37See Options 8, Section 22(c) Public Outcry— 

Pursuant to Options 8, Section 35 at Supplementary 

Material .01, bids and offers must be made in an 

audible tone of voice. A member shall be 

considered ‘‘in’’ on a bid or offer, while he remains 

at the post, unless he shall distinctly and audibly 

say ‘‘out.’’ A member bidding and offering in 

immediate and rapid succession shall be deemed 

‘‘in’’ until he shall say ‘‘out’’ on either bid or offer. 

Once the trading crowd has provided a quote, it 

will remain in effect until: (A) A reasonable amount 

of time has passed, or (B) there is a significant 

change in the price of the underlying security, or 

(C) the market given in response to the request has 

been improved. In the case of a dispute, the term 

‘‘significant change’’ will be interpreted on a caseby-case basis by an Options Exchange Official based 

upon the extent of the recent trading in the option 

and, in the case of equity and index options, in the 

underlying security, and any other relevant factors. 

38 Id at 25. 

39The Exchange notes that today members are 

responsible for the operation of their own 

equipment while on the Trading Floor. 

The Exchange further believes the 

proposed rule change will 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 permitting the 

Exchange to establish zones. As 

discussed above, the zones are intended 

to replicate the physical Trading Floor’s 

organization and will permit floor 

members to interact in a substantially 

similar way as they do on the physical 

Trading Floor. The zones will also 

encourage interaction of a reasonable 

number of people within the 

communication program. While the 

zones will include additional 

functionality that is not otherwise 

available on the physical Trading Floor, 

such as the chat functionality, the 

Exchange believes the creation of zones 

and inclusion of this functionality will 

create a virtual environment that 

promotes fair and orderly trading given 

the potential limitations of 

communication software. 

The Exchange will make the same 

order types and instructions available in 

a Virtual Trading Crowd as it makes 

available on a physical Trading Floor 

pursuant to Options 8, Section 32. Floor 

Brokers will be subject to the 

responsibilities set forth in Options 8, 

Sections 18 and 28 in a Virtual Trading 

Crowd, as they are on a physical 

Trading Floor. Additionally, members 

and member organizations participating 

in a Virtual Trading Crowd will be 

subject to the same regulatory 

requirements in a Virtual Trading 

Crowd as they are on a physical Trading 

Floor, including those set forth 

generally within Options 8. Orders must 

be systematized and represented, and 

transactions reported, in connection 

with a Virtual Trading Crowd in the 

same manner as they are when trading 

on a physical Trading Floor. The 

Exchange will retain records of the chats 

as well as consents, and any other 

records related to the Virtual Trading 

Crowd that are subject to the Exchange’s 

record retention obligations under the 

Exchange Act. 

Pursuant to Options 3, Section 

26(g)(3)(E)(8)(c), Floor Market Maker 

quotes will be considered firm in the 

event the Floor Market Maker is 

disconnected from the Virtual Trading 

Crowd and the parties have a Meeting 

of the Minds with respect to the terms 

of the transaction. A ‘‘Meeting of the 

Minds’’ means the contra-side(s) 

verbally confirmed participation in the 

trade. In the event that a Floor Market 

Maker is disconnected from the Virtual 

Trading Crowd, a Floor Market Maker 

quote would not be considered firm if 

the quote were provided and the parties 

did not have a Meeting of the Minds 

with respect to the terms of the 

transaction. Today, Floor Market Maker 

quotes are considered firm when 

announced in open outcry 37 and once 

accepted the transaction may be 

effectuated within FBMS. A Floor 

Market Maker may declare he or she is 

‘‘out’’ prior to a Meeting of the Minds 

occurring in open outcry and the Floor 

Broker submitting the trade into 

FBMS.38 Today, a Floor Market Maker 

that experiences issues with internet 

connection,39 makes an error or 

otherwise is unaware of recent news in 

a particular option, would be held to a 

quote verbalized in open outcry. In the 

event that the negotiation continues and 

the terms change, the Floor Marker 

Maker would not be held to the new 

terms without additional acceptance of 

those terms. In the event that the 

transaction is not effectuated in FBMS, 

the trade would not stand. To that end, 

the Exchange believes continuing to 

require quotes to remain firm once the 

parties have arrived at a Meeting of the 

Minds with respect to the terms of the 

transaction is consistent with the Act as 

it creates fair and equitable expectations 

for members trading in the Virtual 

Trading Crowd as a Meeting of the 

Minds was arrived out between the 

parties, each of whom had an 

opportunity to participate in the trade. 

The audit trail for open outcry trading 

in a Virtual Trading Crowd will capture 

the same information that it does for 

open outcry trading on a physical 

Trading Floor. The FBMS execution 

checks for compliance with priority and 

trade-through rules remain intact. The 

Exchange’s proposal only seeks to 

replace the open outcry negotiations 

with a Virtual Trading Crowd. FBMS 

compliance checks were adopted to 

protect investor and the general public 

by automated enforcement of priority 

and trade-through rules. The Exchange 

would continue to cancel orders that 

failed to meet these compliance checks, 

as is the case today. These compliance 

checks ensure that allocation rules are 

complied with and that the proposed 

execution would not cause Phlx to 

trade-through an away market. 

Surveillance staff would remotely 

surveil transactions in a Virtual Trading 

Crowd, in real-time. Specifically, there 

would be an Options Floor Official 

present in each Virtual Trading Crowd. 

Nasdaq Surveillance would conduct 

real-time surveillance for violations of 

Phlx rules, as is the case with physical 

open outcry. Floor Surveillance 

Procedures would be updated to 

account for the conferencing and chat 

requirements, as well as any changes to 

surveil a Virtual Trading Crowd. All 

surveillance patterns would be operable 

and function normally. The Exchange 

believes that the proposed rule change 

would remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system because it would promote fair 

and orderly trading. The Exchange 

believes it will promote just and 

equitable principles of trading for all 

open outcry trading to occur in 

substantially the same manner, whether 

it occurs while market participants are 

in the same physical setting or in remote 

settings being connected through a 

technological solution. 

Controls and security features are 

proposed to ensure that the appropriate 

market participants are participating in 

trades and to minimize any disruptions. 

Nasdaq non-surveillance staff would be 

responsible for the operation of the 

remote conferencing feature, which 

includes monitoring members to ensure 

that only floor members and members’ 

employees are admitted into remote 

conferencing and are properly 

identified. Member organizations would 

be required to execute an addendum to 

the Nasdaq Services Agreement 

regarding their use of the remote 

conferencing feature in addition to 

consenting to voice recording. 

In addition, the Exchange believes the 

proposed rule change will not be 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers, as all 

individuals authorized to act on the 

physical Trading Floor (both member 

organizations authorized at the time the 

physical Trading Floor becomes 

unavailable, the Back-Up Trading Floor 

becomes inoperable or the Exchange 

otherwise determines not to operate the 

Back-Up Trading Floor and any member 

organization that becomes authorized 


khammond on DSKJM1Z7X2PROD with NOTICES
3224 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Notices 

40See Phlx Options 9, Section 1; and Options 9, 

Section 5. See also Options 3, Section 22(d). 

41See Phlx General 9, Section 21. 

after the physical Trading Floor 

becomes unavailable) will be provided 

with access to the Virtual Trading 

Crowd. Additionally, the proposed rule 

change to permit the Exchange to elect 

a Virtual Trading Crowd if the physical 

Trading Floor is unavailable will 

provide individuals unable to trade on 

the physical Trading Floor as a result of 

certain restrictions to participate in 

open outcry trading remotely. 

Surveillance staff will be present in 

each Virtual Trading Crowd to monitor 

the activity of each participant, who 

must be present by video, and to 

observe participant behavior. The 

Exchange will continue to surveil 

options transactions, as it does today, to 

identify transactions which are violative 

of Phlx Rules.40 Phlx surveils for 

transactions which have been executed 

on its market to determine if those 

transactions utilized information which 

would have been available in open 

outcry trading and was not yet public or 

otherwise ascertainable due to the 

execution of a transaction. The 

Exchange notes that in both the 

electronic market and on the trading 

floor, members and member 

organizations must ensure that they 

have procedures reasonably designed to 

prevent the misuse of material, nonpublic information by employees.41

The Exchange has conducted several 

town halls with floor members in which 

the Exchange presented the 

functionality of the Virtual Trading 

Crowd and has made the Virtual 

Trading Crowd available for testing so 

that the Exchange will be ready to 

implement it if necessary. The Exchange 

has received positive feedback from 

floor members regarding the Virtual 

Trading Crowd and will continue to 

make updates as necessary and 

appropriate in response to comments it 

receives to make the Virtual Trading 

Crowd replicate the open outcry trading 

experience on the physical Trading 

Floor as much as possible. The 

Exchange believes this will provide the 

opportunity for as seamless a rollout as 

possible if circumstances cause the 

Exchange to make the Virtual Trading 

Crowd available. 

Finally, this proposal does not amend 

the manner in which fees or other 

pricing incentives, such as caps, apply 

to floor participants. 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 

participants. 

Technical Amendments 

The Exchange’s proposal to update 

citations to Options 8, Section 35 to 

Options 8, Section 24 are consistent 

with the Act as these non-substantive 

amendments will ensure the rule text is 

accurate. 

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 does not believe that the 

proposed rule change will impose any 

burden on intra-market competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act, 

as all member organizations authorized 

by the Exchange, or that become 

authorized by the Exchange, to transact 

on the Trading Floor will receive access 

to the Virtual Trading Crowd. 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on inter-market competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act, 

as it relates solely to the location of 

open outcry trading on the Exchange. 

The proposed rule change will merely 

permit open outcry trading that 

generally occurs while market 

participants are located in the same 

physical setting to occur while market 

participants are in a remote setting, 

connected by a technological solution 

(as electronic trading does). 

The Exchange believes that the 

proposed rule change will relieve any 

burden on, or otherwise promote, 

competition. The Exchange believes the 

proposed rule change will provide 

market participants with continuous 

access to open outcry trading when the 

physical Trading Floor is unavailable, 

the Back-Up Trading Floor becomes 

inoperable or the Exchange otherwise 

determines not to operate the Back-Up 

Trading Floor. The Exchange believes 

this may facilitate continued, 

competitive price negotiations and 

trading of orders that the Exchange 

understands are more difficult to 

execute in an all-electronic trading 

environment without human 

interaction. Additionally, the proposed 

rule change will provide customer 

orders represented for open outcry 

execution with access to the same pool 

of liquidity when the Trading Floor is 

unavailable to which those orders 

would have access when the Trading 

Floor is operating in its normal state. 

Maintenance of this level of liquidity at 

all times, even when the Trading Floor 

is unavailable, may promote 

competition by providing these 

customer orders with increased 

liquidity than may otherwise be 

available, and thus increased execution 

opportunities and price discovery. 

Every Floor Market Maker and Floor 

Broker is permitted access to FBMS. 

With respect to inter-market 

competition, the Exchange notes that 

each options market has a business 

continuity plan. Because the options 

markets are physically located in 

different regions of the United States, 

the conditions under which a business 

continuity plan is deployed may differ, 

based on regional differences. In 

addition, any options exchange with a 

trading floor could amend its rules to 

adopt similar business continuity plans 

that engaged similar controls. 

Technical Amendments 

The Exchange’s proposal to update 

citations to Options 8, Section 35 to 

Options 8, Section 24 do not impose an 

undue burden on competition as these 

non-substantive amendments will 

ensure the rule text is accurate. 

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 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission shall: (a) By order 

approve or disapprove such proposed 

rule change, or (b) institute proceedings 

to determine whether the proposed rule 

change should be 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: 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Notices 3225 

42 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 80a–53(a). 

2 15 U.S.C. 80a–53(c). 

3The industry burden is calculated by 

multiplying the total annual hour burden to prepare 

Form N–54C (eight) by the estimated hourly wage 

rate of $368 for a compliance attorney or other 

business development company employee with 

similar duties and responsibilities. The estimated 

wage figure is based on published rates for 

compliance attorneys from the Securities Industry 

and Financial Markets Association’s Report on 

Management & Professional Earnings in the 

Securities Industry 2013, modified by Commission 

staff to account for an 1800 hour work-year and 

inflation, and multiplied by 5.35 to account for 

bonuses, firm size, employee benefits and overhead, 

yielding an effective hourly rate of $2,944. 

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–2021–03 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–2021–03. 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–2021–03 and should 

be submitted on or before February 4, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.42

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–00591 Filed 1–13–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–184, OMB Control No. 

3235–0236] 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Extension: 

Form N–54C 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the Securities 

and Exchange Commission (the 

‘‘Commission’’) has submitted to the 

Office of Management and Budget a 

request for extension of the previously 

approved collection of information 

discussed below. 

Certain investment companies can 

elect to be regulated as business 

development companies, as defined in 

section 2(a)(48) of the Investment 

Company Act of 1940 (‘‘Investment 

Company Act’’), under sections 55 

through 65 of the Investment Company 

Act. Under section 54(a) of the 

Investment Company Act,1 any 

company defined in section 2(a)(48)(A) 

and (B) of the Investment Company Act 

may, if it meets certain enumerated 

eligibility requirements, elect to be 

subject to the provisions of Sections 55 

through 65 of the Investment Company 

Act by filing with the Commission a 

notification of election. Under section 

54(c) of the Investment Company Act,2

any business development company 

may voluntarily withdraw its election 

under section 54(a) of the Investment 

Company Act by filing a notice of 

withdrawal of election with the 

Commission. The Commission has 

adopted Form N–54C as the form for the 

notification of withdrawal of election to 

be subject to Sections 55 through 65 of 

the Investment Company Act. The 

purpose of Form N–54C is to notify the 

Commission that the business 

development company withdraws its 

election to be subject to Sections 55 

through 65 of the Investment Company 

Act. 

The Commission estimates that on 

average approximately eight business 

development companies file 

notifications on Form N–54C each year. 

Each of those business development 

companies need only make a single 

filing of Form N–54C. The Commission 

further estimates that this information 

collection imposes a burden of one 

hour, resulting in a total annual burden 

of eight hours. Based on the estimated 

wage rate, the total cost to the business 

development company industry of the 

hour burden for complying with Form 

N–54C would be approximately $2,944.3

The Commission also estimates that cost 

burden for outside professionals 

associated with the filing of Form N– 

54C increased to $560 because the 

Commission believes that filers use 

third-party vendors to comply with this 

requirement. 

The collection of information under 

Form N–54C is mandatory. The 

information provided by the form is not 

kept confidential. An agency may not 

conduct or sponsor, and a person is not 

required to respond to, a collection of 

information unless it displays a 

currently valid control number. 

The public may view the background 

documentation for this information 

collection at the following website, 

www.reginfo.gov. Comments should be 

directed to: (i) Desk Officer for the 

Securities and Exchange Commission, 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Room 10102, New Executive 

Office Building, Washington, DC 20503, 

or by sending an email to: 

Lindsay.M.Abate@omb.eop.gov; and (ii) 

David Bottom, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o Cynthia 

Roscoe, 100 F Street NE, Washington, 

DC 20549 or send an email to: PRA_

Mailbox@sec.gov. Written comments 

and recommendations for the proposed 

information collection should be sent 

within 30 days of publication of this 

notice to www.reginfo.gov/public/do/ 

PRAMain. Find this particular 

information collection by selecting 

‘‘Currently under 30-day Review—Open 

for Public Comments’’ or by using the 

search function. 

Dated: January 11, 2021. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–00733 Filed 1–13–21; 8:45 am] 

BILLING CODE 8011–01–P 


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